Panasonic and Tesla Motors finalised a supply agreement for automotive-grade lithium-ion battery cells for use in the premium electric sedan, Model S.

The agreement supplies Tesla with enough lithium-ion battery cells to build more than 80,000 vehicles over the next four years. It guarantees the availability of enough cells in 2012 to meet Tesla's aggressive production ramp-up and fulfillment of more than 6,000 existing Model S orders. This supply agreement helps ensure the automaker will meet its cost and margin targets for the car.

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 dating from 2009. In 2010, Panasonic invested US$30m in Tesla to deepen the partnership and foster the growth of the electric vehicle industry.

Tesla is also a supplier of batteries and powertrains to Toyota and Daimler.

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