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A report from Reuters claimed that hundreds of Panasonic Corp. employees would be sent to Tesla Motor’s Gigafactory in Nevada to start preparing for production at the plant, which would start sometime next year. This production facility will fundamentally change how the company achieves large scale battery production, according to CTO J.B. Straubel. Tesla signed an agreement with Panasonic last year to cooperate in the construction of the large-scale battery manufacturing plant, which will dramatically reduce the cost of energy storage across a broad range of applications.

Tesla stock traded up after the report from Reuters was released, increasing 2.87% as a result. The Gigafactory will produce cells, modules, and packs for Tesla’s electric vehicles and its stationary storage market. The plant will cost around $5 billion, up to 40% of which Panasonic will be paying for. Under the agreement between the companies, Panasonic employees at the plant will manufacture lithium-ion cells, and will hand them off to Tesla employees who will then assemble the battery modules and packs.

The Gigafactory will be a bullish catalyst for Tesla in the future, as it will reduces the costs of producing batteries for its automobiles and stationary storage products. The increased production capacity of batteries that the new manufacturing plant will make possible is key to the new Model 3 sedan the company hopes to release in 2016, which will be priced around $35,000. This vehicle will be more affordable to the general public and have higher sales, so having access to a higher number of cheap batteries is key to the company’s future plans..

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