Tesla, Panasonic Sign Gigafactory Agreement

Tesla, Panasonic Sign Gigafactory Agreement

One of the most crucial requirements for Tesla to secure its future officially fell into place today.

Panasonic Corporation and Tesla Motors Inc. announced that they signed an agreement about their cooperation in manufacturing lithium ion battery cells at the upcoming Gigafactory, marking a key component in Tesla’s plan to scale up production falling into place.

In a joint press release, the companies said Tesla will prepare, provide and manage both the land and utilities while Panasonic will build battery cells and invest in the equipment necessary to do so.

“The Gigafactory represents a fundamental change in the way large scale battery production can be realized,” Tesla chief technical officer JB Straubel said. “Not only does the Gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications.”

As part of the agreement, Panasonic is Tesla’s principle partner and will occupy half of the planned manufacturing space while the other half will be filled by “key” suppliers and Tesla’s own module and battery pack assembly operation. The large-scale plant will cut supplier packaging and transportation costs while scaling up production to reduce the cost of building long range battery packs at the volume Tesla’s future plans require. The company projects that it will produce 35 GWh of cells and 50 GWh of packs per year by 2020.

Currently, the company is only building and selling the Model S sedan, but delivery of the platform-sharing Model X crossover is expected to begin early next year. But both of those vehicles will be produced in much lower volume than the Model III sedan planned to follow up after them. The company says that car will offer a range of roughly 200 miles and will be priced in line with a BMW 3 Series. By offering a product priced more attainably to average drivers than the Model S, which starts at $78,970, Tesla hopes to greatly increase the number of cars it sells.

In order to keep up with the demand for lithium ion battery packs required in all its vehicles, Tesla will also continue to buy batteries produced in Panasonic’s Japanese factories.

GALLERY: 2013 Tesla Model S


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