What about a Tesla Panasonic and SolarCity merger?

edited November -1 in General
Hi guys,
I know everyone will think it a bad idea to merge with a battery company as it would limit Tesla's options in terms of battery supply in the future but hear me out for a sec.

I have been hearing from some pretty reliable battery sources that battery manufacturers are struggling to make money on any of their lithium ion products. Some are downsizing operations in this area as a result. Obviously it would not be good if Tesla was to lose its supply of batteries from Panasonic so naturally I thought of a merger of these two companies...well Panasonic could spin off it's lithium battery business first and merge that with Tesla (obviously Tesla doesn't want to worry about selling Panasonic flat screen TV's!) it Panasonic EV. If Panasonic is really losing money on it's lithium business then they should be willing to part with this area of their business for cheap.

Anyway in this way Panasonic EV could provide Tesla with batteries at break-even cost allowing Tesla to lower prices and increase volume, ultimately making more profit as one company, rather than Panasonic eating all the losses in their current arrangment. If Panasonic is losing money they might not sign any more supply deals with Tesla after this one is up.

I am of the opinion that the current Panasonic batteries are actually good enough to get the world driving electric...all we need is to get the price down.
Let me explain...with Tesla Supercharging stations spread out across the country in 150 mile radiuses Tesla need only build cars with a 200 mile (real world) driving range. Anything more is just overkill on the battery adding weight and cost...sure people could still order a bigger battery if they like as an option but I firmly believe that the Gen III should start at 200 miles real world range with free supercharger access for long distance, all for $30,000 USD (after any incentives). If they can do this then the game will truly have changed and Gen III will be sold in huge numbers.

With Panasonic EV as a division of the company helping to drive down and subsidize battery costs Tesla could start selling the Gen III at affordable prices more quickly and make up any losses in the battery division by increased profits due to higher sales.

The current Panasonic batteries don't need to get any better to make this a reality. Tesla could afford through it's higher profits to continue research and development on incremental improvements in the batteries but again they are good enough to get the job done already and a 200 mile range is all that is really necessary if the car has access to the supercharging network.

SolarCity comes into play by perhaps being able to put together a EV/solar/ off grid battery storage solution as a bundled package to its customers. Eg. People could lease all three products (EV, solar panels, off grid storage batteries) for a lower price than they are currently paying for their ICE car, gasoline/oil/maintainence, and electricity bill from their current utility company.
I.e. If you can get the battery price low enough by subsidizing it through the other two companies (Tesla and SolarCity) then as a trifecta they might work out very profitable as a whole.
Again the current Panasonic batteries are good enough (and reliable enough) to do everything now..we just need to get the price lower, ensure their continued supply, and have incremental advancements in the battery tech from here on out.

Perhaps the SolarCity arrangment would have to come a bit later on down the road but this would be the final nail in the coffin to those who say grid tied solar isn't really running off of true renewable energy and is a burden on the overall energy grid. It would also shut up those who say the grid couldn't handle a real mass movement into electric cars. Kills a lot of birds with one stone if it could work.

Just an idea...what do you guys think?


  • edited November -1
    Who the heck says LiIons aren't going up in demand? Every time I turn around more stuff is running off em.

    I also think its a catastrophically BAD idea for Tesla to merge with ANYONE until they are further along in their master plan. At least Gen III, and maybe not even then. If they merge before that, whoever they merge with has the chance to kill Tesla's development dead, and sell off the remains to ICE manufacturers to bury again. Elon has the vision and drive to make Tesla work, I seriously doubt anyone else can.
  • edited November -1
    Vawlkus +1

    Teddyg: Go back and re-evaluate your logic. I don't know if Panosonic is losing money on baterries, but if we assume you are right you then suggest after a merger Tesla could buy batteries as "cost" and price would go down. By definition if Panosonic is losing money they are selling at less than cost today so price will go up not down.

    As a TSLA stockholder I see many other issues with your proposal, but the one above is enough to make the deal a non starter.
  • Merger, no.

    Joint venture, maybe...

    Produce the batteries in a low cost area of the US or Canada. Avoids tariffs for Panasonic (and Tesla!), I am sure in the long term Panasonic will make money off Li ions and will provide a lower cost to joint venture partners (Tesla, GE and others?)

    Seeds of a good idea...
  • edited November -1
    I am actually a little worried about the long term demand for the 18650 cells that the Tesla uses. It seems that portable computers are shifting from conventional laptops to slimmer devices like the iPad and Microsoft surface, more and more people are using smartphones for their portable computer needs. I am typing this message on one as we speak.
    I don't think these devices run on 18650 cells, maybe somebody here knows what cells they do run on? Apple has apparently made some big strides in battery tech for these slim devices though...but i doubt they could be used in an EV, might get a little ridiculous if Tesla tried to manage 20,000+ iPad cells per car but who knows?

