South Africa Could Get Tesla Battery Plant In Exchange For Starlink Deal: Report

Musk's meeting with the South African president could let SpaceX deploy Starlink in exchange for a Tesla battery plant.

Elon Musk and a battery pack made with 4680 cylindrical cells

Photo by: InsideEVs

Rob Stumpf

By: Rob Stumpf

Jan 2, 2025 at 12:00pm ET

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Musk's South African roots are calling him home. Okay, well, maybe not him, but at least his companies. According to a recent report by Bloomberg, Musk's talks with South African President Cyril Ramaphosa could lead to a bit of quid pro quo for two of Musk's heavy hitters: Tesla and SpaceX.

After meeting earlier this year to discuss potential investments in South Africa from companies under Musk's control, Ramaphosa and Musk are reportedly in talks over a deal that spans multiple Musk ventures. The twinkle in Musk's eye in SpaceX's Starlink, which he has been itching to deploy across the country but has been blocked over regulatory hurdles. However, there's a carrot dangling right in front of Ramaphosa in the form of a Tesla-branded battery factory—that is, if the deal materializes.

Tesla's 4680-type cylindrical battery cell

"I want you to come home and invest here," said President Ramaphosa, referring to a conversation he had with Musk in September. The two reportedly discussed potential foreign direct investment opportunities—similar to Tesla's, a U.S.-owned company operating in China—which includes bringing services link Starlink to South Africa

However, Musk's entry into South Africa has hit regulatory barriers involving the country's local Broad-Based Black Economic Empowerment policy. Musk has reportedly asked Ramaphosa for leniency in meeting requirements under this policy so that Starlink could be deployed in his home country, and in exchange, Musk's companies could invest in South Africa. One such example given to Bloomberg by an unnamed source was a battery production facility for Tesla.

But why Tesla, and why a battery production facility? Your mind might jump immediately to vehicles, but South Africa would more directly benefit from another area of Tesla's business: battery storage.

The country is known for the so-called "load shedding" of its power grid. This has resulted in an unstable power grid and has even contributed to an uptick in crime with criminals taking advantage of the power cuts to commit offenses. Tesla's could use this battery plant to increase the reach of its energy storage products, namely the Megapack, Powerwall, and even its solar products. It could also use any over-capacity to aid in cell production for the automotive area of its business, potentially overcoming geopolitical hurdles in other areas of the world.

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Now, any sort of deal is far from finalized. But it's interesting to watch reciprocity between two companies that share the same CEO.

What do you think?

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Comments

Musk has been criticized in the past for being an "absent CEO" from Tesla. However, his tie-ups between companies mixed with recent political influence could end up being a benefit for Tesla shareholders in this scenario.

Whether or not it plays out is another story. As evidenced by Tesla's Gigafactory in Mexico (or, rather lack thereof) and $25,000 EV, Tesla's plans can change often and fast.

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