Panasonic Corp. will supply almost 2 billion lithium-ion battery cells to Tesla Motors over four years under an agreement announced today. The cylindrical cells (18650 form factor) will be used in the Model S and the Model X—the latter slated for production start-up by the end of 2014. The agreement builds on an earlier collaboration between the two companies to "develop next-generation automotive-grade battery cells and accelerate the market expansion of electric vehicles." The say the current cell, developed together, is a "customized technology designed specifically for optimizing electric vehicle quality and life," and offers the highest energy density in the market. Panasonic said it will increase production capacity of Li-ion cells to meet demand from Tesla.