The Reason Tesla Spent $218 Million On Maxwell Technologies

FEB 16 2019 BY EVANNEX 77

WHY DID TESLA ACQUIRE MAXWELL TECHNOLOGIES?

Tesla’s acquisition of battery supplier Maxwell Technologies went mostly unnoticed by the mainstream press, but it could have a tremendous influence on the future of the California carmaker, and of the entire auto industry.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: A sampling of batteries from Maxwell Technologies (Image: Maxwell Technologies)

Maxwell, which was founded in 1965 as a government contractor, is based in San Diego and has about 380 employees. The company has gotten a lot of coverage in the EV press, mainly because of its innovations in the realm of ultracapacitors. The astute will recall that Elon Musk was planning to study ultracapacitors when he arrived at Stanford in the 1990s.

However, Electrek’s Fred Lambert surmises that Tesla’s acquisition of Maxwell may have little to do with ultracapacitors, and much to do with “dry electrodes,” which the company calls “a breakthrough technology that can be applied to the manufacturing of batteries.”

Maxwell claims to have demonstrated that its proprietary electrode can enable an energy density of over 300 Wh/kg, and predicts that it can achieve over 500 Wh/kg. Of course, the energy density of Tesla’s batteries is top secret, but it’s widely believed to be the best in the industry. Tesla owner Sean Mitchell, who discusses some of the possible reasons that Tesla bought Maxwell in a recent video, estimates that the energy density Maxwell is talking about would represent an improvement of between 15 and 50 percent compared to Tesla’s current batteries.

Above: Sean Mitchell discusses the possible rationale for Tesla’s most recent acquisition (Youtube: Sean Mitchell)

This would be a huge step forward, enabling longer range and/or smaller battery packs, but other benefits could be even more important. Maxwell says its technology can simplify the manufacturing process and result in a “10 to 20% cost reduction versus state-of-the-art wet electrodes,” while also “extending battery life [by] up to a factor of two.”

A cost reduction of anything like this magnitude would be a huge step forward, possibly enabling Tesla to make the Semi economically viable, and to start delivering the long-awaited $35,000-dollar Model 3.

Of course, companies regularly announce advances in battery tech, but Elon Musk and JB Straubel have repeatedly said that, while they keep a close eye on new developments, they haven’t yet seen a cell that’s proven to be better than those produced by Tesla and partner Panasonic. In mid-2018, Straubel said (as reported by Electrek), “We try to talk with every single battery startup, every lab, every large manufacturer. We get quotes from them. We test cells from them. If there’s anything better, we are all ears, we want to find it, but we haven’t found it yet.”

Above: Tesla’s lithium-ion cells (Image: Charged)

The fact that Tesla is willing to pony up around $218 million for Maxwell indicates that it has finally found a firm that can deliver the goods.

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Written by: Charles Morris; A version of this article originally appeared in Charged; Sources: Maxwell TechnologiesElectrekSean Mitchell

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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77 Comments on "The Reason Tesla Spent $218 Million On Maxwell Technologies"

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Just a couple of corrections.

1- Sean Mitchell does not own Tesla.

2- The energy density of Tesla batteries is not top secret. The energy density in the Model 3 is 252Wh/kg at the cell level and 134Wh/kg at the battery pack level, according to page 13 of this document:
http://www.prologium.com.tw/upload/Download/20180719-15155777.pdf

Just because some company put figures for the Model 3 cells into a presentation doesn’t make those figures gospel. They probably are only estimates. Besides, high-tech battery makers such as Panasonic are continually fiddling with the chemistry to improve energy density on a year-by-year basis, so the exact energy density may be changing month by month, and certainly year by year.

Panasonic and Tesla hold the exact characteristics of their batteries as trade secrets, and that’s not going to change. Anyone who bothers to research the subject will quickly find that different sources give different estimates for the energy density of the Panasonic 2170 cells used in the Model 3.

To some extent, any measurement of li-ion battery cell energy density is going to depend on the testing method. Did you know that li-ion battery capacity varies by temperature? So that’s one variable right there which is going to affect the energy density, and may result in different measurements using different methods.

Don’t worry, I am not taking anyone’s figures as gospel. However there are more enough Tesla 2170 cells out in the wild to make reasonably accurate measurements, and that is all we need here. I know very well that the capacity measurement depends not only on temperature but also on cell manufacturing tolerances, on the current drain used during the test, and of course on the accuracy of the equipment.

I have first hand experience measuring lithium battery capacity using cheap Chinese test equipment. I purchased 3 capacity measuring modules about a year ago (under $3 each) and tested the same lithium cell with each board. The readings were different by as much as 15% from one module to the next! So yeah, you get what you pay for.

