February 26, 2014 2:00 am JST

Panasonic, Tesla to set up auto battery plant in US

TOKYO -- Panasonic and California-based electric-vehicle startup Tesla Motors are in talks to build an automotive battery plant in the U.S., aiming to lower manufacturing costs via mass production.

     Targeted to go onstream in 2017, the lithium-ion-battery facility will handle everything from processing raw materials to assembly. Panasonic is inviting a number of Japanese materials makers to sign on, with total investment expected to reach more than 100 billion yen ($965 million).

     Slashing battery prices is key to making electric cars more affordable to consumers, as the units represent a big chunk of a vehicle's cost. With the new facility, Tesla aims to bring the vehicles down into the same price range as their gasoline-burning cousins.

     The plant will produce small, lightweight batteries for Tesla and may also supply Toyota Motor as well as other automakers. Plans to make home-use storage batteries are also on the table to raise production volume.

     Established in Silicon Valley in 2003, the Nasdaq-listed Tesla is partly owned by Toyota and Panasonic. Tesla expects to boost 2014 sales 55% on the year to 35,000 vehicles, helped by the mainstay Model S.

     The company plans to launch a sport utility vehicle this year and is developing another electric vehicle due out around 2017. At around $35,000, the latter would help capture customers for whom its current offerings are out of reach. Tesla's cheapest existing U.S. model sells for roughly $70,000.

     Panasonic logged a net loss of over 750 billion yen for two consecutive years in fiscal 2012, weighed down by sluggish sales of flat-panel televisions and other troubles. The firm has undertaken such restructuring efforts as jettisoning the struggling plasma TV business and now sees future growth in the auto industry.