Tesla’s Big Battery Order: How Many Cars is That?

Tesla (TSLA) needs batteries like a character in a Lou Reed song needs a fix–and Panasonic is willing to be The Man.

Agence France-Presse/Getty Images

The Associated Press has the details on Tesla’s order.

Under the pact announced early Wednesday, Panasonic will supply nearly 2 billion cells over the next four years. The automotive grade lithium-ion battery cells will power the Model S sedan as well as the Model X SUV, which is scheduled to go into production by the end of 2014, Tesla said.

The agreement amends a 2011 contract between Panasonic and Tesla that promised enough cells for 80,000 vehicles — or approximately 560,000 cells — through 2015.

Deutsche Bank’s Dan Galves does the math:

We estimate that these vehicles use an average of 6,000 cells per vehicle (i.e. 7k for the 85kwh and 5k for 60kwh). So this implies that Tesla sees the potential for production of roughly 330k vehicles over that 4-year period. (Hat Tip: Street Insider.)

Tesla expects 21,000 of its Model S to hit dealerships this year, the AP says.

Shares of Tesla have dropped 2.3% to $160.73 today at 11:47 a.m.