Tesla to buy Model S battery cells from Panasonic

Customer rides of the Model S Beta

Customer rides of the Model S Beta

Electric car maker Tesla announced on Tuesday that it will buy battery cells from Panasonic to build at least 80,000 cars over a four-year period, including supplying battery cells for its second electric car, the Model S. Tesla’s Model S is supposed to go on the market in mid-2012, and Tesla says it has 6,000 reservations for the car.

Tesla has been working with Panasonic for a while, and entered into an agreement with the battery maker back in 2009. In November 2010, Panasonic purchased $30 million of Tesla’s common stock. But Tesla is a public company now, so it has to more readily disclose agreements like the one with Panasonic (here’s its SEC filing from this morning).

Tesla’s entire business model is based around buying standardized small-format, low-cost battery cells from giants like Panasonic, and assembling these battery cells into an electric car battery. Long-term deals like this one with Panasonic enable Tesla to keep the costs of producing its car as low as possible.

The Model S is one of the first all-electric cars designed from the ground up around the placement of the battery, which is flat and runs along the bottom of the car. That makes the car sturdy, with a low center of gravity, and the underside of the car is completely flat. For a closer look at the Model S (at least the Beta version), check out our video below:


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