Tesla’s $218M Maxwell acquisition
aims to give its batteries a boost (Tech Crunch)
- Yesterday Tesla acquired one of the largest ultra capacitor manufacturer’s: Maxwell Technologies.
- Maxwell, a pure play on ultra capacitors - whose use was increasing in both EVs and mild hybrids - was always an interesting “potential” acquisition target for battery and auto OEMs.
Comments
- This could be a very interesting acquisition for Tesla and the wider EV industry.
- Why is this important? Ultra capacitors store charge electrostatically rather than electrochemically. Hence they do not suffer from the big issues associated with batteries i.e. relatively short life (measured by charging cycles), sensitive to higher temperatures and problems with high speed charging plus safety (they can catch fire if mistreated).
- Ultra capacitors in contrast can undergo thousands of charge discharge cycles without any degradation. They also charge and discharge at 10x the rate for lithium ion batteries because of their higher power density versus lithium ion batteries.
- Ultra capacitors however have one big problem, while their power density is very high (charge and discharge rate), their energy density (i.e. storage capacity) is very poor. Therefore while they cannot fully replace lithium ion batteries in cars, they work well in conjunction with 48V mild hybrids and Lithium ion battery powered EVs.
Tesla's Gigafactory
EPA & California still a long
way apart on emissions (Autonews.com)
- The acting head of the US EPA has been quoted as saying that the EPA and the state of California are still a long way part on agreeing new tailpipe emission standards.
- The EPA wants to cap the fuel economy standards at approximately 37 miles per gallon (MPG) through to 2026, compared with the previous administrations target of nearly 50 MPG by 2025.
- Their justification is around keeping car costs lower, whereas California is focused on reducing emissions. This debate is important as California is one of the largest purchasers of EV’s.
- If no agreement is reached, the EPA is looking to impose federal standards, which we assume will end up in court.
Comments
- The current debate between the EPA and California is symptomatic of the stated desire of the current US federal administration to unwind many of the existing environmental laws and regulations.
- There is a real risk that by slowing EV development in the US, the industry leadership role could pass to China and to some extent Europe. Both markets are moving ahead of the US in terms of technology roll out (Tesla being an exception); and as scale-effects kick in, this gap could widen.
Tesla Share Price
Conclusion
I have quite bullish on Tesla, the company is not overly expensive and I think its product is UNIQUE. It will find a way to deliver and increase orders as infrastructure is rolled-out.
I was in San Francisco a few months ago and I was truly amazed by the number of Tesla in the city. To be honest, I think a Tesla is more classy and cooler than ANY luxury European Brands.
At 50x P/E NTM and with FCF expected to be positive in FY2018. I would buy it for the Long Term as I think it could become a giant.
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