Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is a four point seven million square feet facility
Speaker 2: that at full capacity thirty gig or what hours, enough
Speaker 2: for five hundred thousand evs, but animal powered by these
Speaker 2: little guys twenty one to seventy cells. And we're delighted
Speaker 2: to be joined by Panasonic Corporation of North America CEO
Speaker 2: Megan meong on Lee, regular contributor to the show. But
Speaker 2: this was the moment you and I talked about it
Speaker 2: earlier in the year. What does it mean for Panasonic
Speaker 2: in America and American manufacturing of battery technology?
Speaker 3: So this is more than a ten year vision. We
Speaker 3: wanted to do this and we wanted to go big
Speaker 3: in this market. So we had a commitment and we
Speaker 3: started in Reno and Nevada and this is our factory
Speaker 3: that we're diversifying our EV strategy and we're going to
Speaker 3: be full production this year and it's really exciting. Today's
Speaker 3: a fun and exciting day, and this is a celebration.
Speaker 2: Full production this year, so sales are already coming off
Speaker 2: the line. Could you just explain the roadmap for the ramp,
Speaker 2: because no facility is straightforward, but this is the size
Speaker 2: of two hundred American football fields. How are you going
Speaker 2: to get to full capacity this year?
Speaker 3: So we started in November twenty twenty two, two and
Speaker 3: a half years ago, and it was all flat field
Speaker 3: and it was a massive land and we started the
Speaker 3: construction and we started the production and testing last week.
Speaker 3: And we're going to produce the batteries this year. And
Speaker 3: you probably saw the cars that we have in Display
Speaker 3: and Tesla, Lusid and Hexagon truck and we're really excited
Speaker 3: to work with different suppliers and partners and clients this year.
Speaker 2: We're going to discuss in detail those customers. They're really
Speaker 2: key to this. There were media reports Friday night that
Speaker 2: there would be a delay in reaching full capacity and
Speaker 2: what the report stated was that was due to demand.
Speaker 2: Are you able to comment on that report? And it
Speaker 2: sounds like they were misinformed. If you are going to
Speaker 2: hit full capacity this year, I.
Speaker 3: Do think it was misinformed and very We're a Japanese
Speaker 3: company and when we say when we commit to something,
Speaker 3: we're fully committed and we want to make sure that
Speaker 3: we support all the customers that were committed. We're not
Speaker 3: feeling the slow down yet and we're very bullish on
Speaker 3: working with all those customers.
Speaker 2: When you say you're not feeling the slow down, that
Speaker 2: means that you're seeing consistent orders from those key customers
Speaker 2: or they're still committing to orders in advance.
Speaker 1: What do you mean by the definition of what you
Speaker 1: just said.
Speaker 3: So we have the operation in Reno and that's going
Speaker 3: very healthy, and we're seeing the commitments coming in for
Speaker 3: this facility as well. So we're not feeling the slow
Speaker 3: down yet. But yet again, I mean, you see this operation,
Speaker 3: this is a long term commitment, so there are may
Speaker 3: be some pushback or moving ahead, or we're committed for
Speaker 3: a long term and we're not shying away from those
Speaker 3: from time to time challenges.
Speaker 2: Throughout the morning, there was a lot of discussion about
Speaker 2: Tesla because Tesla makes the best selling ev model in
Speaker 2: the world this specific facility, does Tesla dominate the proportion
Speaker 2: of output or is it more evenly split across your
Speaker 2: different customers.
Speaker 3: So we're working with Tesla for sure, and we're working
Speaker 3: with Lucid and Hexagon and other clients. So it is
Speaker 3: to diversify our EVN manufacturing in the United States.
Speaker 2: What do you mean by diversify move away from one
Speaker 2: sort of core customer.
Speaker 3: No, not really. We're expanding right so we're definitely working
Speaker 3: with Tesla, but we want to work with other establish
Speaker 3: the OEMs as well as startups. So it's part of
Speaker 3: our efforts to expand our strategy and manufacturing output as well.
Speaker 2: What signals has Tesla given you about its future orders,
Speaker 2: about the health of its business.
Speaker 3: Your guess is as good as mine. But we have
Speaker 3: a long term relationship, longer than anyone else, and there's
Speaker 3: still a very important strategic partner for us, and I
Speaker 3: believe our partnership is very strong.
Speaker 2: Throughout the morning, there was a lot of discussion of
Speaker 2: how Kansas was the absolute best candidate. What were the
Speaker 2: biggest factors in choosing this site? Were they financial? Were
Speaker 2: they simply the ability to get things done? Lack of
Speaker 2: red tape? Why were you able to move so quickly?
Speaker 3: So we talked about the available workforce and the infrastructure.
Speaker 3: I mean you saw the power lines built by the
Speaker 3: factory and as well as the energy procurement that we
Speaker 3: can do. But more than anything, there was something very
Speaker 3: special about Kansas. All the officials were able to work
Speaker 3: with us, and you probably heard that Lautana Governor Toland
Speaker 3: taking some of his speech in not only Japanese but
Speaker 3: Osaka dialect, and that level of insights and care and
Speaker 3: support really made the difference. And it doesn't matter what
Speaker 3: party they are, they're very committed to bring us here
Speaker 3: but also make us feel home. So that kind of partnership,
Speaker 3: not just numbers and infrastructure, but emotional partnership made the
Speaker 3: difference and we're so happy to celebrate today.
Speaker 2: What I was going to say on the numbers is
Speaker 2: there is a job creation story. It's four thousand direct jobs.
Speaker 2: I think the number is twenty thousand indirect jobs. When
Speaker 2: you take into account supply chain construction, what have you
Speaker 2: had to do to kind of bring the other infrastructure
Speaker 2: you've needed to de Soto have everything you need around you?
Speaker 3: So what was great about planning it out? Like I said,
Speaker 3: we started two and a half years ago, and at
Speaker 3: that time we worked with local schools and community colleges
Speaker 3: to create curriculums so when missed for manufacturing, they are
Speaker 3: there already already taking the courses and be available to
Speaker 3: take a job.
Speaker 1: To guarantee you had the skill sets.
Speaker 3: Absolutely absolutely, So we created curriculum together and it's been
Speaker 3: a really good partnership and it helps us and it
Speaker 3: helps the community and it's like wonderful win win.
Speaker 2: The headline figure was that Panasonic put four billion dollars
Speaker 2: into this foot to Sodo facility. But you also the
Speaker 2: reported number is eligible for almost seven billion dollars from
Speaker 2: the Inflation Reduction Act.
Speaker 1: How much of that materialized.
Speaker 3: We haven't started the manufacturing here, so we have not
Speaker 3: seen the incentives yet.
Speaker 1: They're setting against milestones.
Speaker 3: Yes, yes, so it comes with the production. So we're
Speaker 3: looking forward to it and it's definitely a big part
Speaker 3: of our investment.
Speaker 2: Do you anticipate that you will get access to the
Speaker 2: full tranche of money?
Speaker 3: We certainly hope.
Speaker 2: So things have changed, I mean things have changed even
Speaker 2: since you and I spoke in January.
Speaker 1: There is some.
Speaker 2: Effort underway to reshape or or undo the Inflation Reduction Act.
Speaker 1: It seems like the seventy five.
Speaker 2: Hundred dollars credit which goes to the consumer on the vehicle,
Speaker 2: will go, but the forty five x manufacturer credits seems intact.
Speaker 1: How have you navigated that? Is that you'll read on
Speaker 1: the scenario as well.
Speaker 3: So we're very still a vehicle fall that should remain
Speaker 3: and I think it should remain it's not only for us,
Speaker 3: but it's for creating jobs and manufacturing and bringing technology
Speaker 3: to us. So so far it's very positive and we're
Speaker 3: hopeful that its stay is it will be a big
Speaker 3: part of our long term strategy.
Speaker 2: What's the supply chain story right now for DeSoto, Kansas?
