Panasonic Corporation and Tesla Motors, Inc. signed an agreement that lays out their cooperation on the construction of a large-scale battery manufacturing plant in the United States (the specific location yet to be announced) known as the Gigafactory. (Earlier post.) During Tesla’s Q4 earnings call in February, Tesla CEO Elon Musk had noted that because Panasonic is Tesla’s primary partner on battery production, the “default assumption” was that Panasonic would continue to partner with Tesla in the Gigafactory.
According to the agreement, Tesla will prepare, provide and manage the land, buildings and utilities. Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval. A network of supplier partners is planned to produce the required precursor materials. Tesla will take the cells and other components to assemble battery modules and packs.
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.
Tesla is creating the Gigafactory to enable a continuous reduction in the cost of its long range battery packs in parallel with manufacturing at the volumes required to enable it to meet its goal of advancing mass market electric vehicles. 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; key suppliers combined with Tesla’s module and pack assembly will comprise the other half of this fully integrated industrial complex.
The Gigafactory represents a fundamental change in the way large scale battery production can be realized. 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.—JB Straubel, CTO and Co-founder of Tesla Motors
Tesla anticipates cost reductions will be achieved through optimized manufacturing processes driven by economies of scale previously unobtainable in battery cell and pack production. Further price reductions will be achieved by manufacturing cells that have been optimized for electric vehicle design, both in size and function; by co-locating suppliers on-site to eliminate packaging transportation & duty costs and inventory carrying costs; and by manufacturing at a location with lower utility and operating expenses.
The Gigafactory will produce cells, modules and packs for Tesla’s electric vehicles and for the stationary storage market. The Gigafactory is planned to produce 35 GWh of cells and 50 GWh of packs per year by 2020. Tesla projects that the Gigafactory will employ about 6,500 people by 2020.