Tesla Acquires Battery Maker Maxwell Technologies for $218 Million to Give Boost to E-Vehicles Batteries

Tesla has announced that it will acquire battery maker Maxwell Technologies with a $218 million all-stock deal to improve the electric automaker Tesla’s batteries as well as reduce costs. The merger with an expected closure date in second quarter in 2019 will value Maxwell’s nearly 46 million shares at $4.75.

Founded in 1965, Maxwell Technologies is known for making ultracapacitors. Ultracapacitors are energy storage devices just like batteries; however, as regular batteries store energy in electrochemical form and takes longer time to charge and discharge, the ultracapacitor batteries store energy in electrostatic form which enables quick charging and discharging than in regular batteries.  The ultracapacitor technology of Maxwell has found many uses in automobile industry as its notable customers include Lamborghini, General Motors and Geely.

Although Ultracapacitor is a long-time interest of Tesla Founder and CEO Elon Musk, it is highly unlikely that the millions of dollar worth acquisition deal was aimed at ultracapacitor. Battery expert Venkat Vishwanathan from Carnegie Mellon University explained that the acquisition may be eying Maxwell’s other battery technology called the dry electrode technology. Maxwell claims that its new technology improvises on the lithium ion batteries by using a conductive agent in place of a solvent. The company claims that the dry electrode technology can ramp up battery capacity to 300 Wh/kg, a 20% boost over the best electric car batteries. The batteries being more efficient and cost effective than traditional wet electrode technology can give Tesla a boost in e-vehicles market which is experiencing stiff competition.

Maxwell sold its high-voltage batteries to Renaissance Investment Foundation for $55 million in cash. Traditional fuel-based automobile manufacturers are increasingly shifting e-vehicles in order to comply to stricter environmental and carbon emission standards. This has led to a paradigm shift in e-mobility as number of automakers have launched e-vehicles such as Hyundai Kona, Kia e-Niro, Audi e-tron SUV, and Jaguar I-PACE.

The acquisition will also help Tesla manage its cash-flow which has turned out profits only 4th  time in Tesla’s fifteen year journey since founding in 2003. The reduction in battery cost will help Tesla to deliver on its $35,000 Model 3 promised for mass market. Although none of the companies explicitly cited the chief motive behind the acquisition deal, Tesla’s spokesperson stated in an e-mail statement that they are always looking for potential acquisitions to support Tesla’s mission to accelerate transition to sustainable energy.

Author: Nikhil Kaitwade

With over 8 years of experience in market research and consulting industry, Nikhil has worked on more than 250 research assignments pertaining to chemicals, materials and energy sector. He has worked directly with about 35 reputed companies as lead consultant for plant expansion, product positioning, capacity factor analysis, new market/segment exploration, export market opportunity evaluation and sourcing strategies.