Tesla Partnering With Panasonic to Build Battery Gigafactory by 2017

Tesla peeled back a bit of the mysterious curtain surrounding its upcoming Gigafactory, announcing a partnership with battery cell manufacturer Panasonic. Building off of an existing business relationship in which Tesla purchases lithium-ion cells from Panasonic’s Japanese facilities, Panasonic has signed on to help build the factory and its necessary equipment and machinery. Panasonic will occupy roughly half of the Gigafactory’s planned manufacturing space.

Relocating battery cell production to the United States will significantly cut down on the various costs of building long-range battery packs for Tesla vehicles, but Tesla says that it plans to keep purchasing cells from Panasonic’s Japanese facilities until the U.S. facility is ready. While we’ll have to wait and see how long this arrangement lasts, but it’s likely a smart safety net that will allow Tesla to meet demand for the entry-level Tesla Model 3 and later Model X, while continuing to supply electric powertrains to Mercedes-Benz and Toyota.

Sales of the Tesla Model S continue to grow, as well. Tesla is working to aggressively price the Model S in markets like China, while advancing its Supercharger infrastructure to make the luxury electric sedan more feasible and practical for customers.

“The Gigafactory represents a fundamental change in the way large scale battery production can be realized,” said Tesla co-founder and chief technical officer JB Straubel. “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.”

Last February Tesla said it planned to invest $2 billion into the Gigafactory project, with $2 to 3 billion coming from “other partners,” one of which we now know to be Panasonic. Tesla expects to break ground later this year at an as yet unannounced location, with production beginning by 2017.