Tesla, Panasonic Agree to Build Gigafactory

On Thursday, Tesla and Panasonic reached an agreement to build a "Gigafactory", a large-scale battery manufacturing plant in the United States.

According to Tesla, it will provide and maintain the land, buildings and utilities while Panasonic will manufacture and supply cylindrical lithium-ion cells. Panasonic will also invest in the equipment associated with the cells as well as machinery and other manufacturing tools. Supplier partners will provide the required precursor materials.

"Tesla will take the cells and other components to assemble battery modules and packs," the press release stated. "To meet the projected demand for cells, Tesla will continue to purchase battery cells produced in Panasonic's factories in Japan. Tesla and Panasonic will continue to discuss the details of implementation including sales, operations and investment."

Thanks to the Gigafactory deal, Tesla believes this facility will employ around 6,500 people by 2020. The company also reports that the facility will eventually produce 35 GWh of cells and 50 GWh of packs per year by 2020. The resulting cells, packs and modules produced by the facility will be used in the stationary storage market as well as electric vehicles from Tesla.

Overall, Tesla is looking to advance mass market electric vehicles. That means it needs a manufacturing plant to produce long range battery packs at a cost that continues to decline, and to meet the volumes required to advance the electric vehicle market. That's where Gigafactory comes into play.

"The Gigafactory will be managed by Tesla with Panasonic joining as the principle partner responsible for lithium-ion battery cells and occupying approximately half of the planned manufacturing space," the press release stated. "Key suppliers combined with Tesla's module and pack assembly will comprise the other half of this fully integrated industrial complex."

Tesla reports that it will continue to discuss with Panasonic the details of implementation including sales, operations and investment.

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