Panasonic to localize data center battery production in the US

Japanese company Panasonic plans to begin mass production of battery cells for data centers in Kansas by fiscal year 2028, redirecting a large portion of its investment in AI infrastructure toward storage.

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Panasonic plans to localize production of battery cells for data centers in the United States, manufacturing the cells at a factory in Kansas rather than shipping them, as the company pursues a market that almost didn't exist a few years ago.

Mass production at the Kansas plant is scheduled for the fiscal year ending March 2029, which Panasonic estimates as fiscal year 2028. The plant gives the company a domestic base to directly supply American data center operators, a significant advantage at a time when tariffs, supply chain stress and the speed of AI development have made domestic production a competitive asset rather than a cost to be minimized.

Panasonic is directing about 350 billion yen, or about $2.18 billion, of a previously announced 500 billion yen investment in AI infrastructure over fiscal years 2026 to 2028 to its Energy unit, the division that also supplies Tesla, with the remaining 150 billion yen going to its Industry division. That allocation shows where the company believes growth lies: the battery business that grew around electric vehicles is being reshaped to power server rooms.

Panasonic Energy CEO Kazuo Tadanobu described the data center energy storage unit’s sales target of 950 billion yen for fiscal 2028 as a “minimum commitment,” with the company aiming to surpass 1 trillion yen. That formulation as a baseline rather than a target indicates how quickly the company expects demand to grow.

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The logic is based on how modern data centers actually work. The facilities that train and serve AI models draw huge, spiked loads and cannot tolerate a single moment of downtime, making large-scale storage essential to smooth supply, bridge outages, and manage the gap between what the network can deliver and what the racks require at any given time.

As AI's computing power increases, the storage associated with it also increases.

The cells needed in these facilities also have different specifications than those installed in cars, tailored for grid-type duty cycles rather than the range and weight constraints of a vehicle. This is part of the reason why an established battery manufacturer still has to build special capacity rather than simply reusing its existing lines.

This demand is already straining the systems around it. The growth has pushed power grids to their limits, with operators from Denmark halting new connections and China struggling with how to match clean energy with data center load, making on-site storage less of a luxury and more of a requirement. Batteries are becoming part of the core AI infrastructure, not an optional add-on added at the end.

Panasonic is not entering a vacuum. Chinese battery giants, including CATL, are rapidly entering the same data center storage market, and the competition is running parallel to the broader race for silicon inside those facilities, where Chinese companies are pushing homegrown alternatives to Nvidia at a rapid pace. The energy layer of the AI ​​stack is becoming as competitive as the compute layer.

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The U.S. plant is a hub in a wider network. Panasonic Energy is also planning a third plant in Mexico, with mass production also targeted for fiscal year 2028, giving it capacity in North America on both sides of the border.