US electric car manufacturing giant Tesla and Japanese electronics manufacturing company Panasonic have signed a deal to produce photovoltaic cells and modules in Tesla's gigafactory in Buffalo, New York.

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The two companies reportedly signed a non-binding letter of intent, with Panasonic now in charge of making the cells for Tesla's stationary power storage units, the Powerwall and Powerpack.

This announcement comes as Tesla is looking to acquire solar energy company SolarCity. A decision of Tesla's shareholders with regards to the merger is set to be announced on November 17.

"We are excited to expand our partnership with Panasonic as we move toward a combined Tesla and SolarCity. By working together on solar, we will be able to accelerate production of high-efficiency, extremely reliable solar cells and modules at the best cost," JB Straubel, chief technical officer at Tesla said in a statement.

Tesla plans to provide a long-term purchase commitment for these cells from Panasonic.

The CEO of Tesla, Elon Musk, has long made his stand on solar power clear. He envisages a world where people would depend on SolarCity solar roof panels for their domestic electrical needs. The residual energy that is not utilized during the day would get stored in Powerwall battery systems which would provide electricity for use during the night.

Panasonic will also be making electric vehicle and grid storage battery cells that will be used to run Tesla's electric cars.