Tesla (TSLA) to Build Largest Lithium-ion Battery Factory?

Tesla (TSLA) was recently asked on it's conference call if they are looking into building a lithium-ion battery factory to help with the supply problems.  Elon Musk responded saying that that is something they are considering but that they are not ready to break any news just yet.  He also hinted that it would be built in the U.S.

Tesla (TSLA) stock has dropped from $180 to $135 over the past two weeks after the company reported that demand for the Model S remains strong but battery supply is limited.  Tesla recently signed a larger contract with Panasonic to help with supply.

Panasonic and Tesla Reach Agreement to Expand Supply of Automotive-Grade Battery Cells

Panasonic Corporation and Tesla Motors (NASDAQ: TSLA) today announced that the two companies have reached an agreement in which Panasonic will expand its supply of automotive-grade lithium-ion battery cells to Tesla. With this agreement, the two companies update and expand their 2011 arrangement to now supply nearly 2 billion cells over the course of four years. The lithium-ion battery cells purchased from Panasonic will be used to power the award winning Model S as well as Model X, a performance utility vehicle that is scheduled to go into production by the end of 2014.

This agreement builds upon a multi-year collaboration between Panasonic and Tesla to develop next-generation automotive-grade battery cells and accelerate the market expansion of electric vehicles. Panasonic's cells combined with Tesla's proven EV battery expertise have already enabled more than 130 million customer miles driven in Tesla Roadsters and Model S.

"This expanded agreement with Panasonic is important to Tesla as we continue to increase the pace of production," said Tesla Co-Founder and CEO Elon Musk. "We look forward to strengthening our relationship with Panasonic, and I'm confident that this partnership will continue to be an integral part of Tesla's success for years to come."

Together, Panasonic and Tesla have developed a next-generation battery cell technology that provides the highest energy density and best performance cells in the market. Panasonic's cylindrical cell is a customized technology designed specifically for optimizing electric vehicle quality and life. These cells are integrated by Tesla into the battery pack in a way that enables an industry-leading range of approximately 265 miles for the Model S.

"We are extremely proud to be a strategic partner of Tesla," said Yoshihiko Yamada, president of the Automotive & Industrial Systems Company, an internal company of Panasonic. "Panasonic will increase its production capacity of lithium-ion battery cells to supply Tesla's growing needs as it expands its production of EVs."