By Kashmira Konduparty
Panasonic Holdings plans to localize its U.S. supply chain for energy storage systems as it prepares to manufacture battery cells for data centers at its Kansas facility, Chief Executive Yuki Kusumi said Tuesday, as the company seeks to capitalize on surging electricity demand driven by artificial intelligence.
The Japanese electronics and battery maker is shifting part of its focus from electric vehicle batteries to energy storage systems as slowing demand in the U.S. EV market coincides with rapid expansion of AI-powered data centers. Panasonic announced earlier this month that it will begin mass production of battery cells for data center applications at its Kansas plat during the fiscal year ending March 2029.
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Speaking to reporters, Kusumi said the company intends to build a domestic supply chain in the United States because most of its customers for the new business are based there. “Since our customers are in the U.S., it makes sense to localize the supply chain,” he said.
The Kansas facility currently manufactures cylindrical lithium-ion batteries primarily for electric vehicles, including those supplied to Tesla. Panasonic plans to adapt part of the plant’s production capacity to manufacture batteries designed for distributed energy storage systems that help stabilize electricity demand at individual AI servers and data centers.
Unlike many competitors entering the energy storage market, Panasonic said it does not intend to manufacture lower-cost lithium iron phosphate (LFP) batteries, which are commonly used in large centralized storage projects. Instead, the company will continue focusing on nickel-rich battery technology, which it believes is better suited for distributed systems requiring higher energy density and performance.
The strategy reflects a broader shift across the automotive and battery industries. As electric vehicle sales growth has slowed in several markets, manufacturers are increasingly repurposing existing battery production facilities to serve the rapidly expanding AI infrastructure sector, where data centers require substantial backup power and energy management systems.
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Panasonic has committed about 350 billion yen (approximately $2.2 billion) to expand its energy storage business as part of a larger investment in AI-related infrastructure. The company is also planning a third battery manufacturing facility in Mexico to support future production of energy storage systems.
Kusumi also addressed concerns over geopolitical tensions and supply chains saying Panasonic has not experienced significant disruptions in obtaining materials from China despite recent export restrictions imposed by Beijing on some companies. He noted thar Panasonic has not been included on China’s export control list and continues to secure the materials needed for production.