1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,840 --> 00:00:10,440 Speaker 2: This is a four point seven million square feet facility 3 00:00:10,600 --> 00:00:14,520 Speaker 2: that at full capacity thirty gig or what hours, enough 4 00:00:14,560 --> 00:00:17,400 Speaker 2: for five hundred thousand evs, but animal powered by these 5 00:00:17,440 --> 00:00:20,360 Speaker 2: little guys twenty one to seventy cells. And we're delighted 6 00:00:20,400 --> 00:00:23,520 Speaker 2: to be joined by Panasonic Corporation of North America CEO 7 00:00:23,920 --> 00:00:27,080 Speaker 2: Megan meong on Lee, regular contributor to the show. But 8 00:00:27,240 --> 00:00:29,120 Speaker 2: this was the moment you and I talked about it 9 00:00:29,160 --> 00:00:33,000 Speaker 2: earlier in the year. What does it mean for Panasonic 10 00:00:33,080 --> 00:00:37,280 Speaker 2: in America and American manufacturing of battery technology? 11 00:00:37,760 --> 00:00:40,159 Speaker 3: So this is more than a ten year vision. We 12 00:00:40,200 --> 00:00:42,320 Speaker 3: wanted to do this and we wanted to go big 13 00:00:42,360 --> 00:00:45,280 Speaker 3: in this market. So we had a commitment and we 14 00:00:45,400 --> 00:00:49,680 Speaker 3: started in Reno and Nevada and this is our factory 15 00:00:49,760 --> 00:00:53,080 Speaker 3: that we're diversifying our EV strategy and we're going to 16 00:00:53,159 --> 00:00:56,800 Speaker 3: be full production this year and it's really exciting. Today's 17 00:00:56,800 --> 00:01:00,480 Speaker 3: a fun and exciting day, and this is a celebration. 18 00:01:00,160 --> 00:01:03,120 Speaker 2: Full production this year, so sales are already coming off 19 00:01:03,120 --> 00:01:06,360 Speaker 2: the line. Could you just explain the roadmap for the ramp, 20 00:01:06,400 --> 00:01:09,520 Speaker 2: because no facility is straightforward, but this is the size 21 00:01:09,520 --> 00:01:12,319 Speaker 2: of two hundred American football fields. How are you going 22 00:01:12,360 --> 00:01:13,759 Speaker 2: to get to full capacity this year? 23 00:01:14,200 --> 00:01:18,360 Speaker 3: So we started in November twenty twenty two, two and 24 00:01:18,400 --> 00:01:21,440 Speaker 3: a half years ago, and it was all flat field 25 00:01:21,800 --> 00:01:25,160 Speaker 3: and it was a massive land and we started the 26 00:01:25,200 --> 00:01:30,920 Speaker 3: construction and we started the production and testing last week. 27 00:01:31,120 --> 00:01:34,680 Speaker 3: And we're going to produce the batteries this year. And 28 00:01:35,120 --> 00:01:37,320 Speaker 3: you probably saw the cars that we have in Display 29 00:01:37,560 --> 00:01:41,880 Speaker 3: and Tesla, Lusid and Hexagon truck and we're really excited 30 00:01:41,920 --> 00:01:48,320 Speaker 3: to work with different suppliers and partners and clients this year. 31 00:01:48,400 --> 00:01:51,160 Speaker 2: We're going to discuss in detail those customers. They're really 32 00:01:51,280 --> 00:01:55,040 Speaker 2: key to this. There were media reports Friday night that 33 00:01:55,080 --> 00:01:57,880 Speaker 2: there would be a delay in reaching full capacity and 34 00:01:57,920 --> 00:02:00,000 Speaker 2: what the report stated was that was due to demand. 35 00:02:00,560 --> 00:02:02,840 Speaker 2: Are you able to comment on that report? And it 36 00:02:02,960 --> 00:02:05,360 Speaker 2: sounds like they were misinformed. If you are going to 37 00:02:05,400 --> 00:02:08,400 Speaker 2: hit full capacity this year, I. 38 00:02:08,280 --> 00:02:12,720 Speaker 3: Do think it was misinformed and very We're a Japanese 39 00:02:12,720 --> 00:02:16,280 Speaker 3: company and when we say when we commit to something, 40 00:02:16,680 --> 00:02:19,280 Speaker 3: we're fully committed and we want to make sure that 41 00:02:19,360 --> 00:02:22,639 Speaker 3: we support all the customers that were committed. We're not 42 00:02:22,760 --> 00:02:27,320 Speaker 3: feeling the slow down yet and we're very bullish on 43 00:02:27,760 --> 00:02:29,280 Speaker 3: working with all those customers. 