Do you know anyone that has done real testing on 2170 cells? I searched recently and found nothing but estimates.

1.Tesla owner means he owns a Tesla vehicle, not the entire company.
2.Tesla hasn’t released any official figures for energy density. There are several calculations/estimates out there. Our own George Bower’s models says 246 Wh/kg. It’s hard to know with 100-percent certainty.

1- I know, I was just being nitpicky. But you have to admit it could also mean he owns a Tesla power wall or a Tesla solar panel or a Tesla surfboard instead of a Tesla car.

2- 246Wh/kg is only 2.4% different from the figure I quoted, well within reason given all the variables that can affect measurements. I would expect cells from the same manufacturing batch to show capacity differences even higher than that.

Sean owns a Model S, which is what they mean by Tesla owner. Not that he owns the company but that he owns a Tesla vehicle.

“Tesla owner” could mean one of two things. It could mean that he owns a Tesla vehicle. It could mean that he owns the company. Since it’s a publicly traded company, it has many owners. Anybody who holds one share of Tesla stock is a Tesla owner.

With regard to the comment about energy densities of “300 Wh/kg, and predicts that it can achieve over 500 Wh/kg. ” I heard an estimate that Tesla’s current density is 186 Wh/kg, so even the bottom end figure of 300 would be huge. The other factor worth mentioning is the reduction in Cobalt.

George Bower estimated, in a very recent InsideEVs article, 246 Wh/kg for the 2170 cells used in the Model 3.

Not saying that must be correct; just saying that different sources show different estimates, and without inside info from Panasonic or Tesla, there’s no way of knowing what Panasonic’s official figures are.

https://insideevs.com/tesla-model-3-2170-energy-density-compared-bolt-p100d/

Jack Rickard also measured them at 247 Wh/kg. If you charge and discharge li-ions VERY slowly you can increase capacity a little. That’s why you sometimes see 265 Wh/kg for similar NCA cells from Panasonic.

Not exactly news. Several people commenting on the first article on this news — including my own comment(s) — came to the same conclusion: That Tesla has no interest in Maxwell’s capacitors, but is almost certainly very interested in potential improvements to EV batteries using Maxwell’s “dry electrode” tech.

Yeah, if they wanted to use capacitors they’d just buy the capacitors.

One issue that hasn’t been mentioned is how this technology might relate to Tesla’s current and future models. The Roadster 2.0’s advertised range of 600 miles, and to a lesser extent the range of the semi, might have already factored an anticipated improvement in battery technology like the dry electrode.

The proposed ranges strongly suggest an up coming significant battery improvement. I think this is it and that means Tesla intends to introduce this new technology this year.

I’ve said since day one Roadster will use an advanced battery chemistry. Most here say I’m nuts.

That said, Maxwell does not have an advanced chemistry. They have a process for coating electrodes. Their process should work with most advanced chemistries, but it doesn’t fix the problems which keep them out of vehicles today.

Doggydogworld – “I’ve said since day one Roadster will use an advanced battery chemistry. Most here say I’m nuts.”
——————–
Not saying you’re nuts, and you may be right, but I was guessing that the Roadster will just have a higher capacity battery. Such will give a longer range (obviously), but also a higher possible peak power, and consequent higher acceleration. So in the Roadster, that’s why the bigger battery, the increased range then being more a happy by product than the reason for having it. Just a theory…..

It shouldn’t need anywhere near twice the power of a P100DL, though, since it’s smaller and presumably lighter. I also can’t imagine they’d weigh this halo car down with 1+ ton of 2012-era NCA cells. Nor do I see room for them.

This is a halo car. It can use $500/kWh specialty cells, and Tesla needs to be first to market with next-gen batteries.

1000 km range also solves the cycle life problem common to many next gen chemistries.

Putting that large a battery pack into the car means the power level and the “C” rate can be lower, meaning lower demand on the cooling system.

Those alone might be sufficient reasons for Tesla to put such a huge battery pack (or twin battery packs) onto the Mark II Roadster, even without any other reason to do so.

And I don’t at all agree there isn’t room for them. Stack them under the back seat and under the hood, replacing the “frunk”, and I think there is sufficient room. If not, add a single layer of cells under the floor. I don’t agree that, as some claim, there has to be sufficient room for a double layer under the floor.

“I’ve said since day one Roadster will use an advanced battery chemistry. Most here say I’m nuts.”

