Panasonic to pour billions of yen in Tesla's gigafactory as initial investment

Panasonic plans to initially invest billions of yen in the factory, which will produce lithium-ion batteries for electric vehicles.

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Panasonic plans to initially invest billions of yen in Tesla's gigafactory, which will research and produce lithium-ion batteries for electric vehicles.

The tech giant, which recently set up a separate company in the United States dedicated to producing lithium-ion batteries for Tesla Motors, will invest billions of yen in the first investment instalment, according to the Wall Street Journal.

Both Tesla and Panasonic are investors in the construction of the factory, which will produce battery cells, modules and packs for Tesla electric vehicles. The automaker says that by 2020, the factory will be shipping out 35GWh of cells and 50GWh of packs per year.

Speaking at the annual Combined Exhibition of Advanced Technologies (CEATEC) trade show in Japan, Panasonic Chief Executive Kazuhiro Tsuga said:

"Our initial investment amount in the factory will be tens of billions of yen. We will expand the size as we go by pouring in further instalments of similar amounts."

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Tesla's gigafactory is expected to span across 10 million square feet and employ roughly 6,500 people. It is hoped that by developing cheaper battery packs, it will eventually be possible to produce more cost-conscious EVs for the general public -- with base prices as low as $35,000.

Panasonic's new company, Panasonic Energy Corp., will also be based at the gigafactory in Sparks, Nevada. The decision to host the company at the factory was made in order to maintain strong communication between the firms, and therefore keep the supply of batteries and cars at the correct levels. The new company has capital reserves of $5 million to begin with, but Panasonic is expected to contribute between 30 and 40 percent of the total cost of the gigafactory, according to comments made on a conference call in July by Tesla CEO Elon Musk.

Nevada was recently chosen as the site for Tesla's new factory, and was able to beat competing states by offering lucrative tax deals to the automaker. Reports suggest that Nevada's financial incentives amount to roughly $1.25 billion spread over 20 years, and include sales tax abatement, property tax abatement, transferable tax credits, job-based tax credits and discounted electricity rates.

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