    My idea wasn't for the two companies to remain seperate..Tesla and Panasonic EV would become ONE company so they wouldn't want to kill Tesla by stopping the supply of batteries to Tesla...indeed supplying Tesla with batteries is ALL that the battery division of the company would do. I am trying to protect the supply of the 18650 cell here as Panasonic might not renew its contract next time around if it is losing money supplying Tesla.

    Tesla would then produce all of its components in house. Is the electric motor Tesla uses built by Tesla or do they source it from someone else?

    It is quite clear that Panasonic lost money on its lithium battery business last year...they have said they will be looking to sell off areas of the company that remain unprofitable..

    Hopefully Panasonic will hold on to its lithium battery business as it can see the potential with EV's but I am just thinking Tesla should have some sort of back up plan here. If someone else were to acquire Panasonic's battery business, they could put pressure on Tesla by raising prices to make the business profitable...God help us if an oil company was to buy...they have a pretty big incentive to shut down the EV if they can...70% of US oil use is for fuels in the transport industry.

    If Tesla is to go mass market it will need a supply of BILLIONS of 18650 cells every year...buying the 18650 lithium battery business off of Panasonic on the cheap might not be a bad thing long term.

    As I said the current 18650 from Panasonic is good enough for the 200 mile supercharging capable Gen III...only gradual improvements would be necessary over time so cost reductions could be the priority over increasing capacity.

    As I said if Panasonic continues to lose money on its 18650 business Tesla should have a plan as to what its options might be for the future anyway.
    Not trying to be alarmist...just wondering what might be best for Tesla long term.
  • edited November -1
    Tesla's car is not relevant to the battery or maker of the battery. If Panasonic goes away Tesla can purchase it's 140 million batteries a year from someone else. The price might go up and the output and mileage might change but that many batteries will drive someone to make them.

    Tesla doesn't plan on using the same battery forever either. They will switch when a better battery comes alone.

    I think it would be a really bad idea to tie Tesla to one battery manufacture when a different company might put out a far better battery in a few years. Not to mention a miracle might happen and a real mass-producible super-capacitor might come alone.
  • edited November -1
    Fair enough but what about the 18650 cell? It should be around awhile longer but it seems like the lithium battery in terms of consumer electrics is going even smaller than 18650 as ipad's and smartphones seem poised to take over the portable computer market. i too hope something better comes along but right now Tesla seems to rely pretty heavily on the continued proliferation of the 18650 cell in order to drive its battery price down.
    I just hope Tesla is looking into this at any rate.

  • edited November -1
    Should be "consumer electronics" bad
  • edited November -1
    Tesla is contractually free to purchase cells from anyone, and to revise its battery pack to suit. In a sense, Panasonic is relevant only insofar as it keeps up with the market.
  • edited November -1
    Ok but I think you guys may be missing the point.
    Tesla only buys the 18650 cells from Panasonic, they then assemble the cells into their Model S battery packs. So all of Tesla's battery building/heat management systems/etc skills are designed and centered around the 18650 point is that the 18650 cell may now be on the decline in terms of mass production because portable computers are moving away from standard bulky laptops to slim devices such as the iPad, Microsoft surface, and smartphones.

    The MS surface is going to be a big hit for students and business people on the go. Now that these slim touchpad devices have a keyboard (no doubt Apple and others will copy the surface keyboard idea very soon) this enables real work/typing to be done on them, so there is very little reason left for the heavy/bulky laptop. Indeed the only reason left for the standard laptop will be for business specialists who need a larger amount of computing power and storage space to run specialty programs/applications. I.e. A pretty small segment of society.
    The standard bulky laptop and thus the 18650 cell will be in considerably less demand now as a result. Panasonic could have been losing money on its 18650 production anyway.
    All of these things do not seem good to me for Tesla who is relying pretty heavily on the 18650 cell remaining in very high production to drive down battery costs over time.

    What can Tesla use if not the 18650 cell? What is their back up plan here? I don't think they will be able to arrange 20,000-30,000 iPad type cells for use in a Tesla. I don't know maybe they can?

    My suggestion here was that Tesla might be able to take advantage of all this and buy up Panasonic's 18650 division on the cheap and use it to continue to provide 18650 cells at cost to itself and SolarCity (for use in off-grid energy storage). This way they keep production of the cells high (billions will be needed if Tesla starts making 100,000+ cars per year)

    I don't know maybe they can work something out with Panasonic as they already own 5-10% of Tesla.

    Just wondering if Tesla has thought about all this.
    I am worried if Panasonic is looking to sell off the 18650 division whoever takes it over could raise costs for Tesla significantly.

