Tesla Motors Corp. and the Japanese-based Panasonic Corp., both of which are developing battery cells for electric vehicles, will jointly develop a battery plant in the Chinese city of Nanjing, according to two people with knowledge of the matter.
The agreement was reached after Tesla’s chief executive officer, Elon Musk, met with President Xi Jinping and his Chinese counterpart Li Keqiang in the country last month, the people said.
The Chinese government has sought to expand its use of electric vehicles by developing advanced battery technology.
At the time, Tesla said it had already developed battery cells from China and planned to make them in the future.
Panasonic’s Nanjing battery plant will be a joint venture between Panasonic Corp and Mitsubishi Electric Co., the company said in a statement.
The announcement comes as Tesla and Panasonic work to secure financing for their joint project.
Tesla is seeking $2.8 billion in additional financing for its battery project, which could come from private investors.
Panasonic’s proposal for the project would also include the purchase of a factory in Nanjing.
Tesla’s announcement comes less than a month after it completed the first phase of a project to manufacture battery cells in China.
A Tesla spokeswoman said the announcement is part of a larger strategic initiative to boost the use of clean technologies in manufacturing, particularly for batteries.
The company has announced plans to start manufacturing batteries for electric cars in China in 2018, the company’s first in the world.