Panasonic to start producing data center batteries in the US by fiscal 2028

Panasonic Holdings, the Japanese industrial conglomerate that has made batteries for electric vehicles for decades, is pivoting part of its strategy toward data centers. According to the company's chief executive, Panasonic plans to begin mass-producing battery cells for data centers at its plant in Kansas (US) by fiscal 2028. To fund the effort, it will redirect a significant share of the investment it had previously set aside for AI infrastructure.

Why data centers became a new customer

Companies that spent years supplying batteries for electric vehicles have found a new and far more demanding customer: the data center. The explosive growth in compute needed to train and run AI models has sharply increased the strain on power grids. Data centers need reliable energy storage for backup power and peak shaving, and demand for these systems is growing faster than demand for transportation batteries.

For Panasonic, this is a chance to apply its battery cell manufacturing expertise to a new, fast-growing market instead of expanding capacity solely for the auto industry, which in recent years has grown noticeably more slowly than the AI compute infrastructure segment.

What we know about the company's plans

• The plant producing battery cells for data centers will be located in Kansas, US
• Mass production is scheduled to start by fiscal 2028
• The company is redirecting a significant share of its AI infrastructure investment toward energy storage
• Panasonic has historically been known primarily as one of the largest makers of electric vehicle batteries
• The plans were disclosed by the company's CEO; Panasonic is so far releasing specific project details only sparingly

Data centers as a new front in the energy race

The explosive growth in compute needed to train and run large language models has made power supply one of the main constraints on further expansion of AI infrastructure. Data centers need not only more electricity but also reliable ways to store it. Battery storage smooths out peak loads, provides backup power when the external grid fails, and lets data center operators add capacity faster without waiting for grid upgrades.

That is why battery makers that once focused almost exclusively on the auto industry are increasingly eyeing data centers as a new source of demand. For companies like Panasonic, this means diversification: instead of depending on the cyclical and increasingly competitive EV market, they gain a parallel business tied to the long-term growth of AI computing.

Who else is looking at data centers

The trend extends beyond a single manufacturer. As the EV market grows more slowly than earlier forecasts predicted and demand for AI compute breaks records year after year, battery cell suppliers around the world are rethinking the priorities of their production lines. A data center is a different kind of customer than an automaker: it doesn't need batteries that can withstand road vibration and impacts, but it does require stability under continuous 24/7 load and a predictable service life over many years of operation without replacement. That opens a niche for players willing to adapt existing production capacity to the new technical requirements rather than build it from scratch.

What it means

Panasonic's pivot toward data center batteries is another sign that energy infrastructure is becoming a bottleneck for AI. Component makers that once worked almost exclusively for the auto industry are increasingly switching to serving data centers, which need their own power reserves to handle the growing load of AI computing. For the industry, the signal is clear: AI investment has long since moved beyond model and chip development and is increasingly running up against physical infrastructure, from power grids to ordinary battery cells.