Tesla Signs Official Gigafactory Deal With Panasonic

JUL 31 2014 BY ERIC LOVEDAY 28

Tesla Giga Factory

Tesla Giga Factory

Giga Factory Graphic

Giga Factory Graphic

Tesla has timed this one perfectly.

Predictably, Tesla announced the signing of an official agreement with Panasonic related to the battery gigafactory just ahead of earnings.  We first learned the rumor of this deal a few days ago.

Details are still rather scarce, but we do learn the following:

  • 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.

Later today, Tesla Motors will release its 2nd quarter earnings, but ahead of that we received this stock boosting gigafactory announcement:

Panasonic and Tesla Sign Agreement for the Gigafactory

Thursday, July 31, 2014

OSAKA, Japan / PALO ALTO, USA, July 31, 2014 – Panasonic Corporation and Tesla Motors, Inc. have signed an agreement that lays out their cooperation on the construction of a large-scale battery manufacturing plant in the United States, known as 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.

The Gigafactory is being created to enable a continuous reduction in the cost of long range battery packs in parallel with manufacturing at the volumes required to enable Tesla 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.

JB Straubel, Chief Technical Officer and Co-founder of Tesla Motors said: “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.”

Yoshihiko Yamada, Executive Vice President of Panasonic, added, “We have already engaged in various collaborative projects with Tesla toward the popularization of electric vehicles. Panasonic’s lithium-ion battery cells combine the required features for electric vehicles such as high capacity, durability and cost performance. And I believe that once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market.”

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 are 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 35GWh of cells and 50GWh of packs per year by 2020. Tesla projects that the Gigafactory will employ about 6,500 people by 2020.

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28 Comments on "Tesla Signs Official Gigafactory Deal With Panasonic"

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I noticed they use Model 3 not Model III, in this press release.

CherylG

If the rumors are true on the amount invested, Panasonic really put the screws to Tesla.

Panasonic stuck to their position and used these months and months since the February announcement to squeeze Tesla.

Musk kept saying over and over he’d have an agreement in “two more weeks” but Panasonic kept playing it cool and close to the vest letting month after month slip by increasing the pressure on Tesla.

Panasonic basically ran out the clock forcing Tesla to accept Panasonic’s more limited investment.

Well played Panasonic, well played.

So you want batteries to cost more?

Honestly I don’t think Panasonic is in any position to put any pressure.

Aaron

Panasonic did play it well, but out of necessity. Their balance sheet just won’t allow for a very large investment. Matsushita just isn’t doing that well.

http://panasonic.net/ir/annual/2013/pdf/panasonic_ar2013_e.pdf

Mark

What limited investment. Numbers have not changed one bit from beginning. You do realize the final numbers tossed around of 5 billion is for a complete factory years from now? You don’t get all of the money now,when you don’t need it quite yet. That would be wasting money. You get it as you need it and expand.

Leptoquark

I think it’s more like Panasonic is very risk-averse and cautious in a new, never-been-done-before type of project like this. Japanese corporations tend to be very careful when there aren’t other players in the “Gigafactory” space.

Marshal G

Way to spin every bit of good news as actually bad news, Cheryl. Did you learn that from Faux news?

CherylG's_DirtyLittleSecret

You got to know when to hold ’em,
know when to fold ’em,
Know when to walk away and
know when to run…..

If you build it….

Aaron

I only had 5 minutes.. no time to make it “pretty”

Spin

And the factory will be in the State of …….

GeorgeS

Nevada

GeorgeS

quote:
” Panasonic 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.”

That’s interesting. key suppliers and pack assembly in 1/2 the space. I didn’t know they were assembling the packs there.

quote:
“Further price reductions are achieved by manufacturing cells that have been optimized for electric vehicle design, both in SIZE and function.”

Could this imply they will go to a slightly larger format cylinder than 18650?

Boris

Elon mentioned that on a few occasions that ideal battery size for the next gen vehicle would be slightly larger than 18650 so I guess they’re going with it.

Musk has said the gigafactory would have raw material come in one end and completed packs come out the other.

J.B. Straubel has also mentioned the slightly larger cell size as optimum also. This would be their chance to slightly modify the format. That might be bad for replacement Model S packs in the future though.

I would like to request that everyone here stop for just a moment and ponder what this announcement will mean years from now. (Not that comments about font selection aren’t worthwhile…) I suspect that this will be seen as one of landmark moments in the rEVolution, not to mention our taking action on climate change, among other issues.

There will be other Big Events coming, no doubt some (much?) bigger than this. (The eventual capitulation of Honda and Toyota to the inEVitability of EVs simply leaps to mind as possibilities.) But it’s worth taking a moment or three to consider it in context.

I now return you to your regularly scheduled, warp-speed web browsing.

Leptoquark

Very true. The Gigafactory will be to batteries what River Rouge was to Ford cars. People admired the scale of River Rouge only after it had been built and running a while….

Ocean Railroader

I really think the next great thing for the EV movement is when the ranges double on the low range cars and get out of the 80’s range. Or a transcontinental route of Chamo and CSS fast chargers opens up.

In that as of now this Tesla model 3 is looking like it’s going to be out of a lot of people’s price range.

TomArt

The average selling price of a new vehicle in the US is a hair over $30k. A $40k-$45k loaded mid-sized sedan with tons of cargo space will do just fine – just like with the Model S, they won’t be able to keep up with global orders.

And as the market matures, there will be more & more in the used lots.

Priusmaniac

A big boost will be the 1MW hypercharger through under the car secured contacts to charge in 10 minutes hands free. That’s when gasoline cars really become totally irrelevant.

TomArt

+1

Ocean Railroader

I think once they start building the Giga Factory everything else will work itself out. In that it could be that Panasonic could build a lot of parts for the factory themselves saving on cost. In that it after all their battery making system Tesla is using. And we really don’t know much one of their battery machines costs that makes batteries.

PJS

Y’all are thinking too small. The future in this plant will be storage batteries for solar installations via Solar City. The car business is a sideline…

There were % estimates given some where. The majority was always the car business. I want to say 30% was slated for energy storage systems.

James

Epic.

CherylG's_DirtyLittleSecret

Go Tesla!