Tesla Hits New Deal With Panasonic

Tesla Hits New Deal With Panasonic

Tesla has agreed on a new contract with Panasonic to produce its lithium-ion batteries. While it is not yet clear if this includes cost-effective 4680 battery cell, Tesla will continue to purchase its batteries from Panasonic until next year even though the EV car maker has plans to produce its own units.

The US-bad auto manufacturer announced at its September 2020 Battery Day that it intends to manufacture new battery cells but will probably need to keep partnering with Panasonic until the whole battery production is setup and fully operational.

The new agreement between Tesla and Panasonic includes the Japanese battery manufacturer supplying battery cells until March 31, 2022, however, further details on the pricing contract have not been disclosed.

Tesla imports the 18650 Panasonic cells from Japan and uses them in both the Model S and Model X. These are different to the 2170 cells produced at Gigafactory 1 for the Model Y and Model 3.

Over and above the new pricing agreed between the companies, it also includes the capacity that Panasonic will provide and the volumes that Tesla will purchase. Tesla Motors Netherlands BV is another party in the contract as well as US-based Tesla Inc.

With minimal details of the contract made public, it is not yet confirmed if Tesla will continue to import the 18650 cells or whether the newer 4680 cells are part of the agreement.

The deal with Panasonic was revealed earlier this week; the same day Tesla's share price hit a record high at $729.77. The EV company’s the first trading day of 2021 showed enthusiasm after Tesla announced its 2020 delivery figures of 499,550 vehicles.

Tesla's strong performance was helped by the increasing demand in China and with production underway at the Shanghai Giga Factory for the Model Y vehicles. The Chinese-produced sport utility car is being offered in the region at $52,600 after a price cut of 30%. As the new year kicked off, Tesla’s Chinese website went down after being overwhelmed with new orders.

In December, Tesla had to stop production on the Model S and X in Fremont, and this led to various rumors such as the EV manufacturer refurbishing the assembly lines to provide for changes in the future model vehicles. Production is expected to restart for the Model S and X next week.

During 2020, there was a fairly large demand for these models and both delivery and production ranged between 15,000 to 20,000 cars (combined) and the Model 3 and Model Y are seeing an increase in each quarter, going into the six figure mark.

Reports continue to persist regarding potential design changes to the Model S and X and December’s production halt added fuel to the fire. What’s more, a variant Model S was also seen in the US, which has given plausibility to the rumors. However, it could well have been a test vehicle or a prototype that’s being developed as Tesla prepares for its Plaid model that is expected to go into production towards the end of 2021. Some of the changes that were seen include the rear apron with a diffuser and a much wider body.

If December’s production break was about tweaking the assembly lines for a newer Model S and X design, we will be seeing this within the next few weeks, and they could possibly even include newer battery cells manufactured by Panasonic. This coming year is going to be an exciting one for Tesla as it rolls out its new products that have been eagerly anticipated as well as the opening of its new Giga Factories.