Tesla Motors Inc. and Panasonic Corp. announced that they have signed an agreement to build a battery Gigafactory, where they will assemble and package lithium ion batteries for Tesla vehicles.
In a joint press release, the companies revealed that Panasonic will build the battery cells and invest in the equipment needed to do so. Tesla will ultimately prepare, provide and manage the land and utilities, while assembling the batteries into packs.
The press release, which was issued Thursday morning, did suggest that there are still some details to be worked out before the building of the Gigafactory, but some details are already known. The Gigafactory is projected to cost around $5 billion and could employ as many as 6,500 people by 2020. While the location is yet to be decided, Tesla CEO Elon Musk has studied sites in Arizona, New Mexico, Nevada, California and Texas.
At the moment, Panasonic builds the batteries and then ships off them to a Tesla factory for packaging, but thanks to the Gigafactory, the most of the process will take place under the same roof. However, Panasonic will have to continue to build batteries offsite in its Japanese factories as the Gigafactory will only be able to produce about 70 per cent of the batteries required for the Tesla cars.
The development of the Gigafactory marks a key component in Tesla’s plan to scale up production. Currently, Tesla is only building and selling the Model S sedan, but delivery on the Model X crossover is expected to start early next year, and the much more affordable Model III sedan is set to follow both of these at a much higher production rate.
Tesla hopes to drastically increase the number of cars it sells and also see an increase in all electric car sales. Earlier this year, Musk announced that Tesla would share its technology with BMW to expand the German automaker’s electric vehicle production beyond the i3 and i8 models.