Tesla Model S Consumes Lots of Battery Cells - Like 7,000-Plus Per Vehicle

Tesla Model S Consumes Lots of Battery Cells - Like 7,000-Plus Per Vehicle

A few days ago, Tesla Motors and Panasonic released this joint announcement:

“Panasonic Corporation and Tesla Motors today announced that the two companies have reached an agreement in which Panasonic will expand its supply of automotive-grade lithium-ion battery cells to Tesla. With this agreement, the two companies update and expand their 2011 arrangement to now supply nearly 2 billion cells over the course of four years. The lithium-ion battery cells purchased from Panasonic will be used to power the award winning Model S as well as Model X, a performance utility vehicle that is scheduled to go into production by the end of 2014.”

A win for Tesla...yes.

But what's up with Panasonic?

Well, to understand what's going on at Panasonic, we have to look at the BIG picture.

Now, we're not about to get into the nitty-gritty specifics here, as that's not the point.  However, pointing out Panasonic's intense focus on Tesla is what we'll zero in on.

Panasonic 18650 High Capacity Lithium Batteries

Panasonic 18650 High Capacity Lithium Batteries

By this time next year, Panasonic will have exited the plasma TV business forever and slashed its chip-making division at least in half.  Furthermore, Panasonic will idle some of its factories responsible for plasma screen and chip-making, while converting others over for automotive battery cell production.

Additionally, Panasonic will dwindle down its "small battery" workforce, while simultaneously shifting some of those employees to automotive battery cell production.

The BIG picture says it's all or nothing for Panasonic. If this deal with Tesla were to go sour, then Panasonic would almost surely go bankrupt.  In fact, before Tesla stepped in, Panasonic had huge financial struggles.

In the future, it seems Panasonic's sole focus will be on automotive-grade battery cell production.  Fortunately for Panasonic, it seems Tesla is willing to gobble up every battery cell that Panasonic produces.

Tesla and Panasonic are currently tied at the hip.  But remember, Tesla is eying deals with other cell manufacturers, so Panasonic may not be in the position to barter.

It's all or nothing...Panasonic either wins BIG time...or loses nearly everything.