Updated: 02/26/2014 11:38 | By Agence France-Presse

Panasonic plans battery mega factory with Tesla: report

Japan's Panasonic and California-based electric-vehicle venture Tesla Motors are in talks to build a $1 billion automotive battery plant in the United States, a report said Wednesday.

Panasonic plans battery mega factory with Tesla: report

A pedestrian passes an advert of Japanese electronics giant Panasonic in Tokyo on February 4, 2014 - by Yoshikazu Tsuno

The electronic giant is inviting several other Japanese materials makers to join the project, with the aim of lowering manufacturing costs of the lithium-ion batteries used in electric vehicles, the respected Nikkei daily said, without citing sources.

Batteries currently represent a big chunk of the final cost of an electric car, and slashing prices is key to making the technology more acceptable to consumers.

The new facility, expected to handle everything from processing raw materials to assembly, is intended to go onstream in 2017 and to produce small, lightweight batteries for Tesla and possibly for Toyota Motor and other automakers, the Nikkei said. 

Tesla wants to bring electric vehicles down into the same price range as their gasoline-burning cousins, while also planning to make home-use batteries for grid storage, it said.

Panasonic has worked with Tesla on developing next-generation auto batteries and last year expanded the contract to supply lithium-ion units to the firm to about two billion cells until 2017.

Contacted by AFP, Panasonic said it is "studying every possible way to strengthen ties with Tesla", without confirming the report.

Panasonic shares jumped more than 5 percent in Tokyo morning trade.

But analysts expressed caution on the reported project.

"The story is just a talking point," Advanced Research Japan analyst David Rubenstein told Dow Jones Newswires. 

"Panasonic's margins on its battery business are razor-thin, so it's little more than wishful thinking that this kind of project, if true, would actually add meaningfully to its bottom line."

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