Tesla to acquire Maxwell Technologies

18 March 2019

Tesla has agreed to acquire Maxwell Technologies, an ultra-capacitor and electric vehicle battery manufacturer, for $218 million. The deal will close sometime in Q2 2019.

Maxwell’s expertise in dry electrode technology boosts the energy density of batteries while, it says, also being more cost-effective than the more prevalent wet electrode technology.

For Tesla, the acquisition is a deviation from its approach hitherto of building EV batteries in-house – perhaps a necessary strategic pivot as EV competition toughens.

Now competing automakers are pressuring Tesla from both the high and low ends of the market, inparticular Porsche, Mercedes and Audi and at the ‘economy’ end Nissan, General Motors and VW.

With competitors hot on its heels Tesla may have decided it did not have the time to crack the EV battery code on its own, while Maxwell has the necessary technology already in place and under development.

Analysis by Frost & Sullivan bears out this view. Maxwell Technologies, it says, is a pioneer in the design and manufacture of high power density ultra-capacitors, while its high density batteries fit well with Tesla's energy strategy. “Tesla Model 3 currently has an energy density (at cell level) of 210 Wh/kg and 275 Wh/litre at the battery pack level. Maxwell claims that its patented dry cell electrode can produce energy density of over 300 Wh/kg which is a 42.8% increase whereas the planned energy density of over 500 Wh/kg would be a 138% increase compared to Tesla's current batteries. Such a boost in the energy density will be a breakthrough in the EV industry as it can propel Tesla cars from the current range of 220 miles to around 375 miles. The end result of applying Maxwell's dry cell technology would be a simplified manufacturing process which can lead to 10 to 20% cost reduction with better battery life (up to 2x).”

The acquisition, says F&S, offers these benefits to Tesla:

• Pairing Tesla's Powerpack with Maxwell's ultra-capacitor storage systems for utility-scale applications such as primary frequency response and grid stabilization.

• In automotive applications - start-stop, regenerative braking, and actuated power.

• The dry electrode manufacturing process which is an environmentally friendly process without solvents will improve battery performance including energy density and range while cutting down manufacturing costs.

There are clear signs that Tesla is looking to diversify in terms of battery suppliers to reduce its dependency on Panasonic.

Frost & Sullivan believes that this acquisition is expected to be a clear winning strategy for Tesla as it has bought a company whose goals clearly aligns with its vision. Also, they acquire an experienced technical and manufacturing team in Maxwell which is noticeably capable of making important advancements in the EV and storage industry. Given the fact that Tesla owner Elon Musk already has a background on ultra-capacitors, Tesla is expected to commercialise the dry electrode manufacturing technology sooner than expected with potential synergies for the company.



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