Panasonic to Team with Tesla Motors on New ‘Gigafactory’

Artist rendering of the future Tesla Gigafactory

According to a story from the Associated Press, Japanese electronics company Panasonic is partnering with American electric car maker Tesla Motors to build a battery manufacturing plant in the U.S. expected to create 6,500 jobs.

The companies announced the deal Thursday, but they did not say where in the U.S. the so-called “gigafactory,” or large-scale plant, will be built. Financial terms weren’t disclosed for the $5 billion plant.  The states currently in the competition for becoming home to the gigafactory include Arizona (Tucson recently gave Tesla an advance building permit), California, Nevada, New Mexico, and Texas – all states where land can be purchased relatively inexpensively.  It is rumored that the plant will need take up at least 500 acres and could initially be built on at least 1,000 acres.

More news on where the gigafactory will be located today, after Tesla Motors reports it’s 2nd quarter earnings.  Could be another exciting day in the world of Tesla, or they could remain tight-lipped.  As a Tesla executive recently told me by email “A birthday is always more fun when you wait to unwrap your presents!”

The plant will produce cells, modules and packs for Tesla’s electric vehicles and for the stationary energy storage market, employing 6,500 people by 2020.

Under the agreement, Tesla, based in Palo Alto, California, will prepare, provide and manage the land and buildings, while Osaka-based Panasonic will manufacture and supply the lithium-ion battery cells and invest in equipment.

Tesla CEO Elon Musk has said the factory will help Tesla reduce its battery costs by 30 percent. Tesla needs cheaper batteries in order to produce its mass-market Model 3, an electric car it’s developing that would cost around $35,000. Tesla hopes to have the Model 3 on the road by 2017. The company’s only current vehicle, the Model S sedan, starts at $70,000 and goes to over $100k for the premium model.

“The Gigafactory represents a fundamental change in the way large-scale battery production can be realized,” said Tesla Chief Technical Officer and co-founder JB Straubel, referring to the cost reductions.

Sales of zero-emission electric vehicles account for less than 1 percent of the global auto market. But worries about global warming and more stringent emissions regulations in many countries are expected to boost sales of electric and other green vehicles.

Yoshihiko Yamada, executive vice president of Panasonic, said the planned factory will help the electric vehicle market grow.

Panasonic, which makes great products, but has lost some of its strength in consumer electronics to a growing sea of low-balling competitors, is putting more focus on businesses that serve other industries, including batteries.

It remains powerful in Japan and some overseas markets in consumer products such as refrigerators, washing machines and batteries for gadgets.