Well, Tesla has already built its prototype Mark II Roadster, and reportedly it has a 200 kWh battery pack in it. Tesla may wind up using different batteries than were in the prototype, but just putting the equivalent of two 100 kWh Model S/X packs into the Mark II Roadster would probably be sufficient for it to perform as demonstrated.

There are of course many possibilities, including the possibility that Tesla got hold of enough samples of Maxwell’s breakthru electrode material to make enough batteries to equip the Mark II Roadster with that. But that seems unlikely; that would be a lot more than just a sample.

Shaving with Occam’s Razor, I see no reason why the Mark II Roadster can’t use the same batteries which Tesla is using in either the Model S/X or the Model 3 packs.

Where I’d call someone “nuts” is where people have claimed the Mark II Roadster will use solid-state battery cells. Nope! Two Tesla spokesmen have said repeatedly that solid-state batteries are not a workable solution in the next few years. Not soon enough for the Mark II Roadster.

Unlikely Tesla would be making announcements on technology they hadn’t acquired . This probably adds to their existing improvements we haven’t seen yet

Elon Musk once septically said on the battery breakthrough subject: “just show me a working prototype” . Looks like Maxwell showed Tesla a working prototype.

Also $218 million is a lot more than the $90 million Dyson paid for Sakti3’s solid state scam so maybe this is more real?

Tesla has a sophisticated battery cell analysis lab. I think the chances that Maxwell has scammed Tesla are slim and none.

Maxwell’s “dry electrode” tech is also the subject of what appears to be a formal scientific paper presented to the Electrochemical Society. While that doesn’t completely rule out a scam, scammers rarely if ever present their work for formal scientific review.

http://ma.ecsdl.org/content/MA2018-01/3/266?related-urls=yes&legid=ecsmtgabs;MA2018-01/3/266

Based on the estimated/noted gravimetric density figures, it sure seems to me that reducing pack weight would have significant benefits, provided it could be done without sacrificing other metrics to evaluate a battery pack.

Even if the Energy Density Advantage was just 20%, think 20% of 310 Miles Range: 62 More Miles! So, a Long Range Model 3 could push out to 370 Miles!

Even adding 20% on the base Model 3’s Anticipated 220 Miles range, adds 44 more miles, for 260 Mile’s Range, as a Base Model 3! Mid Ranges 260 miles, becomes 300 Miles! So, it takes until 2020-2021! Still decent!

More importantly, life cycle and calendar life: If that could be doubled, imaging a 16 Year Long Battery and Drive Train Warranty! Now, if Tesla could get a full 8 Year Vehicle Warranty …..!

The 300 and 500 Wh/kg is just marketing fluff. It has nothing to do with Maxwell’s process.

How do you know? Are you a scientist at Maxwell?

No, but I can read.

Tesla spending $128 million to acquired the tech seems to point quite strongly in the direction of Maxwell’s claims being quite a bit more substantial than mere “marketing fluff”.

DBE isn’t fluff, just the 300-500 claim.

If Maxwell’s tech was so valuable, you would think the battery mfgs. like Panasonic, LG et al would be all over it and Tesla would have had to pay more the $218M which sounds like company and products are not that highly valued even though claims of 10-20% cost reduction and 100% increase in battery life. Just a 10% cost reduction would be worth $500M a year to Tesla.

The most likely benefit from Maxwell’s Dry Battery Electrode coating process is a few percent cost improvement. Assuming it works at scale, which they were supposed to demonstrate last year but didn’t.

Anyway, a few percent cost reduction is worth a lot more to a high volume operation, and nobody has higher volume than the Gigafactory right now.

More than a few percent. According to the announcement on the technology and Jack rickard who is a battery guru this will drop the manufacturing cost significantly. The wet electrode drying process is energy intensive, time consuming and takes up a lot of space.
Jack Rickard has labeled it a significant incremental improvement.

In addition, Tesla gets an injection of battery scientists so who knows what else will flow from this.

Maxwell’s marketing folk claim DBE can reduce BEV cost by $200-1000. That’s 2-8%, depending how you measure. The low end is probably more realistic, but that’s still $80m/yr savings at current run rates and more in the future.

When a battery technology company has an innovation, they will look at who the largest consumers are. When it comes to lithium ion batteries, that’s Tesla. Presumably, they approached Tesla, and Tesla found it more advantageous to buy the company than to license its technology. Owning it means that they can put money into R&D as they see fit.

When the technology is a good fit for a specific purpose, going to a company that has that need makes more sense than going to a general battery company that would then have to convince companies like Tesla to use the technology.

Another thing that Tesla gains from buying Maxwell — besides just the technology — is the talent. If Maxwell has good new technology, then they have a team which is demonstrably capable of making important advances. Straubel is brilliant, but bringing more smart folks in-house can only help Tesla.

Maybe Maxwell wanted to sell to Tesla, did you consider that?

I think you’re misreading the situation rather badly. Maxwell has been losing money, so the company itself isn’t worth that much aside from the intellectual property. In fact, there may be hidden costs if Tesla has to take on Maxwell’s debt.

It looks like Tesla paid a lot just to get some IP. Perhaps in your world, $218 million isn’t that much; but for most people and most companies, it’s a pretty large amount.

218m is not a lot if it saves to 80-200m per year. Which is a few percent of what they pay/will pay for batteries.

Read their 10-K. It’s clear DBE does not provide 300-500 Wh/kg, it’s just compatible with some chemistries that do.

Like it was mentioned in insideevs before, Tesla most likely bought Maxwell for the electrode technology, they must have also tested this new ssb link below. before they made the decision to go with Maxwell, Audi/ VW could be the other maker who are testing out this new ssb, and this company grabbed another award after getting the CES innovation award.
https://finance.yahoo.com/news/revolutionary-ev-solid-state-battery-024500535.html

ProLogium energy density and specific energy are worse than 2170 at the cell level. Their claimed advantages come from eliminating cooling and using rectangular cells to eliminate empty space in the pack.

The biggest single question in my mind is how long will it take for this new technology to be implemented at GF1? I don’t think Tesla would have paid the high price of $218M without long and thorough evaluation of the process. Tesla must have been working with Maxwell for the past year or longer. I therefore assume that they already have a pilot line working and it is quite possible that those prototype batteries are already installed in the Roadster 2 and Semi trucks.

Maxwell was supposed to develop a pilot line last year, but apparently did not get it working yet.

I certainly wouldn’t bet that Tesla is that far along in using Maxwell’s technology. If Tesla decided to buy the company rather than license it, then they certainly couldn’t already be using it in manufacturing — which would have required them to license the tech.

I rather doubt that Tesla has been able to do more with the tech than give it a thorough test.

So solid state batteries may be coming soon. In time for the Tesla pick up truck would be my hope…..

This is not solid state

Another Euro point of view

There goes part of the cash Tesla probably needed to further develop the pick up truck and thus probably further chances for Rivian to get their truck on the market before Tesla.

As a ‘merger of equals’ for shares not cash, Tesla gets $63 million COH, assets, customer base and IP and no tax bill.
Bargain.

Cash on hand is less now, and will be even less when the deal closes. MXWL is a cash incinerator.

You are down voted, but I think the point about ongoing cash burn is important, unless Tesla liquidated quite a bit of Maxwell’s headcount and R&D

My guess is that Tesla will sell off the assets related to manufacturing capacitors. Tesla is likely only interested in the dry electrode tech, altho as others have pointed out, they may be interested in hiring some of the scientists and/or researchers working for Maxwell.

Since Maxwell was losing money, Tesla may be taking on substantial debt along with the new company. Hopefully Tesla will be able to offset that by selling off assets for which Tesla has no need.

Maxwell already sold what they could, the CONDIS line. Besides, ultracaps are cool and nobody can hype cool stuff better than Musk. He’ll probably have an ultracap powered scooter in a few months.

Wrong! Tesla cash increases because Maxwell had 70million cash on the books. The deal is share swap so all that happens is Tesla stock dilutes by 200 million. So they effectively paid 130million for Maxwell.
Pretty good deal for Tesla

Tesla will gain cash, just not as much as people say because Maxwell will burn 20-30m by the time the deal closes. Tesla will also take on 40m of debt which will offset the cash.

Maxwell started 2017 with 50m and burned it all in 9 months. The 23m cash on hand at 9/30 was from selling stock.

They sold their CONDIS high voltage business in December, raising 45m of cash but increasing their burn rate a little.

What was MXWL average annual cash burn the last 3 years? Pretty sure it’s a rounding error for Tesla

Meh. Let Rivian cut its teeth on the pickup truck market. I’m sure they will do well. I hope they do well, But since they are focusing on the ‘Adventure’ truck market, there is a lot of room to differentiate and come out with something for the working truck market. I wouldn’t buy a Rivian truck because of its pretty boy image. I need something tougher and capable of being roughed up. I am not sure that Musk has that market in mind either.

“…There goes part of the cash Tesla probably needed…”

More FÜD from the pravduh mill.

Tesla paid no cash to acquire Maxwell; it was a stock exchange deal.

