Panasonic is set to supply batteries to Tesla Motor for its Model S, according to sources close to the Japanese electronics maker.

Model S would be the second line of electric cars for the San Carlos, Calif.-based Tesla, which plans to launch it in late 2011. The startup carmaker unveiled a prototype Model S in March this year and is close to settling on a location in Southern California to produce the car (see Can Tesla Impress the Masses).

The U.S. Department of Energy recently approved a loan of $365 million to finance Model S production. The DOE gave an additional loan of $100 million to Tesla for a powertrain factory in the Silicon Valley town of Palo Alto.

Battery pack makes up one of the most expensive components in an electric car. In the past, Tesla has declined to disclose the lithium-ion battery suppliers for its first model, the Roadster, except to say that the company buys battery cells from Japanese suppliers.

Panasonic strengthened its battery business when it announced last December that it would purchase Sanyo. Sanyo was the world's largest lithium-ion battery maker, with most of the batteries going to consumer electronic devices such as cell phones and laptops. The companies have gotten government approval for the deal in Japan, and are seeking the nod from the European Commission. 

Panasonic was already in the car battery business when it announced the Sanyo deal. Panasonic had created a joint venture with Toyota Motor called Panasonic EV Energy (see Toyota Drives Toward Greener Fleet). 

Tesla's spokeswoman Rachel Konrad declined to comment about Panasonic. 

At a starting price of $57,400 ($49,900 if you include the federal tax credit), a standard Model S would come with a battery pack that allows for 160 miles per charge. Consumers can upgrade to battery packs that would prolong the range to 230 miles and 300 miles. Tesla hasn't announced the prices for the upgrades.

The battery pack for the 230-mile or 300-mile range is made up of 8,000 cells, compared with the 6,800 cells in the battery for Tesla's Roadster, a $100,000-plus sports car with a 244-mile range. Tesla is using better cells for the 300-mile battery pack, hence the number of the cells is the same as the battery for the 230-mile range, said J.B. Straubel, Tesla's chief technology officer, earlier this year. The battery pack for the 160-mile range would come with 5,500 cells.

The potential boom in the market for electric car and plug-in electric hybrid cars has spurred hefty public and private investments in car battery technologies.

In August this year, the DOE announced $2.4 billion in grants to a slew of car battery and electric drive companies, including A123 Systems, General Motors and Johnson Controls. 

Photo via Tesla Motors.

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