44 00:02:29,520 --> 00:02:32,040 Speaker 2: When you say you're not feeling the slow down, that 45 00:02:32,160 --> 00:02:35,519 Speaker 2: means that you're seeing consistent orders from those key customers 46 00:02:36,040 --> 00:02:38,440 Speaker 2: or they're still committing to orders in advance. 47 00:02:38,520 --> 00:02:40,520 Speaker 1: What do you mean by the definition of what you 48 00:02:40,600 --> 00:02:40,960 Speaker 1: just said. 49 00:02:41,240 --> 00:02:44,760 Speaker 3: So we have the operation in Reno and that's going 50 00:02:44,880 --> 00:02:47,720 Speaker 3: very healthy, and we're seeing the commitments coming in for 51 00:02:47,880 --> 00:02:52,520 Speaker 3: this facility as well. So we're not feeling the slow 52 00:02:52,560 --> 00:02:56,320 Speaker 3: down yet. But yet again, I mean, you see this operation, 53 00:02:56,560 --> 00:02:59,520 Speaker 3: this is a long term commitment, so there are may 54 00:02:59,560 --> 00:03:04,200 Speaker 3: be some pushback or moving ahead, or we're committed for 55 00:03:04,240 --> 00:03:07,160 Speaker 3: a long term and we're not shying away from those 56 00:03:07,600 --> 00:03:09,040 Speaker 3: from time to time challenges. 57 00:03:09,639 --> 00:03:11,679 Speaker 2: Throughout the morning, there was a lot of discussion about 58 00:03:11,720 --> 00:03:15,040 Speaker 2: Tesla because Tesla makes the best selling ev model in 59 00:03:15,080 --> 00:03:20,440 Speaker 2: the world this specific facility, does Tesla dominate the proportion 60 00:03:20,560 --> 00:03:23,400 Speaker 2: of output or is it more evenly split across your 61 00:03:23,400 --> 00:03:24,240 Speaker 2: different customers. 62 00:03:25,080 --> 00:03:27,919 Speaker 3: So we're working with Tesla for sure, and we're working 63 00:03:27,960 --> 00:03:31,840 Speaker 3: with Lucid and Hexagon and other clients. So it is 64 00:03:31,880 --> 00:03:36,360 Speaker 3: to diversify our EVN manufacturing in the United States. 65 00:03:36,600 --> 00:03:39,000 Speaker 2: What do you mean by diversify move away from one 66 00:03:39,040 --> 00:03:40,520 Speaker 2: sort of core customer. 67 00:03:40,320 --> 00:03:43,960 Speaker 3: No, not really. We're expanding right so we're definitely working 68 00:03:43,960 --> 00:03:46,920 Speaker 3: with Tesla, but we want to work with other establish 69 00:03:47,000 --> 00:03:51,280 Speaker 3: the OEMs as well as startups. So it's part of 70 00:03:50,000 --> 00:03:55,360 Speaker 3: our efforts to expand our strategy and manufacturing output as well. 71 00:03:55,840 --> 00:03:59,640 Speaker 2: What signals has Tesla given you about its future orders, 72 00:03:59,640 --> 00:04:01,920 Speaker 2: about the health of its business. 73 00:04:01,960 --> 00:04:04,760 Speaker 3: Your guess is as good as mine. But we have 74 00:04:04,840 --> 00:04:07,720 Speaker 3: a long term relationship, longer than anyone else, and there's 75 00:04:07,760 --> 00:04:11,320 Speaker 3: still a very important strategic partner for us, and I 76 00:04:11,480 --> 00:04:13,560 Speaker 3: believe our partnership is very strong. 77 00:04:14,240 --> 00:04:16,520 Speaker 2: Throughout the morning, there was a lot of discussion of 78 00:04:16,720 --> 00:04:21,760 Speaker 2: how Kansas was the absolute best candidate. What were the 79 00:04:21,800 --> 00:04:26,160 Speaker 2: biggest factors in choosing this site? Were they financial? Were 80 00:04:26,160 --> 00:04:29,719 Speaker 2: they simply the ability to get things done? Lack of 81 00:04:29,760 --> 00:04:31,960 Speaker 2: red tape? Why were you able to move so quickly? 82 00:04:32,400 --> 00:04:37,279 Speaker 3: So we talked about the available workforce and the infrastructure. 