Tesla and Panasonic reach supply deal agreement

Tesla and Panasonic have entered into an agreement for the latter to supply lithium-ion batteries to power the car maker's electric vehicles.

The deal follows Panasonic's announcement in December that it is working on two new nickel-based lithium-ion battery cells. The compact 18x65 mm cells -- 3.4 Ah and 4.0 Ah -- use Panasonic's patented nickel-based positive electrodes which, the company claims, boost capacity and improve longevity.

The larger 4.0 Ah cell supplements this with a negative electrode of silicon-based alloy instead of the normal carbon, boosting energy density and capacity by around 30 percent over the current 2.9 Ah product.

Among the world's largest producers of lithium ion batteries, Panasonic is already working on, among other things, power pack technologies for Toyota's next generation plug-in hybrid Prius.

To accommodate an expected massive hike in demand for its product in coming years, the company is sinking US$1 billion into specialist R&D and production facilities in Suminoe, Japan. The factory is set to commence production in April.

Important to Tesla is that the deal is not exclusive. Buying contributor cells from multiple suppliers for its proprietary power packs is strategically important for the company, both in keeping it abreast of rapid improvement in battery chemistry and technology, and in keeping costs down during what is still an early phase in its path to market acceptance.

Chief Technology Officer JB Straubel looks on the deal as a win-win, saying it will accelerate the development of next generation EV cells. "Combining Tesla's rigorous cell testing and understanding of EV requirements with Panasonic's cutting-edge battery technology will result in custom cells optimised for use in EVs."

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