SK On and Panasonic Are Redirecting US EV Battery Capacity Toward FEOC-Compliant Storage Cells

Within days of each other, two of the largest non-Chinese battery manufacturers operating in the United States described the same maneuver: take factory capacity built for electric vehicles and aim it at stationary energy storage instead.

SK On’s North America president told Energy-Storage.news that the South Korean company is repurposing its established US manufacturing footprint toward domestic-content, FEOC-compliant lithium-iron-phosphate cells for stationary storage. The company paired that footprint with what it calls a “new technology” roadmap and an explicit posture on US fire safety and certification, leaning on vertical integration to clear the federal compliance thresholds that now gate the tax credit.

Panasonic described a parallel move. The Japanese company confirmed it will convert its Kansas EV battery cell facility to produce batteries for data-center and stationary applications beginning in the third quarter of 2029. The conversion follows a roughly US$2.18 billion commitment, made in June, to data-center batteries, and it signals that idle or underutilized EV cell lines are being redirected toward stationary demand.

The driver. Neither company frames the shift as a retreat from electric vehicles. Both name the same cause: the Foreign Entity of Concern restrictions written into the One Big Beautiful Bill Act. A storage project that wants the federal investment tax credit, and the domestic-content bonus layered on top of it, must keep Chinese-linked content below a rising threshold. Under the law, the material assistance cost ratio that a project must clear begins at 55 percent in 2026 and steps toward 75 percent by 2030. Whether a commercial storage project keeps the credit now turns on clearing that ratio.

Why these two. The compliance arithmetic favors a particular kind of supplier. Many of the cells inside the world’s storage systems are made by Chinese manufacturers, which a rule built to exclude them cannot, by definition, accommodate. SK On is South Korean; Panasonic is Japanese. Both can plausibly document compliant supply chains, and both already operate US factories that were sized during a period when electric-vehicle uptake was expected to grow faster than it has. Converting an existing line is faster and cheaper than breaking ground, and it arrives qualified for the part of the tax code that increasingly governs procurement decisions.

The output. SK On describes its converted capacity as domestic-content, FEOC-compliant LFP cells for stationary storage, supported by a “new technology” roadmap and a US certification posture aimed at fire safety. Panasonic is more specific about the destination: its Kansas output is directed at data-center and stationary applications, with the conversion beginning in the third quarter of 2029, and the roughly US$2.18 billion the company committed in June was earmarked for data-center batteries. The named demand these lines are being tuned to serve sits at the large, creditworthy, long-contracted end of the market.

That orientation carries a consequence for smaller buyers. The format that the commercial behind-the-meter segment purchases, cabinet and wall-mounted systems sized to a single building’s peak demand, is not what data-center-oriented capacity is built to produce. A larger pool of domestic, FEOC-compliant cells does not automatically translate into compliant cells available to mid-size commercial projects at the volumes, form factors, and prices those projects require. Aggregate compliant supply grows; whether it reaches the smaller end of the market is a separate question, and the answer depends on allocation decisions the manufacturers have begun to signal.

The timing. There is also a gap between when the rule bites and when the supply arrives. The material assistance threshold is 55 percent now and climbs every year, while Panasonic’s Kansas conversion does not begin until the third quarter of 2029. Commercial projects financed in 2026 and 2027 therefore meet the compliance squeeze before much of this reshored capacity is producing. Buyers in those years are sourcing into a market where the compliant domestic cell remains scarce and the credit is already conditioned on having one.

The SK On and Panasonic conversions are a supply-side answer to that scarcity. They indicate that the United States can produce FEOC-compliant storage cells, and that the companies positioned to do so are Korean and Japanese rather than Chinese, or, so far, American at scale. What the conversions do not yet establish is whether a mid-size commercial building, the kind that installs storage to shave demand charges rather than to firm a solar farm, will be able to source those compliant cells before the decade is out. The capacity is being built. The destinations named so far are large.

Sources