83 00:04:37,360 --> 00:04:40,520 Speaker 3: I mean you saw the power lines built by the 84 00:04:40,560 --> 00:04:45,839 Speaker 3: factory and as well as the energy procurement that we 85 00:04:45,880 --> 00:04:49,280 Speaker 3: can do. But more than anything, there was something very 86 00:04:49,320 --> 00:04:53,120 Speaker 3: special about Kansas. All the officials were able to work 87 00:04:53,160 --> 00:04:57,080 Speaker 3: with us, and you probably heard that Lautana Governor Toland 88 00:04:57,640 --> 00:05:00,719 Speaker 3: taking some of his speech in not only Japanese but 89 00:05:00,960 --> 00:05:06,240 Speaker 3: Osaka dialect, and that level of insights and care and 90 00:05:06,279 --> 00:05:10,159 Speaker 3: support really made the difference. And it doesn't matter what 91 00:05:10,320 --> 00:05:14,880 Speaker 3: party they are, they're very committed to bring us here 92 00:05:15,240 --> 00:05:19,960 Speaker 3: but also make us feel home. So that kind of partnership, 93 00:05:20,040 --> 00:05:25,560 Speaker 3: not just numbers and infrastructure, but emotional partnership made the 94 00:05:25,560 --> 00:05:28,080 Speaker 3: difference and we're so happy to celebrate today. 95 00:05:28,160 --> 00:05:29,359 Speaker 2: What I was going to say on the numbers is 96 00:05:29,400 --> 00:05:32,719 Speaker 2: there is a job creation story. It's four thousand direct jobs. 97 00:05:32,800 --> 00:05:35,880 Speaker 2: I think the number is twenty thousand indirect jobs. When 98 00:05:35,880 --> 00:05:40,320 Speaker 2: you take into account supply chain construction, what have you 99 00:05:40,400 --> 00:05:43,479 Speaker 2: had to do to kind of bring the other infrastructure 100 00:05:43,480 --> 00:05:47,359 Speaker 2: you've needed to de Soto have everything you need around you? 101 00:05:47,920 --> 00:05:51,240 Speaker 3: So what was great about planning it out? Like I said, 102 00:05:51,240 --> 00:05:54,000 Speaker 3: we started two and a half years ago, and at 103 00:05:54,040 --> 00:05:57,520 Speaker 3: that time we worked with local schools and community colleges 104 00:05:57,600 --> 00:06:01,720 Speaker 3: to create curriculums so when missed for manufacturing, they are 105 00:06:01,760 --> 00:06:05,400 Speaker 3: there already already taking the courses and be available to 106 00:06:05,520 --> 00:06:06,120 Speaker 3: take a job. 107 00:06:06,160 --> 00:06:07,920 Speaker 1: To guarantee you had the skill sets. 108 00:06:07,880 --> 00:06:11,720 Speaker 3: Absolutely absolutely, So we created curriculum together and it's been 109 00:06:11,760 --> 00:06:14,919 Speaker 3: a really good partnership and it helps us and it 110 00:06:15,000 --> 00:06:17,200 Speaker 3: helps the community and it's like wonderful win win. 111 00:06:17,640 --> 00:06:21,279 Speaker 2: The headline figure was that Panasonic put four billion dollars 112 00:06:21,720 --> 00:06:25,320 Speaker 2: into this foot to Sodo facility. But you also the 113 00:06:25,360 --> 00:06:28,560 Speaker 2: reported number is eligible for almost seven billion dollars from 114 00:06:28,560 --> 00:06:29,760 Speaker 2: the Inflation Reduction Act. 115 00:06:30,080 --> 00:06:31,680 Speaker 1: How much of that materialized. 116 00:06:32,960 --> 00:06:36,440 Speaker 3: We haven't started the manufacturing here, so we have not 117 00:06:36,640 --> 00:06:38,240 Speaker 3: seen the incentives yet. 118 00:06:38,760 --> 00:06:40,120 Speaker 1: They're setting against milestones. 119 00:06:40,200 --> 00:06:44,039 Speaker 3: Yes, yes, so it comes with the production. So we're 120 00:06:44,080 --> 00:06:46,360 Speaker 3: looking forward to it and it's definitely a big part 121 00:06:46,400 --> 00:06:47,279 Speaker 3: of our investment. 122 00:06:47,480 --> 00:06:49,800 Speaker 2: Do you anticipate that you will get access to the 123 00:06:50,120 --> 00:06:51,240 Speaker 2: full tranche of money? 124 00:06:51,320 --> 00:06:52,200 Speaker 3: We certainly hope. 125 00:06:52,240 --> 00:06:55,039 Speaker 2: So things have changed, I mean things have changed even 126 00:06:55,080 --> 00:06:56,880 Speaker 2: since you and I spoke in January. 