Panasonic Plans U.S. Battery Plant to Supply Tesla, NHK Says

(Bloomberg) -- Panasonic Corp. plans to build a U.S. factory to supply Tesla Inc. with lithium-ion batteries, Japanese national broadcaster NHK reported, seeking to ramp up production to meet anticipated demand for electric vehicles.

The Japanese electronics conglomerate is looking at sites in Oklahoma and Kansas to build the plant, NHK reported, citing a person it didn't identify source. Tesla is bringing a new factory online in nearby Texas, where it recently established a new headquarters in Austin.

Panasonic a longstanding relationship with Tesla, with the two companies jointly operating the massive battery plant known as the Gigafactory outside of Reno, Nevada. The batteries to be built in any new U.S. factory will probably be 4680 cells, a new type that's bigger with a 46-millimeter diameter and 80-millimeter height. Because of their higher capacity, fewer are needed for EVs, making it possible to build cars more cheaply with a longer range.

Yayoi Watanabe, a spokeswoman for Osaka-based Panasonic, said that the NHK report wasn't based on information by the company.

Panasonic is seeking to bolster its ability to produce batteries that enable EVs with a longer driving range and is considering spending “several hundreds of billions of yen” on the factory, according to NHK.

Earlier this week, Panasonic said it will start mass production of 4680 batteries in the fiscal year ending March 2024, with plans to establish two additional production lines as well as facilities at its Wakayama factory in western Japan.

Tesla Chief Executive Officer Elon Musk has called the batteries a “massive breakthrough” in technology that will make it possible for his company to produce EVs that sell for $25,000. While Tesla plans to make the cells in-house, it has asked Panasonic to begin producing them as well. Panasonic also intends to sell the batteries to automakers other than just Tesla.

The carmaker has an insatiable need for batteries. It has begun making its own battery cells on a pilot line in Fremont, California, while continuing to rely on outside suppliers like Panasonic, China's Contemporary Amperex Technology Co. and South Korea's LG Energy Solution Ltd.

There's been a slew of announcements by major automakers in recent months to ramp up capacity to manufacture batteries for the coming wave of EVs. In December, Toyota Motor Corp. said it will open its first battery factory in the U.S. in North Carolina, investing $1.29 billion with plans to start production in 2025.