Tesla signs three-year deal with Panasonic on electric car batteries

Tesla has signed a three-year pricing deal with Japan’s Panasonic Corp to manufacture and supply lithium-ion battery cells at the Gigafactory in Nevada, the electric carmaker disclosed in a filing on Tuesday.

Tesla and Panasonic have been reported to be in talks to expand the battery joint venture’s capacity.

Panasonic hinted in May that it was working to develop new batteries with Tesla, possibly with higher capacity.

Tesla said the deal, signed last week and effective April 1, 2020, sets the terms for production capacity commitments by Panasonic and purchase volume commitments by Tesla over the first two years of the agreement.

Tesla also amended the general terms and conditions of its partnership with Panasonic, modifying the term to expire 10 years after Panasonic achieves certain manufacturing milestones.

Panasonic is no longer Tesla’s exclusive battery supplier, but has been able to turn around the U.S. joint battery business as demand for Tesla’s electric cars soar.

Last month, Tesla reported its third consecutive quarterly profit despite the economic impact of the coronavirus pandemic, taking investors by surprise.