Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752) announced today that it has officially sealed the deal to partner with Tesla Motors Inc (NASDAQ:TSLA) on its massive gigafactory. The announcement accompanied Panasonic’s latest earnings report and comes just hours before Tesla’s next report.

Details on Panasonic’s deal with Tesla

In a press release this morning, Panasonic announced that Tesla Motors “will prepare, provide and manage the land, buildings and utilities.” Panasonic will “manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery and other manufacturing tools.” The two companies will be working with a network of other partners to supply materials. Tesla will then use the cells and other components produced by the factory to build its battery modules and packs.

Panasonic said Tesla will manage the factory and it will be the automaker’s principle partner that will handle the lithium-ion battery cells and occupy about half of the facility. The other half will be occupied by key suppliers and Tesla’s own module and pack assembly lines.

Tesla gigafactory
Tesla gigafactory

Tesla aims to reduce battery costs

Tesla Motors has been talking up the gigafactory for some time. Analysts are expecting the automaker to release more details about the facility tonight alongside its next earnings report. Because Panasonic has made this announcement, it seems likely that Tesla will have more information to release as well. Specifically, analysts are looking for more information about the facility’s location. Their other main question about it—whether Panasonic will definitely partner with Tesla on it—has now been answered.

This morning’s press release said the gigafactory will reduce the cost of its batteries “through optimized manufacturing processes driven by economies of scale previously unobtainable in battery cell and pack production.” It also stated that Tesla will further reduce the price of its batteries by producing calls that have actually been “optimized” for electric vehicles by “co-locating suppliers on-site.” This will eliminate costs related to transportation, packaging, duties and inventory carrying.

The automaker plans to produce 35 GWh of cells and 50 GWh of packs by 2020. The facility is expected to employ approximately 6,500 people by then.