The deadline for the Tesla Maxwell merger is fast approaching.
Tesla's move to acquire Maxwell Technologies is perhaps the smartest thing that the company has done since breaking ground for Gigafactory 1. If successful, the acquisition will give Tesla a near-term competitive edge, keep Tesla relevant for the near future, and further the company's overall mission.
A Near-Term Competitive Edge
Maxwell's tech advancements applicable to battery technology could help Tesla right away in two ways. First, Maxwell claims that their dry electrode technology can save 10% - 20% over wet electrode manufacturing and at also boost energy density. If implemented rapidly, this savings and energy density boost could help Tesla reduce "batry" costs and boost Tesla's profit margins. Particularly of note would be an improved margin on the Standard $35,000 Model 3. While it is generally acknowledged that Tesla is a low cost leader in battery costs, an additional savings would help boost it's cash position, secure it's immediate financial future, and make additional projects and products possible, much sooner.
Second, the Maxwell tech could enable Tesla in short order to boost the range of its current premium models, thereby expanding its customer base. While Tesla does not disclose the current energy density of its cells, it is thought that Tesla's 2170 cells have an energy density of about 260 Wh per kg. Maxwell touts that their technology improvements can boost cell energy density right away to 300 Wh per kg. If this proves true, then the range of a Premium Model 3's could for example be boosted from 325 miles to 375 miles, hopefully without increasing the sticker price. Market research suggests that there is a large segment of automobile buyers that are range sensitive. They want an EV with greater range. This segment's interest in owning an EV increases as the EV range increases. Maxwell's tech should immediately help Tesla increase range, thus helping Tesla compete more effectively in the broader automobile market against ICE cars.
Keeping Tesla Relevant In The Near Term
The race is on. Millions and millions of dollars are being spent on battery R&D. Sila Nanotechnologies, QuantumScape, Henrik Fisker and others are in a race to develop and bring to market batteries that are safer, have quicker recharge times and have greater energy density. The push is to get to 500 Wh per kg.
Maxwell claims to be able to boost energy density to 300 Wh per kg right away with a path to 500 Wh per kg and at the same time double the batteries discharge/recharge cycle life. If true, then rather than being left in the dust, Tesla will be able to remain the consummate leader of the EV revolution, at least for the next few years.
It's very likely the EV landscape and environment will change within three to five years. Tesla needs more time out front of the pack to secure its future. One startup, Innolith, claims to be only three years away from mass market batteries with 1kWH per kg. IF this does come to fruition (battery breakthrough announcements abound) Tesla will have hopefully have built enough of an empire by then to continue to successfully compete, including developing, acquiring or at least licensing such a technology.
Furthering Tesla's Core Mission
JB Straubel has said "Our mission is ... to change the electric mobility equation, so that essentially every vehicle could have the opportunity to be electric" (or said another way to become an ICE killing machine). Elon Musk has essentially said that if Tesla went bankrupt, but its influence converted the world to sustainable transportation (electric vehicles), he would consider Tesla a success. Tesla doesn't just want to just sell the most popular electric vehicles, although it does. And, Tesla doesn't want to simply sell more electric vehicles than anyone else, although it does. Tesla's mission is to replace ICE vehicles with EVs.
As mentioned, research suggests that a large portion of the automobile market wants vehicles that have an affordable range of 300+ miles and really a 400-mile range would be optimal to entice the greatest number of drivers away from ICE vehicles and to EVs. As Ben Sullins of Teslanomics has said, "You have to look and see what it would take for an electric vehicle to compete with the range and convenience of a gas powered car." A survey done by Autolist suggests that when EV range jumps up from 250 miles to 300 miles, interest in owning an EV jumps up markedly as well. (www.greencarreports.com/news/1112298_how-much-electric-car-range-is-enough-300-miles-much-better-than-200-miles-survey)
As affordable range increases, so will the market for EVs. Each step forward in increased affordable range will open up the EV market to new buyers that wouldn't have considered buying electric at shorter ranges. "Affordable" is very subjective but certainly $45,000 is a good place to start. However, as greater battery energy density comes down in cost more and more, people will convert from ICE vehicles to EVs. If Maxwell's touted 500 Wh per kg can be reached, then more affordable, longer range vehicles should be possible. When a 400-mile range EV can cost as little as $28,000, then we will see the true end of the ICE era.
From one marketing perspective, I do not think that Tesla should be selling vehicles by range (Standard Range, Long Range) but rather only by trim level (Standard, Premium). Naturally the more luxurious the trim level, the greater the features, including range. Selling by range as a primary vehicle feature puts a subconscious seed in consumers' minds that the range is affixed to the model purchased, and if the week after purchasing a "Standard Range" vehicle the range increases by 50 miles, the customer may feel particularly cheated. The traditional convention of touting a vehicle only by trim level is a much better wiser choice.
As a side note
I can understand the resistance to the Tesla-Maxwell merger on the part of some Maxwell stock holders. They may possibly be looking at Maxwell's historical highs, which are nearly ten times the price tenured by Tesla. I can imagine that it is much easier to believe that a $4 stock could grow again to $40 than it is to grasp the possibility that a $270 stock could grow to $2,700. But if all goes well, that is not beyond the realm of possibilities, particularly with the help of Maxwell's technologies.
The merger with Maxwell has great significance. JB Straubel has commented that Tesla gets hit up all the time with ideas for better battery tech, and it's constantly evaluating new technologies all the time. The fact that it has decided to make a move on Maxwell's technology signals to me that it is the real deal, and Tesla is very confident that it is a true leap forward, not just investor bait.