Panasonic is converting its Kansas EV battery plant to make AI data center batteries

Of the 500 billion yen previously earmarked for AI infrastructure spending across fiscal 2026-2028, roughly 350 billion yen ($2.18 billion) has been designated for the Energy unit — the same division that counts Tesla $TSLA among its customers — while the Industry segment is set to receive the other 150 billion yen.

Speaking to the ambition behind those figures, Panasonic Energy CEO Kazuo Tadanobu characterized the 950 billion yen revenue goal for data center energy storage in fiscal 2028 as a floor rather than a ceiling, telling Reuters that he expects the business to ultimately surpass 1 trillion yen in sales.

A new manufacturing facility in Mexico is also in the works, representing a third production site for Panasonic Energy and one that the company expects to reach full-scale output by fiscal 2028.

The move positions Panasonic to capitalize on surging power demand from AI data centers. The first gigawatt-scale AI data centers are arriving this year, with five facilities at that scale expected to come online in 2026, each operated by a different hyperscaler. The four largest — Amazon $AMZN, Google $GOOGL, Meta $META, and Microsoft $MSFT — combined for $413 billion in capital expenditures in 2025, an 84% increase from the prior year, and are projected to spend $600 billion to $700 billion in 2026, according to The Motley Fool.

Energy storage is essential for data centers as they look for reliable power while facing major grid challenges. Large power transformers now have average lead times of 128 weeks, and gas turbines can take up to seven years to deliver.

The scale of AI data center buildout has no historical parallel. McKinsey has estimated that companies across the compute power value chain will need to invest $5.2 trillion into data centers by 2030 to meet worldwide demand for AI, based on a projected 156 gigawatts of AI-related capacity.