Tesla Motors Inc (NASDAQ:TSLA) and Japan-based Panasonic Corporation have entered into an agreement regarding the construction of a large-scale battery manufacturing plant, based in the U.S., the companies said in a statement issued on Thursday, July 31. The plant also known as the Gigafactory will help Tesla Motors Inc (NASDAQ:TSLA)  to reduce the costs of its long range battery packs, and will also increase the volumes of production of Tesla’s electric vehicles.

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Tesla Motors Inc (NASDAQ:TSLA)  will be responsible for the land, buildings and utilities, under the terms of the agreement. Panasonic will take care of the production and supply of cylindrical lithium-ion cells and will invest in equipment, machinery and other tools, the statement added. The cells and other components will be used by Tesla Motors Inc (NASDAQ:TSLA)  for the assembly of battery modules and packs, the statement added. In addition, Tesla will also continue to buy Panasonic’s battery cells produced in Japan. Both companies will still negotiate some of the details of their joint project.

The cells, modules and packs produced by the Gigafactory will be used for production of Tesla Motors Inc (NASDAQ:TSLA) ‘s electric vehicles, as well, as for the stationary storage market. Overall, the plant is expected to deliver around 35 Gigawatt-hour of cells and 50 Gigawatt-hour of packs each year by 2020, the statement also said. The number of employees at the Gigafactory is expected to reach around 6,500 by 2020.

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