At Panasonic’s massive battery plant in De Soto on Monday, Kansas political leaders stood beside Japanese dignitaries on stage with wooden mallets in their hands.
They huddled together to perform “kagami wari,” a Japanese ceremony marking new beginnings. On the count of three, they plunged their mallets into white wooden sake casks, “Panasonic Energy” labels facing out.
The event drew lawmakers at every level, foreign media and major business leaders to celebrate the start of production. Officials said batteries started rolling down the line a week ago with 1,100 workers hired so far.
The company aims to employ 4,000 people by the end of 2026. And Democratic Gov. Laura Kelly said the plant is expected to bring $2.5 billion of economic activity to the state each year.
Republican U.S. Senator Jerry Moran said the development represented the largest private investment in state history.
“This is a day of joy,” he said. “This is a major accomplishment for Panasonic and for the state of Kansas.”
That cheerful mood prevailed despite serious headwinds in the electric vehicle industry, which some fear could keep the 4.7 million-square-foot battery factory from reaching its full potential — and its hiring goals.
Tesla, tariffs and taxes
Republican President Donald Trump has threatened tariffs that would make it more expensive to manufacture EVs. Tesla, the nation’s largest EV maker, recently saw its profits dip amid CEO Elon Musk’s involvement with the Trump administration’s sweeping funding cuts and federal employee layoffs.
And as part of Trump’s seismic tax and spending bill that recently passed, a $7,500 tax credit for EV purchasers will end in September. Those tax credits were created during Democratic President Joe Biden’s term.
Allan Swan, President of Panasonic Energy North America, told reporters that turbulence in the EV market is to be expected.
“We're in a brand new industry,” he said. “So that industry's going to ebb and flow a little bit as she grows — and she will grow.”
At full capacity, Swan said the facility will produce 70 batteries per second for Tesla, Toyota, Lucid, Hexagon Purus and Harbinger Motors.
As for concerns about tariffs on products used to manufacture batteries, especially from China, Swan said Panasonic is working on finding more options to create “a stronger supply chain.”
De Soto Mayor Rick Walker shared Swan’s optimism for the long-term health of the EV industry. To take advantage of the tax credit before it expires, Walker recently bought an EV of his own — though he went for a cheaper option than a Tesla.
“I really like the car, even if I don't like the guy that is the front for it,” he said, referring to Musk.
A good deal?
Lt. Gov. David Toland, a Democrat who doubles as the Kansas commerce secretary, said he’s not concerned about current economic conditions because the EV industry has grown overall.
“We think that's going to continue in North America and, long term, this facility is going to be a huge win for the people of Kansas,” he said.
In 2022, Kansas offered $829 million in tax incentives to convince the tech giant to build its newest, largest battery plant in the state. That includes $500 million in tax credits in exchange for the company spending $4 billion to build the plant.
The city of De Soto later signed a separate tax incentive agreement to help fund the construction of public infrastructure needed to operate the plant.
Skeptics say deals like that often weigh heavily in businesses’ favor, without providing enough assurance that beneficiaries will provide high-quality jobs and investments in return.
In Kansas’ agreement with Panasonic, the company must spend a certain amount and stay in the state for 15 years to earn the full extent of the discounts on offer. Tax incentives at the local level require Panasonic to hire at least 2,500 full-time employees.
That deal was reached during a competition between Kansas and Oklahoma for the project. Toland said the incentives are a necessary burden for states looking to lure economic investment.
“Every single state in the country has incentives to attract and retain businesses,” Toland said. “So the notion that we should simply step away and put down all of our weapons while other states are fully armed, I think is not wise.”
Zane Irwin reports on politics, campaigns and elections for the Kansas News Service. You can email him at zaneirwin@kcur.org.
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