Japanese electric goods giant Panasonic is to build an electric car battery factory in the United States with Tesla Motors.

Yesterday they signed an agreement on the Gigafactory which will manufacture cylindrical lithium-ion cells.

By 2020 a planned workforce of 6,500 people could be churning out 35GWh worth of cells and 50GWh of packs each year.

The hope is that building a site in the States will bring down the cost of the electric battery technology for cars and other uses.

Fairly high prices for electric cars at the moment are seen as off-putting for consumers.

JB Straubel, Chief Technical Officer and Co-founder of Tesla Motors said cheaper batteries aren’t just useful for car models: “Not only does the Gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications.”

Yoshihiko Yamada, Executive Vice President of Panasonic added: “I believe that once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market.”