Palo Alto, California – Electric vehicle manufacturer Tesla has finalized a supply agreement with Panasonic for automotive-grade lithium-ion battery cells. The batteries will be used in Tesla’s upcoming Model S electric sedan.

The agreement covers sufficient battery cells to build more than 80,000 vehicles over the next four years and guarantees the availability of enough cells in 2012 to meet Tesla’s fulfillment of more than 6,000 existing Model S reservations while also meeting cost and margin targets.

The new agreement builds on a multi-year collaboration between the two companies to develop next-generation battery cells and accelerate the market expansion of electric vehicles. The two initially entered into a supply agreement in 2009 and in 2010, Panasonic invested US$30 million in Tesla.

Tesla also supplies batteries and powertrains to Toyota and Daimler.

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