In a revelation of sorts, Tesla has said, that it had an obligation to pay $1.7 billion to its Japan based longstanding battery partner, Panasonic Corp till 30th September for electric vehicle battery cells to be made at Tesla’s gigafactory in Nevada.
The $1.7 billion figure is unchanged from filings in October.
In an agreement signed in 2014, Panasonic will invest in equipment, machinery and other manufacturing tools at the Gigafactory, to make cylindrical lithium-ion cells for Tesla’s cars.
Tesla has said it expects to start the production of battery cells by the end of this year. These battery cells will initially be used in Tesla’s energy products and later in cars by the end of the year. By 2018, the $5 billion plant will reach full capacity and produce more lithium ion batteries annually than were produced worldwide in 2013.
Panasonic, which plans to invest up to $1.6 billion to produce battery cells for Tesla, will divulge its annual profit forecast on Monday after bringing forward some of its investment in the Gigafactory in hope of strong demand.
In collaboration with Panasonic and other partners, Tesla aims to produce low cost batteries, reduction of waist and simple optimization of locating most manufacturing process under one roof at Gigafactory.
In morning trading on Wednesday, Tesla’s shares were down 0.8 percent at $189.39. Up to Tuesday’s close, the stock had fallen about 21 percent this year.
The name of the plant has been derived from factory’s planned annual battery production capacity of 35 gigawatt-hours (GWh). “Giga” is a unit of measurement that means “billion”. One GWh is the equivalent of generating one billion watts for one hour—one million times that of one kWh.