Investing.com -- Panasonic is working to build a local supply chain in the United States for its energy storage systems as the company prepares to manufacture battery cells at its Kansas facility, CEO Yuki Kusumi said on Tuesday.

"Since most of our customers are in the U.S. for these energy storage systems, we think it makes sense to complete the supply chain as much as possible within the U.S.," Kusumi said during a roundtable interview in Tokyo.

The Japanese company announced earlier this month that it will start mass production of battery cells for data centers at the Kansas plant of its energy unit in the financial year ending March 2029. The facility currently produces batteries for Tesla.

Automakers and battery manufacturers are now converting battery factories to produce energy storage systems to meet power demands driven by artificial intelligence, as the electric vehicle market in the United States weakens.

Panasonic will not manufacture lithium iron phosphate batteries, Kusumi said. He explained that these batteries are less suited to the company's focus on distributed systems that help manage peak power demand at individual servers. LFP batteries work better for large, centralized backup applications.

LFP batteries are commonly used in energy storage systems because they cost less than the nickel-heavy chemistry typically used for EV batteries in North America.

Kusumi said Panasonic is not facing difficulties securing supplies from China, despite ongoing tensions between Beijing and Tokyo. China added 20 Japanese companies to a dual-use export control list this week, but Panasonic was not included.