127 00:06:58,080 --> 00:06:58,760 Speaker 1: There is some. 128 00:06:59,160 --> 00:07:04,279 Speaker 2: Effort underway to reshape or or undo the Inflation Reduction Act. 129 00:07:05,040 --> 00:07:06,760 Speaker 1: It seems like the seventy five. 130 00:07:06,640 --> 00:07:09,920 Speaker 2: Hundred dollars credit which goes to the consumer on the vehicle, 131 00:07:10,360 --> 00:07:14,440 Speaker 2: will go, but the forty five x manufacturer credits seems intact. 132 00:07:15,240 --> 00:07:17,600 Speaker 1: How have you navigated that? Is that you'll read on 133 00:07:17,640 --> 00:07:18,760 Speaker 1: the scenario as well. 134 00:07:18,960 --> 00:07:21,680 Speaker 3: So we're very still a vehicle fall that should remain 135 00:07:22,120 --> 00:07:25,559 Speaker 3: and I think it should remain it's not only for us, 136 00:07:25,880 --> 00:07:29,560 Speaker 3: but it's for creating jobs and manufacturing and bringing technology 137 00:07:29,800 --> 00:07:34,520 Speaker 3: to us. So so far it's very positive and we're 138 00:07:34,560 --> 00:07:36,280 Speaker 3: hopeful that its stay is it will be a big 139 00:07:36,320 --> 00:07:39,160 Speaker 3: part of our long term strategy. 140 00:07:39,800 --> 00:07:43,080 Speaker 2: What's the supply chain story right now for DeSoto, Kansas? 141 00:07:43,160 --> 00:07:46,000 Speaker 2: When you think about your raw material needs and everything 142 00:07:46,000 --> 00:07:49,080 Speaker 2: that goes into the cell process, are there things that 143 00:07:49,120 --> 00:07:50,000 Speaker 2: are still difficult? 144 00:07:50,040 --> 00:07:50,720 Speaker 1: What are they? 145 00:07:51,200 --> 00:07:57,280 Speaker 2: Or has bringing this facility online been smoother because of policy? 146 00:07:57,760 --> 00:08:02,640 Speaker 3: We have been planning for the supply chain resilience, not 147 00:08:02,960 --> 00:08:08,679 Speaker 3: just for this and recent terrificuation, but from COVID. During COVID, 148 00:08:08,760 --> 00:08:12,120 Speaker 3: we really suffered from weak supply chain. I mean, I 149 00:08:12,120 --> 00:08:14,800 Speaker 3: think all the industry did, and so did we. So 150 00:08:14,840 --> 00:08:18,239 Speaker 3: we've been planning for supply chain resilience and we are 151 00:08:18,360 --> 00:08:20,600 Speaker 3: I mean just for our benefit too, to make sure 152 00:08:20,600 --> 00:08:25,760 Speaker 3: that those supply chains stay local and within the North America. 153 00:08:26,000 --> 00:08:29,600 Speaker 3: And our goal is to complete fifty percent of our 154 00:08:29,680 --> 00:08:32,520 Speaker 3: supply chain by twenty thirty to be completely local. 155 00:08:33,160 --> 00:08:36,240 Speaker 2: Are any of the conditions currently associated with that forty 156 00:08:36,280 --> 00:08:40,760 Speaker 2: five x manufacturer credit difficult? When you think about foreign 157 00:08:40,840 --> 00:08:43,800 Speaker 2: entity of concern or parts of the supply chain, which 158 00:08:43,840 --> 00:08:46,920 Speaker 2: in the context of metals like China, is still a factor. 159 00:08:47,000 --> 00:08:52,079 Speaker 3: Yes, yes, yes, so we started partnering with China and 160 00:08:52,360 --> 00:08:56,160 Speaker 3: we are for the supply chain resilience. We are trying 161 00:08:56,200 --> 00:08:59,839 Speaker 3: to diversify and make sure that supply chain is more 162 00:09:00,120 --> 00:09:03,679 Speaker 3: Zulians to make sure that we can procure and process 163 00:09:03,800 --> 00:09:07,800 Speaker 3: on site. So it's not really a new change for 164 00:09:07,960 --> 00:09:10,480 Speaker 3: us necessarily, We've been trying to do that for a 165 00:09:10,480 --> 00:09:11,120 Speaker 3: few years. 