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Summary:

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 of its second electric car the Model S.

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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  1. The US Government has loaned Tesla an extraordinary amount of money. (Drastically more than Panasonic’s investment.) Will the batteries be manufactured in America or elsewhere?

  2. Katie Fehrenbacher Tuesday, October 11, 2011

    @MPGomatic, The batteries are parts of the car, and the car itself will be manufactured in Fremont, CA. I would doubt the batteries from Panasonic are made in the U.S. Do you think all parts of the car have to be made in the U.S.?

    1. @Katie – Of course not. :) Automotive components will always be sourced worldwide. Many (not all) Monroney stickers list a vehicle’s parts content information, with major sources of foreign parts.

      With the Model S, I’d wager that the parts cost/content of the batteries will exceed 50% of the MSRP, certainly with the longer-range options.

      This would not be a concern if our tax dollars weren’t being spent to establish substantial Lithium battery production capability in this country. We need that investment to pay off in spades.

      It’s easy to play Tuesday-morning quarterback and say that the Federal loan conditions should have stipulated domestic batteries …

  3. Heard Tesla’s founders (Eberhard & Tarpenning) speak at recent IEEE event on e-cars. They were pretty eloquent about why standard small 18650’s still beat the other type auto-specific larger batteries out there. I separately heard that some of the LiPo cell companies that were doing larger format designs for the auto industry are starting to shut down their efforts.

    1. Tesla actually has five Co-Founders: Martin Eberhard, Marc Tarpenning, Elon Musk, JB Straubel, and Ian Wright

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