Tesla’s key battery supplier, Panasonic, is under increasing pressure to expedite production at its new facility in De Soto, Kansas. This urgency arises primarily from Tesla’s heightened demand for electric vehicle (EV) batteries as the company seeks to solidify its manufacturing presence in the United States against a backdrop of stringent trade challenges. Panasonic, which has been constructing the facility since 2022, finds itself at a critical juncture, where rapid deployment of battery cells is essential to meet the domestic needs of its largest client.
During a recent interview in Tokyo, Panasonic’s CEO Yuki Kusumi acknowledged the urgency expressed by Tesla, stating, “As we’ve been told by our customer to get Kansas moving quickly, we’re hurrying to do so… There are risks, but we are planning on robust demand for batteries from our main customer as of now.” This commitment to speeding up production comes amid persistent tariffs on EV batteries, which have complicated Tesla’s supply chain and prompted a strategic pivot towards local manufacturing. By March 2027, the Kansas plant is expected to bolster Panasonic’s production capacity by 60%, which is crucial for Tesla’s ambitious growth plans in a landscape still reeling from global supply disruptions.
Panasonic’s proactive stance highlights its responsiveness to the changing dynamics of the EV market. As tariffs continue to affect the competitiveness of Chinese-made batteries, Tesla has turned its attention more aggressively towards domestic sources. The Inflation Reduction Act has also incentivised this shift, as manufacturers seek to qualify for tax credits linked to domestic battery production. In a recent earnings call, Tesla’s Vice President of Supply Chain, Karn Buhiraj, reassured stakeholders that the company is not currently constrained on battery supply, although challenges remain for the Tesla Energy segment due to tariffs.
However, this strategic push is occurring in a broader context where rivals like Honda, Toyota, and Nissan are scaling back their own battery investments, reflecting an industry-wide slowdown. Despite these challenges, Tesla has increasingly moved away from sourcing batteries from China, which had previously included supplies for the Model 3, to align itself better with domestic policies and support its U.S. manufacturing ambitions.
Panasonic, while aiming to strengthen its foothold in the U.S. market, is also undergoing a significant restructuring, planning to cut 10,000 jobs and restructure its operational framework to focus on profitability. This major transformation forms part of a larger strategy to reclaim market share lost to competitors, particularly Chinese and Korean manufacturers. The energy segment, primarily driven by its partnership with Tesla, is expected to remain a bright spot, with forecasts suggesting a 39% increase in profitability by the fiscal year ending March 2026.
As Panasonic accelerates operations in Kansas, it not only reinforces its alliance with Tesla but also fortifies its position against the evolving landscape of battery production—a landscape marked by environmental policies, consumer expectations, and the need for resilient supply chains. Both companies are thus positioning themselves not merely to survive but to thrive in an increasingly competitive market for affordable electric vehicles, navigating complex trade barriers while aligning with domestic consumer needs.
In this context, the interplay between Panasonic’s production capabilities in Kansas and Tesla’s ambitious growth strategies will be pivotal, not just for their respective futures, but for the broader narrative of the American electric vehicle industry.
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Source: Noah Wire Services
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