TOKYO Panasonic Corp confirmed on Thursday it would invest in U.S. electric carmaker Tesla Motors Inc's planned $5 billion lithium-ion battery plant in the United States, but said it had yet to decide on the size of its investment.
The Japanese company, which already supplies batteries for Tesla, said it was gauging the demand for batteries before deciding on an amount. It had earlier said it would invest in stages and that any expenditure this year would be small.
"We have not yet decided exactly how much we will invest and when," said Chief Financial Officer Hideaki Kawai.
"However, Tesla is a very important partner to us and discussions are continuing. We need to look very carefully at auto demand and respond appropriately so of course that means taking a step-by-step approach to investment," he added.
A person familiar with the matter told Reuters on Tuesday that Panasonic would initially invest around 20 to 30 billion yen ($200-300 million) into the factory and would ultimately invest about $1 billion.
Demand for batteries from the U.S. premium eco-car maker has been a boon for Panasonic as it tries to expand its business as an industrial supplier, especially to the auto sector, and reduce its reliance on volatile consumer markets.
Under the agreement, Tesla will prepare, provide and manage the land while Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the equipment, machinery and other manufacturing tools, they said in a joint statement.
Tesla's chief executive Elon Musk has said that he expected Panasonic to become the main partner in the Gigafactory, which the company says will be able, when fully operational in 2020, to make more lithium-ion batteries in a year than were produced worldwide in 2013. It is currently looking at three new sites to locate the plant.
Panasonic announced the deal with Telsa after beating analysts forecasts and reporting a 28.2 percent increase in operating profit for the first quarter on growing demand for its energy-saving household fittings as well as cost cuts.
(Reporting by Sophie Knight; Editing by Miral Fahmy)