    Might be better to keep it all in house and just work on getting the 18650 cost down to its absolute minimum so that it can sell the final product (the car) at a larger profit overall.
  • edited November -1
    I still don't get your point. If I get an order for 140 MILLION batteries I am going to give that person a discount. You do realize that each car takes over 7000 batteries (or 1000ish laptops worth per car). Add the X into the mix in 2014 and that order goes easily to 250 million.

    When a battery or any tech becomes old tech it's price drops not goes up. I believe Panasonic built the factory specifically to make the Tesla batteries. Once that cost is paid for they start making batteries at a lower overhead. They probably already include the factory construction cost into the first 200-500 million batteries. After that the price can come down.

    I would imagine Tesla ha signed contracts to buy X number of batteries and Y price.

    By the way. 140M batteries is over 300,000 batteries a day.

    They aren't literally stealing the batteries out of laptops.

    Basically Tesla creates their own demand.
  • edited November -1
    Also, Tesla's engineers are examining and testing, full-time, every competitive and potentially competitive battery tech. Our "discoveries" on this site are old hat to them, you can be sure. But TM uses the best <i>proven</i> tech available at the time.

    Locking in to the 18650 by merging/buying a manufacturer is the last thing they would/should/will do.
  • edited November -1
    I really hope your right Brian because it looks like the 18650's days may be numbered.
    Its not very likely that any new or "revolutionary" cell is going to be cheaper than the 18650 either, not until it makes it into full scale mass production anyway, and that could take a long time.

    I just figured that we know the price of the 18650 right now and that it is clearly good enough to do the job. I.e. The 18650 doesn't really need to get much better, it just needs to get cheaper. I thought if Tesla bought Panasonic's 18650 cell division they could supply both themselves and SolarCity at cost, and make more money selling the car and the off grid solar packages.

    I actually even thought that Tesla and SolarCity could join up with a green home builder to offer a "Solar Life" package of a energy efficient home, a Tesla Gen III, and off grid solar panels with a Tesla battery backup...they could roll everything up into one monthly payment (sort of like a mortgage, car lease, and solar lease in one) which might work out less than the combined payments of their current mortgage, ICE car lease, the oil and gas payments needed to operate and maintain the ICE car, and their current utility bill.
    Best of all these people would be insulated from any fluctuations in the price of energy (either oil/gas/ or electricity) for the duration of their leases...over a 20+ year period this could be very attractive to buyers as it allows you to budget long term knowing these prices are fixed for you, and you never need be concerned about any type of energy spike.

    Sorry got a bit sidetracked there.

    Back to the 18650...think of it this way...Tesla chose the 18650 cell because it was already in mass production (for the laptop industry) so was the cheapest to purchase on the market.
    So up until now Tesla's strategy has been to continue to rely on the fact that these cells are going to be produced in ever greater numbers driving down the price. I am saying that strategy might no longer be valid for the 18650 cell unless Tesla can somehow fill the void that was the laptop industry. Maybe they can, as I said if they start producing 100,000 Gen III cars they will need BILLIONS of cells every year. Maybe they will have even better purchasing power as the only real large customer left in the 18650 market, or will the 18650 plants just shut their doors? I don't know. That's why I'm asking you guys.

    I do know that if Tesla wants to continue its strategy of piggybacking off the most highly mass produced lithium cell then the big money, research, and immediate mass production is going to go into flat small cell batteries for iPad/surface like devices and smartphones...maybe Tesla can stack and pack these small cells as well? I don't know. That's why I'm asking you guys.

    If they can't use the smaller cells and the 18650 stops production, they may have to go shopping for large format cells like the Nissan Leaf and Volt are using...but I am pretty sure these are going to be quite a bit more expensive for Tesla.

    Don't get me wrong I am not trying to upset anyone here...i am probably the biggest Tesla fan in the southern hemisphere...i just want Tesla to succeed and make sure they are looking at all the options here. As I said things are changing in the 18650 market quite rapidly...just saw Sony is looking to sell their battery division as well.
  • edited November -1
    Tesla builds the battery packs themsevles. If the 18650 form factor goes away, it won't take more than an afternoon to redesign the interior of the pack to accept a different form factor. Knowing Elon, there are probably a couple of different designs already conceptualized & ready to be implemented at a moments notice if the battery cells availability becomes an issue.
  • edited November -1
    I really hope so Vawlkus.
    I am not sure what other lithium cell will be produced in as high numbers as the 18650 when the bulky laptop business fades away...I imagine only the thin cell iPad/Surface/smart phone cells will be left in really large numbers in mass production. Tesla currently relies on this large scale mass production and gradual improvements to drive its battery costs down.

    As I said it may be possible to bundle these even smaller cells into packs as well? Maybe they would be easier to cool in terms of thermal management? I don't know. But I think the 18650 may be on its way out...hopefully Tesla has a long term plan to replace it as you say.
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