The panelbar items for each level should have a span with "k-panelbar-item-text" and a "k-panelbar-item-icon" classes wrapping a given item's text and icon. Currently, the text is not wrapped in a span element, nor does it apply the required classes for both the items and icons.
Correct rendering for the items can be observed here. And the correct rendering for the icons can be checked here.
Inspect rendering of Panelbar items from this demo.
The PanelBar Item's TagHelper rendering lacks classes and a span wrapper element:
The Panelbar Item's TagHelper should have classes and a span wrapper element: