NEW YORK (TheStreet) -- Tesla Motors Inc. (TSLA) and Panasonic (PCRFY) have reached a basic agreement for Panasonic to participate in the Gigafactory, the major battery plant that Tesla plans to build in the U.S., the Nikkei reports.
Tesla expects to begin the first phase of construction this fiscal year. The plant would start making lithium-ion cells for Tesla cars in 2017. The automaker is shouldering the cost for the land and buildings, the Nikkei said.
Panasonic likely will invest 20 billion to 30 billion yen ($194-291 million) initially, taking responsibility for equipping the factory with the machinery to make the battery cells.
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Capacity at the Gigafactory will be added in stages to match demand, with the goal of producing enough battery cells in 2020 to equip 500,000 electric vehicles a year.
The total investment is expected to reach up to $5 billion, and Panasonic's share could reach $1 billion, the Nikkei noted
Shares of Tesla are slightly lower in after-hours trading.
TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins."