photo by: John English/Journal-World

The Panasonic battery plant in De Soto is pictured on Sept. 9, 2024.

Panasonic has announced plans to repurpose production lines inside its U.S. plants, including De Soto, in order to produce energy storage systems for data centers. Currently, the De Soto facility makes batteries for electric vehicles.

A Panasonic spokesperson told the Journal-World that the company is still in the beginning stages of planning its data center battery cell production in Kansas. However, this effort is a part of $2.18 billion-dollar global investment, and the first data center battery cells are anticipated to be produced in mid-to-late 2028 or early 2029. Panasonic has one other plant in the U.S. located in Sparks, Nevada.

The move to build battery systems for data centers is following changes to federal consumer tax credits and a drop in consumer electric vehicle sales. Companies across the country are beginning to accommodate their massive manufacturing capacity to meet the demand from hyperscale data centers. Similarly, General Motors has expanded into data center power and paused EV battery production.

“Panasonic Energy is constantly evaluating new opportunities to deliver high-quality products to the market,” the spokesperson said via email. “In addition to meeting our existing EV battery customer commitments, we are exploring options to use some of our U.S. production capacity to address the growing need for data center energy storage.”

The Journal-World inquired about the data center clients Panasonic is intending to work with, but officials did not answer that question.

As the Journal-World reported, nearly 5 million-square-feet of the electric vehicle battery factory opened in De Soto, about 20 minutes east of Lawrence, last July. Currently, the Panasonic plant is operating at half of its capacity with four production lines. Once construction is fully complete, the plant will house eight production lines.

The plant is widely considered to be the largest private economic development project in Kansas’ history. The project has received millions in financial incentives from the State of Kansas to locate the project to De Soto.

The spokesperson said the ramp up for EV battery cell production at the De Soto facility will continue to be determined by customer demand. The Journal-World asked how many production lines will support EV battery cell production vs. data center energy storage, but they did not answer the question.

“Panasonic Energy built our wholly owned lithium-ion battery facility in Kansas as part of our long-term commitment to investing in American manufacturing and advancing the EV industry in the U.S.,” the spokesperson said via email. “This facility is designed to be agile and responsive to the market and our diverse customers’ needs.”

De Soto has already attracted the attention of two companies proposing data center projects in the area, and one of them wants to build next to the Panasonic plant, as the Journal-World reported.

Data center projects have been popping up across the state, though, after the Kansas Legislature passed Senate Bill 98 last year. The law created a 20-year sales and use tax exemption for data centers that invest at least $250 million and create at least 20 jobs within five years. With some data center construction easily topping $100 million, the state incentive allows companies to save millions of dollars by avoiding sales taxes on the materials needed to build the centers.