Speaker 2: When you think about your raw material needs and everything
Speaker 2: that goes into the cell process, are there things that
Speaker 2: are still difficult?
Speaker 1: What are they?
Speaker 2: Or has bringing this facility online been smoother because of policy?
Speaker 3: We have been planning for the supply chain resilience, not
Speaker 3: just for this and recent terrificuation, but from COVID. During COVID,
Speaker 3: we really suffered from weak supply chain. I mean, I
Speaker 3: think all the industry did, and so did we. So
Speaker 3: we've been planning for supply chain resilience and we are
Speaker 3: I mean just for our benefit too, to make sure
Speaker 3: that those supply chains stay local and within the North America.
Speaker 3: And our goal is to complete fifty percent of our
Speaker 3: supply chain by twenty thirty to be completely local.
Speaker 2: Are any of the conditions currently associated with that forty
Speaker 2: five x manufacturer credit difficult? When you think about foreign
Speaker 2: entity of concern or parts of the supply chain, which
Speaker 2: in the context of metals like China, is still a factor.
Speaker 3: Yes, yes, yes, so we started partnering with China and
Speaker 3: we are for the supply chain resilience. We are trying
Speaker 3: to diversify and make sure that supply chain is more
Speaker 3: Zulians to make sure that we can procure and process
Speaker 3: on site. So it's not really a new change for
Speaker 3: us necessarily, We've been trying to do that for a
Speaker 3: few years.
Speaker 1: Where are the bottlenecks right now? If any, I don't know.
Speaker 3: It's really the refining process, to make sure that we
Speaker 3: can find a supplier who can make sure that quality
Speaker 3: is there. Right the refinement, the quality matters for our
Speaker 3: quality production. So that's where we pay most attention to
Speaker 3: make sure that the raw material is ready for EVY batteries. Right,
Speaker 3: it's good for everyone, for consumers. We want to make
Speaker 3: sure those av batteries are tested and safe.
Speaker 2: I know this might seem far fetched. We're just bringing
Speaker 2: this facility online. Yes, but one of the questions I
Speaker 2: got from you from the audience is what happens next
Speaker 2: you have the Vada you now have Kansas. Does Panasonic
Speaker 2: see further site for ev in the first instance, what
Speaker 2: is your next priority.
Speaker 3: It's TBD. Today's the first day of this operation and
Speaker 3: we're really excited to make sure that this goes smooth,
Speaker 3: producing quality EV batteries. We'll focus on their first and
Speaker 3: if it goes well, who knows right?
Speaker 1: Demand is still a question.
Speaker 3: Yes.
Speaker 2: What I find interesting is a lot of the customer
Speaker 2: basis pure play EV. But the lesson we've learned in
Speaker 2: the last eighteen months or so is hybrid is still
Speaker 2: a big part of the market, maybe in a way
Speaker 2: that surprised many. Do you have the ability to tap
Speaker 2: into demand for hybrid from this facility or others.
Speaker 3: We don't know yet, but we're pleasantly surprised that eb
Speaker 3: sales still rows by like eleven point four percent, So
Speaker 3: that's a good sign. And like I said, this is
Speaker 3: a long term play, so we're not going to be
Speaker 3: happy and said with the small ups and downs, we're
Speaker 3: still bullish that ebie markets should grow and hybrid transition
Speaker 3: should be part of it.
Speaker 2: Have you done a sort of side by side analysis
Speaker 2: of the economics of a single cell?
Speaker 1: Bring mine back out. I have one single twenty one.
Speaker 2: Seventy cell here, so this will be manufactured in Kansas,
Speaker 2: not subject to tariffs. You have the Nevada facility, but
Speaker 2: Panasonic Energy also has facilities all around the world. Is
Speaker 2: it just an instant fixed that the cell on a
Speaker 2: unit basis is just a more attractive economic proposition if
Speaker 2: it's built here in Kansas for the American market versus
Speaker 2: shipping cells in from EU overseas facilities.
Speaker 3: It makes a lot more economic sense to produce here, right,
Speaker 3: Bring raw materials here and produce here.