166 00:09:11,440 --> 00:09:15,800 Speaker 1: Where are the bottlenecks right now? If any, I don't know. 167 00:09:16,440 --> 00:09:19,520 Speaker 3: It's really the refining process, to make sure that we 168 00:09:19,559 --> 00:09:23,400 Speaker 3: can find a supplier who can make sure that quality 169 00:09:23,440 --> 00:09:27,240 Speaker 3: is there. Right the refinement, the quality matters for our 170 00:09:27,400 --> 00:09:31,520 Speaker 3: quality production. So that's where we pay most attention to 171 00:09:31,559 --> 00:09:36,400 Speaker 3: make sure that the raw material is ready for EVY batteries. Right, 172 00:09:36,679 --> 00:09:39,640 Speaker 3: it's good for everyone, for consumers. We want to make 173 00:09:39,640 --> 00:09:43,280 Speaker 3: sure those av batteries are tested and safe. 174 00:09:43,720 --> 00:09:48,200 Speaker 2: I know this might seem far fetched. We're just bringing 175 00:09:48,240 --> 00:09:51,200 Speaker 2: this facility online. Yes, but one of the questions I 176 00:09:51,240 --> 00:09:53,680 Speaker 2: got from you from the audience is what happens next 177 00:09:54,120 --> 00:09:58,240 Speaker 2: you have the Vada you now have Kansas. Does Panasonic 178 00:09:58,360 --> 00:10:04,040 Speaker 2: see further site for ev in the first instance, what 179 00:10:04,440 --> 00:10:05,480 Speaker 2: is your next priority. 180 00:10:06,360 --> 00:10:11,080 Speaker 3: It's TBD. Today's the first day of this operation and 181 00:10:11,120 --> 00:10:14,760 Speaker 3: we're really excited to make sure that this goes smooth, 182 00:10:15,280 --> 00:10:19,600 Speaker 3: producing quality EV batteries. We'll focus on their first and 183 00:10:19,679 --> 00:10:21,560 Speaker 3: if it goes well, who knows right? 184 00:10:23,200 --> 00:10:24,720 Speaker 1: Demand is still a question. 185 00:10:24,920 --> 00:10:25,240 Speaker 3: Yes. 186 00:10:25,280 --> 00:10:28,439 Speaker 2: What I find interesting is a lot of the customer 187 00:10:28,440 --> 00:10:31,640 Speaker 2: basis pure play EV. But the lesson we've learned in 188 00:10:31,679 --> 00:10:34,560 Speaker 2: the last eighteen months or so is hybrid is still 189 00:10:35,040 --> 00:10:37,559 Speaker 2: a big part of the market, maybe in a way 190 00:10:37,600 --> 00:10:40,760 Speaker 2: that surprised many. Do you have the ability to tap 191 00:10:40,800 --> 00:10:43,760 Speaker 2: into demand for hybrid from this facility or others. 192 00:10:44,720 --> 00:10:48,959 Speaker 3: We don't know yet, but we're pleasantly surprised that eb 193 00:10:49,200 --> 00:10:52,959 Speaker 3: sales still rows by like eleven point four percent, So 194 00:10:53,000 --> 00:10:55,360 Speaker 3: that's a good sign. And like I said, this is 195 00:10:55,360 --> 00:10:58,320 Speaker 3: a long term play, so we're not going to be 196 00:10:58,480 --> 00:11:02,040 Speaker 3: happy and said with the small ups and downs, we're 197 00:11:02,040 --> 00:11:05,880 Speaker 3: still bullish that ebie markets should grow and hybrid transition 198 00:11:06,800 --> 00:11:07,840 Speaker 3: should be part of it. 199 00:11:08,320 --> 00:11:10,720 Speaker 2: Have you done a sort of side by side analysis 200 00:11:11,320 --> 00:11:13,720 Speaker 2: of the economics of a single cell? 201 00:11:13,880 --> 00:11:16,360 Speaker 1: Bring mine back out. I have one single twenty one. 202 00:11:16,320 --> 00:11:20,080 Speaker 2: Seventy cell here, so this will be manufactured in Kansas, 203 00:11:20,400 --> 00:11:23,240 Speaker 2: not subject to tariffs. You have the Nevada facility, but 204 00:11:23,320 --> 00:11:26,920 Speaker 2: Panasonic Energy also has facilities all around the world. Is 205 00:11:26,960 --> 00:11:29,800 Speaker 2: it just an instant fixed that the cell on a 206 00:11:29,880 --> 00:11:33,600 Speaker 2: unit basis is just a more attractive economic proposition if 207 00:11:33,600 --> 00:11:36,880 Speaker 2: it's built here in Kansas for the American market versus 208 00:11:36,880 --> 00:11:40,080 Speaker 2: shipping cells in from EU overseas facilities. 209 00:11:40,679 --> 00:11:44,040 Speaker 3: It makes a lot more economic sense to produce here, right, 210 00:11:44,160 --> 00:11:46,079 Speaker 3: Bring raw materials here and produce here.