Panasonic has announced plans to invest $256 million in Elon Musk's electric car company Tesla. The funding will be used to finance and boost Tesla's production plant in Buffalo, New York. The facility currently makes photovoltaic cells and modules.

This investment move by Panasonic is seen by many as a way to strengthen the company's partnership with Tesla, as well as a strategic move away from producing consumer electronics to focus more on doing business with corporate clients.

After the deal was announced, Tesla's shares increased by 3 percent to $219.84.

Panasonic And Tesla's Partnership

In a joint statement on Tuesday, the two companies said they are reinforcing a long-time commitment to each other and will start the production of solar cells and modules in the summer of 2017. These products will be used to create solar panels and solar glass tile roofs. Research and development for Tesla's solar roof tiles are now in progress in the company's factory in Fremont, California.

"When production of the solar roof begins, Tesla will also incorporate Panasonic's cells into the many kinds of solar glass tile roofs that Tesla will be manufacturing," said Tesla in a blog post. "All of these solar products will work seamlessly with Tesla's energy storage products, Powerwall, and Powerpack."

The agreement will allow Panasonic to cover the capital costs incurred in Tesla's Buffalo facility. In return, Tesla will be making a long-term commitment to exclusively buy solar cells and modules from Panasonic. The said investment will increase the New York facility's output to 1 gigawatt by 2019. It will also create 1,400 new jobs in the plant, 500 of which will involve jobs in the manufacturing field.

Panasonic is also working with Tesla on the latter's Gigafactory in Nevada. The company serves as Tesla's exclusive supplier of lithium-ion batteries for its electric cars such as the Model S, Model X, and the up-and-coming Model 3, which is now being touted as the company's first affordable, mass market electric car.

SolarCity Is Acquired By Tesla

The Buffalo production plant has been funded $900 million due to an economic development initiative started by the New York government. It was recently acquired by Tesla from SolarCity, but will still operate under its founding company's name.

Once the 1.2 million square foot facility becomes fully operational, it will produce as many as 10,000 units of photovoltaic modules per day, making it the largest manufacturer in North America.

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