Tesla partners with Panasonic to build massive Gigafactory for batteries

29 Jul 2014

The Tesla Model S

Electric-car company Tesla is understood to have reached a basic agreement with Panasonic to participate in the construction of Tesla’s Gigafactory, a giant battery production plant Tesla plans to build in the US.

The deal is initially worth up to US$291m while overall investment in the project is estimated to climb to US$5bn, out of which Panasonic’s share will reach US$1bn.

Tesla, which is on the cusp of producing a new lower-cost US$35,000 vehicle code named Model 3, is understood to have seen sales of the popular Model S held up by the shortage of lithium-ion batteries.

According to Nikkei, the first phase of construction of the plant begins this year, with the plant producing its first lithium-ion cells in 2017.

The goal is to produce enough battery cells in 2020 to equip 500,000 vehicles a year.

In a contract signed in October, Panasonic agreed to provide Tesla with 2bn battery cells between 2014 and 2017.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years