In a $218 million US all-stock deal, Tesla has agreed to purchase Maxwell Technologies—a company known for its energy storage. The contract can potentially help the massive electric car maker produce more energy-efficient and longer lasting batteries. As competition in the market rises, it’s paramount that Tesla cut costs and capitalize on better batteries.
Tesla has sped up production on its Model 3 sedan, and to reach a broader customer base, it needs to lower the cost of the vehicle, so those vehicles are more attainable than the purely luxury models.
Executives of Maxwell spoke with investors in January, advising them of a newly patented, dry electrode technology that can increase the driving range while also reducing the cost of batteries used in electric vehicles. During the investors meeting, Maxwell also stated that it expects alliances to build around the dry electrode technology within six months.
The energy storage company also produces ultracapacitors, which discharge energy faster than batteries. Ultracapacitors also complement battery technology.
Craig Irwin, a spokesperson for Roth Capital Partners, stated that Tesla requires the solvent-free battery electrode from Maxwell to create a viable path to lower battery costs. Irwin also said that Tesla needs to move quickly because real competitors are on the horizon.
Currently, General Motors and Lamborghini are also customers of Maxwell Technologies.
Japan’s Panasonic Corporation is presently Tesla’s exclusive battery cell provider. However, Elon Musk, chief of Tesla, stated way back in 2013 that he believes ultracapacitors to be highly valuable. At that time, he also said that a breakthrough in energy density was needed before ultracapacitors can be useful.
In addition to vehicles, Tesla sells power storage in conjunction with its solar power business. Ultracapacitors have the potential to get used as backup systems for utility grids and homes.
Maxwell Technologies state that it is expecting the board-approved deal to close either in 2019’s second quarter or shortly after.