Panasonic's Pivot: A New Era for U.S. EV Battery Production
Monday, Jan 6, 2025 11:27 pm ET
TSLA --
In the ever-evolving landscape of electric vehicle (EV) production, one name stands out as a critical player: Panasonic Energy. As a key supplier to Tesla, Panasonic has been at the forefront of battery technology and production. However, recent developments have led the company to reevaluate its supply chain strategy, with a focus on reducing dependence on Chinese suppliers for U.S.-made batteries. This shift, as stated by Allan Swan, President of Panasonic Energy of North America, is a "No.1 objective" for the company.

The decision to diversify Panasonic's supply chain comes in response to incoming President Donald Trump's pledge to raise tariffs on Chinese goods. This move has forced companies worldwide to reassess their manufacturing processes and consider alternative sources for critical components. By eliminating its supply-chain dependence on China, Panasonic aims to avoid potential tariff-related cost increases and maintain a competitive pricing strategy for its customers, including Tesla.
Panasonic's commitment to this objective is evident in its expansion plans within the United States. The company operates a plant in Nevada and plans to open a second U.S. factory in Kansas this year. This expansion will not only help Panasonic reduce its dependence on Chinese suppliers but also increase its production capacity in the United States. Additionally, Panasonic is considering a third plant in the U.S., further solidifying its commitment to domestic production.
As Panasonic works to secure a stable and diverse supply chain for its EV batteries in the U.S., it must balance the need for cost-efficiency with the desire for a more resilient and diversified supply chain. To achieve this, Panasonic is investing in new technology, such as improving the energy density of its 2170 battery cells, which will reduce manufacturing costs and result in an overall price drop for Tesla. Furthermore, Panasonic is exploring partnerships with other automakers, such as Mazda and Subaru, to diversify its customer base and reduce reliance on a single client.
In conclusion, Panasonic's shift in supply chain strategy, driven by the need to reduce dependence on Chinese suppliers, is a strategic move that will help the company maintain a competitive edge in the U.S. EV market. By expanding its production capabilities, investing in new technology, and diversifying its customer base, Panasonic is well-positioned to navigate the changing market landscape and continue its success as a key player in the EV industry.