Panas Panasonic to produce new lithium-ion batteries for Tesla

In the past few years, Panasonic Corporation NASDAQ: TSLA supplier has fallen behind China's CATL and South Korea's LG Energy Solutions in battery manufacturing.

The Japanese firm is back to normal now with renewed push and investment.

What Happened: Panasonic plans to start mass-producing new lithium-ion batteries that have the potential to increase the range of the EVs by 25%, the Nikkei reported. The report said that production is likely to start as early as 2023 and that the first deliveries will be made to Tesla.

Panasonic is reportedly working on developing the new 4680 battery at Tesla's request. A Tesla Model S armed with the new battery will have a range of 750 km, as opposed to its current range of 650 km.

The report said that the battery will be twice as big as the previous versions, and have a fivefold increase in capacity, allowing automakers to reduce the number of batteries used. Nikkei said that these batteries would be 10 -- 20% cheaper.

Panasonic is reportedly expanding its plant in Wakayama prefecture with an additional investment of 80 billion yen $704 million to make the new Tesla batteries.

Related Link: Tesla Slips Below $1 K Ahead Of Earnings, Nio Begins Locking ET 7 Orders, BYD Raises Prices and More.

Why is it important to focus on developing efficient and cost-effective batteries, as batteries account for about 30% of the total EV cost.

Panasonic plans to start operations this year to establish safe, efficient processes before mass production. Mass production of the new batteries will be expanded to plants in the U.S. or other countries.