Mazda has used their ultracapacitors for several years in I e-loop

Super capacitors and lithium batteries work very well together right now. Check out the Bellore Bluecar that combines both. They rent them in the BlurIndy ans LABlue rental electric cars. They go over 160 mikes on a charge with a Nissan LEAF size battery. They charge faster, regen better and last longer.

Maxvell is a running cpmpany so the capacitor part shonld
Be returning somthing on telsa investment

They have a huge cash burn rate, they won’t be a financial asset. This is about tech only.

They have 70mil in cash on the books. They lost 7 million last year. Bear in mind they have spent a lot developing this technology

7m?? They lost 30m in the first 9 months of last year alone, and burned roughly 50m of cash (offset by a 23m stock offering).

Well… Straubel should have taken a closer look at Forge Nano Corp. They cracked the code on ALD, Atomic Layer Deposition. This tech. eliminates the thermal runaway, adds 2X life to batteries. Adds 25% energy density.

Thanks, never heard of Forge Nano before. Looks like it would be a really good match for lithium solid state batteries. Not convinced it is necessarily better than Maxwell.

Nearly all claims from high tech battery and/or energy storage startups, such as the claims you cite, turn out to be something which can’t be commercialized, or even outright B.S.

Maxwell apparently has something real, or Tesla wouldn’t have bought them out.

ALD is just a standard deposition system type in just about all semiconductor fabs. They may have a specific process that uses ALD but ALD by itself says nothing really.

I’m a big fan of ultra caps but another notable downside of modern capacitors is very fast self dishcarge relative to li-ion batteries. Whereas li-ion may be 5% per month (dependent on many factors) this value usually exceeds 10% per day in a ultra cap. These absolute numbers may be off by a few factors, but the relationship is generally correct.

But that works fine in the oft-discussed application of being the main power dump for the regenerative braking instead of using the batteries directly.

If you could get the effective efficiency of regenerative braking up from what I’ve seen claimed as 40% to maybe 60 or 70%, the city range would go up a lot. I’m just basing that on remembering the old days when people would homebuild EVs that didn’t even have regenerative braking; the numbers weren’t pretty.

Tesla drivers rarely use friction brakes in city driving, so there’s little opportunity for additional regen except perhaps when the batteries are very cold.

Ultracap round trip efficiency should be a few percent better.

“If you could get the effective efficiency of regenerative braking up from what I’ve seen claimed as 40% to maybe 60 or 70%…”

Seems very doubtful to me that using a bank of capacitors would improve the energy efficiency of regen by that much. If it was possible, then Tesla cars would already be using capacitors for that purpose. They don’t, because the benefit is marginal.

But nobody uses capacitors for long-term (24+ hours) bulk storage of electricity. Despite some comments in this very thread, capacitors are not suitable for use as EV “batteries”. The energy density is much, much too low.

At best, a small bank of capacitors in an EV would be sufficient to provide maybe a second or two burst of acceleration, or to absorb the energy from a second or two of heavy regen. But obviously Tesla doesn’t think they are necessary, since Tesla’s powertrains don’t use capacitors for that purpose.

Tesla almost certainly has no interest in Maxwell’s capacitors/ supercapacitors/ ultracapacitors.

Slow regen in cold would be improved with capacitors, and slow acceleration also.
Ultimate 0-60 time could be improved especially on the new roadster (even 0.1 sec means a lot).
Might not see them in current Teslas due to it is another system that not only you need to make, but develop its behavior in all situations, and another possible fail point in the whole system.
Super capacitors do great at things batteries do not, so they can provide benefit at the cost of complexity.

None of those mean they are going to use super capacitors in updates to their vehicles but there are real reasons for it.

While this is great news. The real measure of battery performance as far as a vehicle is concerned is the pack energy density. Along with a bunch of other variables.
I would like to see some vehicle comparisons on pack weights v energy

Can someone explain to me how this works. Tesla offers $4.77/share. Maxwell share price goes up, $4.74 Friday closing. Maxwell shares were about $3.60 before the offer. If I was a Maxwell share holder I would sell now and take my profit. This has to be approved by SEC and ratified by a Maxwell shareholder vote that will happen in about 3 months.
1. Why 3 months? Is this to give time for another competitive offer by someone else like GM or VAG?
2. Why are investors willing to offer $4.74 now? Doesn’t make sense for 3 cents in 3 months. Are they expecting higher offers?
3. What are the odds of this going through?

Correction, Tesla’s offer is $4.75 per Maxwell share.

Many MXWL owners are selling to aribtrageurs. Some are holding because they want to own TSLA, some for tax reasons.