Japan's Panasonic is set to invest over $200m in American electric carmaker Tesla Motors' lithium-ion battery plant in the US, according to a person familiar with the matter.
Panasonic had signed a preliminary agreement to be involved in the project back in May. In a joint statement the companies said Tesla would be responsible for land, building and utilities and would use the cells to assemble battery packs.
Total investment for the project could reach as much as $5bn, with Panasonic's share possibly reaching $1bn. Panasonic has been supplying the company with batteries for several years.
Tesla chairman Elon Musk hopes the deal will lower cost of vehicles such as the $71,000 Model S, and turn the company into a mass market producer.
Back in October, Panasonic agreed to supply Tesla with 2bn battery cells between 2014 and 2017, the Nikkei business daily reported.
There are several sites being examined by Tesla for the production of Giga Factory units in Texas, New Mexico and Arizona. Tesla hopes to double the production of lithium-ion batteries by 2020.
The deal is welcome news to Musk who in June speaking on Radio 4's Today programme admitted that he hasn’t always had faith that things will come off, saying that he thought neither SpaceX nor Tesla would succeed.
More recently, Musk took the bold decision to take steps toward tearing up the rules on patents. Musk said in a blog post on his company’s website that the wall of patents in the lobby of Tesla’s Palo Alto headquarters had been removed. Tesla will “not initiate patents lawsuits against anyone who, in good faith, wants to use our technology".