Panasonic Corp., which already is the largest supplier of lithium ion batteries for the electric car industry, has announced that it has signed a new contract with Tesla to supply battery cells for the Model S and upcoming Model X electric vehicles. The Japanese company will supply 2 billion 18650 form factor lithium-ion cells worth up to $7 billion over the next four years. Panasonic has been Tesla’s exclusive supplier of battery cells since it started selling its first EV, the Tesla Roadster.
Since Tesla has used 200 million cells over the past two years, the contract indicates a significant ramp up of production is planned, a five-fold annual increase. Tesla has said that it expects to deliver about 21,000 Model S cars this year and that the Model X crossover will go on sale at the end of 2014.