Tesla, Panasonic to build Gigafactory


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After months of speculation, the Street finally learned on Thursday morning how Tesla Motors (tsla) planned to raise the capital to build the multi-billion dollar EV battery factory that analysts, and the company itself, believe necessary for its survival. Panasonic, a Japanese electronics and manufacturing company, will invest an undisclosed sum in the factory and supply it with lithium-ion cells.

Having gradually been pushed out of the consumer electronics market by tougher rivals, Panasonic now focuses on supplying components, particularly battery components, to manufacturers, so the proposed Gigafactory fits perfectly into the company's new strategy.

To Tesla's CEO, Elon Musk, the benefits of creating a huge lithium battery factory are many. They include efficiency of scale, which is needed to lower production costs, a steady supply of batteries for Tesla cars, additional batteries which might be sold to other electric car makers or as home storage solutions, and a resulting boost in residential solar power which will benefit SolarCity (scty), another of Musk's companies.

The site for the Gigafactory has not yet been chosen, but that would seem to be the next logical step. The factory is likely to cost between $4 billion and $5 billion to build and create at least 6,500 jobs, so governors all over the US Southwest are scrambling to lure Tesla to their states. That should give Tesla a bit of political clout, which it can use to fight back against the tremendous influence of the car dealership cartel.

TSLA shares are worth $226.14 per share in Thursday morning trading. 

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC .

This article was originally published on MarketIntelligeneCenter.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Technology
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