Panasonic Expands Mexico Battery Production for AI Data Centers

Summary: Panasonic will expand battery module manufacturing in Mexico with two new production facilities planned for 2027 and 2028, strengthening the country’s role in North America’s AI infrastructure supply chain. The investment supports rising demand for energy storage and backup power systems required by AI-driven data centers, linking Mexican manufacturing capacity with battery cell production in the US and technology development in Japan. The expansion highlights the growing importance of energy availability, storage technologies, and resilient supply chains for attracting data center investment and advancing Mexico’s position in the regional digital economy. 

Panasonic will expand its battery module manufacturing capacity in Mexico with a second production site scheduled to begin mass production in fiscal year 2027 and a third facility planned for fiscal year 2028, positioning the country as a key pillar in the company’s strategy to supply the rapidly growing artificial intelligence (AI) data center market.

The expansion was announced as part of Panasonic Group’s Investors Day on June 8 in Tokyo, where the company unveiled plans to invest ¥350 billion (US$2 billion) to increase manufacturing capacity for batteries and energy storage systems linked to AI data center development.

Mexico has been designated as Panasonic’s regional hub for battery module production serving data center applications. While the company did not disclose investment amounts for the new Mexican facilities or their locations, it currently operates through Panasonic Energy Mexico, which maintains a manufacturing plant in General Escobedo, Nuevo Leon.

The move reflects growing demand for energy infrastructure as AI adoption accelerates globally and data center operators seek reliable power storage and backup solutions. 

Regional Supply Chain Supports AI Growth

As part of its North American manufacturing strategy, Panasonic plans to produce battery cells in Kansas while assembling battery modules in Mexico. At the same time, the company will expand production capacity in Osaka, Japan, converting an automotive-related production line to manufacture lithium-ion batteries and supercapacitors.

The integrated supply chain is designed to support rising energy requirements from AI-focused data centers, which require increasingly sophisticated power management and backup systems.

Panasonic is also repurposing part of its EV battery production capacity in Kansas to manufacture solutions tailored for AI data centers, with production expected to begin in fiscal year 2028.

Of the ¥500 billion previously allocated by the group for AI-related infrastructure between fiscal years 2026 and 2028, approximately ¥350 billion has been assigned to Panasonic’s Energy division, which develops energy storage and backup power solutions. 

New Energy Storage Solutions Target Data Centers

The investment comes as AI workloads drive unprecedented demand for computing capacity, requiring more resilient, and efficient energy infrastructure.

To address these needs, Panasonic is expanding its portfolio of products designed specifically for next-generation data centers. The company is developing capacitor-based backup units to stabilize electricity supply during load fluctuations, battery backup systems adapted to high-voltage direct-current architectures and new high-power lithium-ion battery cells.

Panasonic also raised its financial outlook for the business. The company expects revenue from energy storage systems for data centers to nearly triple by fiscal year 2029, targeting close to ¥1 trillion in sales, equivalent to approximately US$6.25 billion.

Kazuo Tadanobu, CEO, Panasonic Energy, said the company’s revenue target of ¥950 billion for fiscal year 2028 should be viewed as a minimum baseline rather than the upper limit for growth in the segment. 

Energy Availability Drives Data Center Investment

Panasonic’s expansion aligns with broader trends reshaping the data center industry, where energy supply has become a decisive factor in investment decisions.

According to research organizations DCD Intelligence and IDC, Mexico currently has 235MW of installed data center capacity in operation, 74MW under construction and an additional 1,516MW announced for development through 2030, reported MBN. 

Industry stakeholders note that many projects advance only after energy availability is secured and long-term infrastructure planning is confirmed. As a result, operators are increasingly adopting renewable energy power purchase agreements and battery storage systems to guarantee stable and sustainable electricity supplies.

MEXDC has emphasized that reliable and clean energy is essential for positioning Mexico as a destination for high-value technology investment. 

Sustainability Becomes Competitive Advantage

Beyond securing energy supply, the industry is pursuing efficiency measures to support the growth of AI while limiting environmental impact.

Data center operators are deploying advanced architectures that optimize chips, racks and computing systems to increase performance while reducing energy consumption per watt. Cooling technologies that minimize water use, including direct expansion systems, air-cooled chillers, and free-cooling mechanisms, are also gaining traction.

As AI adoption accelerates across industries, data centers are becoming increasingly critical infrastructure for the digital economy. Panasonic’s decision to expand manufacturing capacity in Mexico highlights the country’s growing role in supporting North America’s AI ecosystem through energy storage technologies and resilient supply chains