Telsa Motors and Panasonic made it official today: the electric car maker will buy battery cells for its current and future cars from the Japanese giant.

The deal was reported here first last fall and we had kind of hoped it would be announced at CES or the North American International Auto Show.

So why is Tesla doing this? There are a bunch of reasons. First, it will simplify sources. Tesla now buys from a variety of manufacturers. Switching to one can ease issues with testing, validation, strategy over battery pack architecture, etc. By using one supplier it is easier to bring them in as a technology partner to help figure out the roadmap. And it doesn't hurt that the new partner is a massive conglomerate with lots of engineers.

Second, Panasonic is incresingly becoming more aggressive in its bid to become a major player in green. It bought a controlling interest in Sanyo and overnight became a large player in solar. (Sanyo is also the world's largest lithium-ion battery maker, with most of the batteries going to consumer electronic devices such as cell phones and laptops.) It started selling home fuel cells in Japan last year. The company also wants to start building turnkey green homes stocked with built-in plasma TVs from guess who.

The Tesla contract will give the company significant visibility in the new market for EVs. 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), but Tesla is Tesla. The deal gets noticed. 

Third, the deal also allows Tesla to change its battery chemistry. Panasonic will sell Tesla lithium nickel batteries. Historically, Tesla uses lithium cobalt batteries, the same kind you find in your laptop. Cobalt batteries are the ones that experience the so-called "thermal runaway reaction." Tesla was the only company that actually used lithium cobalt as far as I could tell: everyone else had opted for lithium nickel or other chemistries.

But will this have an impact on Tesla's battery and technology alliance with Daimler? Tesla is supposed to build battery packs for some of the first electric versions of the Smart Car the two plan to work together to build battery packs. Daimler took a 49.9 percent stake in Li-Tec, a subsidiary of Evonik Industries, in 2008. Daimler also created a joint venture with Evonik, called Deutsche Accumotive, in March 2009 to produce battery systems. Daimler has said it plans to use Li-Tec cells in its car. Luckily, Li-Tech relies on lithium nickel so this may be easier to handle than it looks.