Relatively few people focus on it, but the huge Japanese electronics company Panasonic is a minority shareholder in electric-car maker Tesla.

The deal dates all the way back to November 2010, the same year that Tesla completed its initial public offering after Toyota took a stake in the company and sold Tesla its Fremont assembly plant in California.

Toyota has since sold its stake; Panasonic has not. Its $30 million investment is likely worth many times that amount today.

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More importantly, Panasonic invested in the financial stability of what has since become one of its largest customers for lithium-ion battery cells.

The company had long worked with Toyota on nickel-metal-hydride batteries for the roughly 10 million hybrid cars Toyota has sold over 20 years.

But Tesla was Panasonic's first major automotive customer for lithium-ion cells, and the two companies have worked together on several generations of small, "commodity" cells used in Tesla's battery packs.

Rendering of Tesla battery gigafactory outside Reno, Nevada, Sep 2014

Rendering of Tesla battery gigafactory outside Reno, Nevada, Sep 2014

Their latest cooperation is the cell fabrication and assembly facility within Tesla's huge Gigafactory outside Reno, Nevada.

While Tesla owns and runs that plant, using it for electric motor production and other tasks, Panasonic owns and operates the cell-making equipment inside.

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Production of the 2170-format cells used in the Tesla Model 3, which is now being delivered in early low volumes, began in June and will ramp up over the balance of the year and into 2018.

Tesla has said it expects to be building 5,000 Model 3 cars a week by the end of this year, each of which will require a battery pack of roughly 50 or 75 kilowatt-hours, filled with thousands of Panasonic's cells.

2017 Tesla Model 3, in photo tweeted by Elon Musk on July 9, 2017

2017 Tesla Model 3, in photo tweeted by Elon Musk on July 9, 2017

According to a Reuters report syndicated by The New York Times, Panasonic recently said that while it was losing money during the startup phase of Model 3 cell production, that would change by the end of this year.

"For battery cells for the Model 3," said Panasonic's financial head Hirokazu Umeda during an earnings briefing in Tokyo, "costs outweighed profit in the first quarter."

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"As production accelerates towards next year," Umeda continued, "we expect the business to contribute profit."

While it took Tesla and Panasonic considerably longer than a year to hammer out the deal under which the Japanese company would produce cells in Nevada, in other words, it sounds as though that deal will end up a profitable one.


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