Energy
Thursday, July 14th, 2022 12:54 am EDT
Panasonic is likely to invest up to $4 billion into a new factory for Tesla batteries in Kansas.
It’s all about the batteries. While there are other supply chain challenges lately, the number one barrier to faster electric vehicle sales growth year after year is lack of batteries. That goes for Tesla as well as other automakers. Tesla sales have been growing like gangbusters, but new orders won’t be delivered for about a year due to the company’s large supply–demand imbalance. The solution: more battery factories!
Kansas Governor Laura Kelly, eager to take credit for the factory that is no doubt coming to her state in part because of cheap labor, announced the new factory yesterday. The battery factory, to be located in De Soto, Kansas, is expected to create 4,000 jobs in the community — at retailers, in the service sector, among suppliers, etc. It is also projected that the factory will lead to 16,500 construction jobs. If true, that will make it the largest economic development project in Kansas not just this year, not just this decade, not just this century, but in all of Kansas history. (Side note: Kansas is not known for large economic development projects. It’s better known for its wheat, corn, sorghum, and soybeans.)
The factory is not fully approved yet, though, as the board of directors of Panasonic Holdings Corporation still needs to approve the project. Why Governor Laura Kelly came out and announced the project before that happened is unclear. Perhaps she was just keen to break the news before anyone else leaked it (and claim credit), or perhaps it’s a way of pressuring the Panasonic board to approve the project.
The batteries produced in Kansas will surely be sent to Tesla Giga Texas to be put into electric cars, trucks, and SUVs built there.
“As the largest private investment in Kansas history and one of the largest EV battery manufacturing plants of its kind in the country, this project will be transformative for our state’s economy, providing in total 8,000 high-quality jobs that will help more Kansans create better lives for themselves and their children,” said Kansas Governor Laura Kelly. “Winning this project shows that Kansas has what it takes to compete on a global scale — and that our pro-business climate is driving the technological innovation needed to achieve a more prosperous and sustainable future.”
Again, cheap labor is likely also at play — like it is in places like China and Taiwan. Getting away from coastal states requires less in employee expenditures and thus lower production costs and higher profits.
Additionally, Kansas is becoming a bit of a battery manufacturing hub. It already employs 1,300 people in the battery manufacturing sector, and it “ranked second in the nation for employment and wage concentration in the sector in 2021.” Presumably, it only trails Nevada, where Tesla built its first battery gigafactory.
“With this major development, Kansas is being recognized around the world for our talented workforce, innovative environment, and quality of life,” said U.S. Senator Jerry Moran. Or something like that. “Panasonic will bring thousands of good-paying, high-quality jobs to our state which will be a massive economic benefit for local businesses and our communities for decades to come. With the goal of making Kansas a destination for industry, defense, education, science, technology, engineering, and innovation, we will keep our students, their knowledge and intellect in Kansas.” That is certainly true.
The Midwestern state politicians were eager to highlight all kinds of good stats in this once-in-a-lifetime announcement. As part of that, they highlighted that Kansas is more broadly becoming a bit of a tech center in the Midwest, with growing numbers of tech jobs in the Kansas City region. “The Kansas City region is the third fastest-growing tech market in the U.S. and is a nucleus of engineering, technology, and automotive manufacturing expertise. With a strong talent pipeline and cutting-edge training programs, the Kansas City market employs nearly 21,000 workers who contribute to the $19 billion KC transportation manufacturing industry.” Third fastest-growing tech market? Okay, Kansas definitely deserves some credit for doing something right and attracting tech businesses, researchers, and employees to the Sunflower State.
The announcement adds that Panasonic Energy has produced and shipped more than 6 billion battery cells in the USA. That’s billion with a “b.”
One of the best things about an announcement like this is it provides the opportunity to inform — through words, jobs, and real-world visibility — much more of the public that the future is electric. Growing awareness of the transition to electric vehicles leads to growing consumer interest, which leads to more battery factories. “The electric vehicle industry is expected to grow eight times its size in less than 10 years, which is an incredible opportunity for states, communities and energy partners to support leading, innovative technology companies,” David Campbell, President and CEO of Evergy, pointed out. On behalf of our region’s business community, we are very excited to welcome Panasonic Energy to Kansas and the Kansas City Region, and we look forward to supporting your long-term success.” While Evergy sounds like an EV-related company or organization, it’s actually the utility company in that region. Surely, Evergy lobbied a bit to get this factory in town and is happy to chime in about the EV revolution that is underway.
As a final note, while skimming the list of people and companies involved in pulling Panasonic to Kansas, I thought it was interesting to see Rahm Emanuel, U.S. Ambassador to Japan and former Chief of Staff to President Barack Obama, mentioned. In this era of extreme political polarization, it’s good to see a high-profile Democrat working hard to help a Red state get a giant battery factory. Here’s the full list of key supporting organizations and people the Kansas Department of Commerce credits with landing the factory: “The following organizations supported the recruitment of Panasonic Energy to Kansas: Kansas Department of Commerce; Kansas Department of Transportation; Kansas Department of Health and Environment; Kansas Department of Children and Families; the Honorable Rahm Emanuel, U.S. Ambassador to Japan; the U.S. Embassy to Tokyo; Kansas Children’s Cabinet and Trust Fund; City of De Soto; De Soto Economic Development Council; Evergy; Sunflower Development Group; KC SmartPort; Johnson County Community College; Kansas City, Kansas Community College; Peaslee Tech; University of Kansas; Ewing Marion Kauffman Foundation; and Kansas City Area Development Council.”
Kudos to Kansas. Let’s see how long it takes them to start digging once Panasonic officially approves the deal.
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