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Tesla, Panasonic join forces to make battery Gigafactory a reality – report

Panasonic and Tesla have signed a partnership agreement to jointly build a massive new factory for lithium-ion batteries, dubbed the Gigafactory, in the US.


Japanese newspaper Nikkei is reporting that the two have agreed in principle to an arrangement where Tesla will be responsible for the land and buildings, while Panasonic will provide the machinery required to produce lithium-ion battery cells en masse.

The stated aim of the Gigafactory is to produce battery cells for around 500,000 electric cars annually by 2020. Construction of the factory is said to start by the end of this year, with battery production to begin in 2017.

The location of the Gigafactory has yet to be confirmed, but Tesla has said in the past that it is looking at locations in Nevada, Arizona, New Mexico and Texas. Tesla has so far provided no comment regarding the report in the Nikkei, but it's expected that official details about the agreement will be announced shortly.

It's expected that Panasonic will invest 20-30 billion yen ($208-$312 million) in the venture. Overall investment by both parties in the project is reportedly going to reach US$5 billion, with Panasonic shouldering around US$1 billion of that.

Tesla believes that battery supply constraints are holding back the company's growth prospects. Elon Musk, Tesla's CEO, said recently that Toyota was interested in extending its electric car battery agreement past the soon-to-die RAV4 EV. At the time, though, it made no sense for Tesla to take battery supply away from itself to feed Toyota.

The company expects to produce around 35,000 Model S sedans this year, and will soon add the Model X SUV to its line-up. In 2016, the Model III will join the electric car company's range and will be sized to compete with the BMW 3 Series and Mercedes-Benz C-Class.

Panasonic currently owns a portion of Tesla and supplies the batteries used in its Model S sedan.

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