Tesla and Panasonic have signed an agreement to jointly build a large-scale battery manufacturing unit, called Gigafactory, in the US for Tesla's electric cars.
Panasonic will be manufacturing cylindrical lithium-ion cells and invest in manufacturing tools, while Tesla will be providing and managing the building, utilities and land.
The Gigafactory is expected to produce 50GWh of battery packs and 35GWh of battery cells per year by 2020.
The car maker will not cut ties with Panasonic Japan, as it will continue buying batteries produced in Japan by Panasonic.
The new factory is being created to achieve cost reduction through optimized manufacturing processes in battery cell and battery pack production.
Tesla Motors co-founder JB Straubel said: "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."
Panasonic executive vice president Yoshihiko Yamada said: "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."
