Tesla Electric Car
Tesla Motors

Panasonic Corp will initially invest around 20-30 billion Yen ($200-300 million) in Tesla Motors for producing lithium-ion battery used in electric vehicles.

Tesla Motors is a US based electric car manufacturer and Japan's Panasonic has been supplying batteries for the electric car maker for years.

The overall investment for the project could touch $5 billion and Panasonic's share could reach $1 billion. However, a Panasonic spokesperson declined to talk about the investment figures, and said that the company has signed a letter of intent to participate in the Tesla battery project and was in talks on the matter.

The stock prices of Tesla Motors and Panasonic Corp surged 0.56 percent and 0.16 percent on Tuesday. ($1 equals 101 Japanese Yen).

Panasonic battery

Reuters reported that a basic agreement on the deal between the two companies will be announced by the end of this week, including quarterly earnings report on Thursday. But the official added that investment figures will be kept under wraps. 

In a contract signed in October 2013, the two agreed that Panasonic would supply Tesla with 2 billion battery cells between 2014 and 2017, Nikkei business daily reported.

Tesla is looking at three to four sites in the United States to build the Giga Factory units in Arizona, New Mexico, Texas and Nevada to double the production of lithium-ion batteries by 2020.

According to a report by insideev, batteries for Plug-Ins and Hybrids were a $660 million market in Q1 2014, led by US demand. Meanwhile, Panasonic has 39 percent share of Plug in Vehicle batteries along with its partnership with Tesla Motors.