Panasonic to buy Tesla and Lithium arm of SQM!

Panasonic to buy Tesla and Lithium arm of SQM!

Haha sorry if I alarmed anyone there but was just thinking about the following scenario:

Panasonic buys Tesla, assuming it could (which is a big "IF" seeing as they have similar market caps now!)
and then buys the Lithium production arm of SQM (the largest lithium producer in the world located in Chile - I estimate their lithium operations to be worth around $1 billion - as are just 10% of their current revenue).

Panasonic then goes on to provide Tesla (now its subsidiary) with cost price lithium and cost price lithium ion cells.

Panasonic (as a whole) then profits on the mark up of the final product (Tesla cars, trucks, planes, trains, boats, etc, etc).

Lithium produced in bulk from the lowest cost producer in the world. Shipped to Panasonic's giga battery factory located across the road from the Tesla factory in California! Sounds good to me.

I wonder what cost price Panasonic could achieve in terms of $/kWh if they were to do this?

Just a thought anyway. Would be pretty cool to see.

teddyg | 5 september 2013

Oh and before anyone attacks me on the "Lithium prices are low and only make up 5% of the battery cost, etc" argument I would say:
If you think lithium prices will not be driven up by speculators once they realize the potential of Tesla, the Gen III, and the Supercharging network and its ability to rapidly move ALL forms of transport to EV then you are kidding yourselves.
And I do realize that there are other materials needed to make lithium-ion batteries but I feel that lithium may come under the most pressure in future by speculators.
If Panasonic/Tesla move to secure ample supply now they will benefit from it I feel.

All just hypothetical anyway people. Please don't kill me just for thinking out loud, which has a tendency to happen on internet forums.
Happy to have a civilized discussion if anyone wants one.


Brian H | 5 september 2013


LionPowered | 5 september 2013

How long before something replaces li-ion battery technology?

ian | 5 september 2013

Wrong state Brian. Unless you're thinking of a different recent discovery than I am. If you are thinking of the huge lithium deposits found near Rock Springs by the UW team looking for a place to sequester CO2, then you meant to say Wyoming. ;-)

Exactly LionPowered. That could restrict Tesla to using one kind of battery which would be bad if something like graphene or one of the other new battery techs makes its way to the marketplace.


teddyg | 5 september 2013

There is always the threat of some crazy breakthrough in battery technology coming along. However ask yourself is such a breakthough likely to be:

A. Sufficiently tested enough with a long enough demonstrated reliabilty and safety track record so that automotive companies will feel secure putting it into their vehicles knowing that it will be there in that car for at least a decade or more? Lithium ion has been sold commercially for over 20 years now and its record is proven across many areas of use. It's one thing to do some great things in the lab or in a laptop (that MIGHT be used for 3-5 years) but quite another to demonstrate automotive safety levels for a product that will be moving at freeway speeds with the lives of your customers hanging in the balance for a decade or more.

B. Cheaper than lithium ion in a $/kWh comparison? New technology is seldom cheap. Lithium ion has been around for over 20 years but is still priced well above that of lead acid, and Nickel Metal Hydride. New technology has to be tested, marketed, and approved by consumers before companies will spend billions on building enough factories to ramp up production to bring costs down...all of which takes a very long time. I know of no revolutionary technologies currently being tested by Tesla or any others in the EV arena (in an actual vehicle)..or of anyone building said factories to produce "the breakthrough" at significant scale.
Therefore it sounds like most breakthroughs are still in the lab so I would say we have quite a bit of time before anything new crops up. I would think that evolutionary steps forward in lithium ion tech and cost reductions are in order. Not revolutionary. But we don't need revolutionary steps to make Gen III work...not with the supercharger network. We just need cheaper batteries..not significantly better ones.

Plus: As the world's biggest battery producer I imagine that nobody is throwing more money at battery R&D than Panasonic. They have the most to lose if someone else comes up with a better battery don't they? Therefore if a battery breakthrough comes along it will likely be Panasonic that commercializes it.
Either that or they will buy out whoever beats them to the punch.

Panasonic through Tesla now has the most experience in the requirements of EV batteries and will be constantly making improvements as time goes by. There are MANY requirements beyond just the total amount of power stored in terms of making a great EV battery. Nobody knows more about those requirements better than Panasonic right now.

I just think this would be the best way to get the cheapest battery into a Tesla so that the Gen III program could be accelerated. With Panasonic trying to profit off the end product rather than the batteries themselves.

Brian H | 6 september 2013

don't know if it's real, but several of the lab claims state that their cathode/anode advances can be smoothly integrated with existing mfg lines and processes. That changes the timelines you posit dramatically. No new factories, except to handle increased demand, the usual.

teddyg | 6 september 2013

Ok so if we are only talking about cathode/anode advances then aren't we still talking about a lithium ion battery or what?
Also who owns the most battery plants out there currently? Panasonic.

So Panasonic still licences or buys out whoever comes up with the better sauce and retools their factories to produce it. It's still coming from a Panasonic factory so I think my point is still valid.
Panasonic buys Tesla, supplies it with cost price batteries and aims to profit off the end product markup (the EV) rather than simply on the battery cells themselves.

Still makes sense to me.

The problem as I see it right now is this:

Tesla needs "giga factories" to make Gen III possible. However Tesla doesn't want to commit to any one battery producer. Panasonic would probably love to build the giga factories for Tesla but without a serious long term supply contract how is Panasonic to commit the billions necessary to build these giga factories?

Panasonic could thus solve the problem themselves by buying Tesla (assuming they could as I said earlier). Then they have the motivation for building the battery factories, as they don't have to worry about who will be supplying Tesla obviously (themselves) and simply try to profit off the end vehicle.

It's not like Panasonic's innovation will stop. Indeed they will have the most at stake in wanting to make the next great battery as it will mean more vehicles sold. And as you said if something else better is developed somewhere else they will want to sell the technology to Panasonic as they will own the factories that can be modified to use the new technology.

Interesting to think about anyway. Cheers

teddyg | 7 september 2013

Just saw this:

Obviously the desire to supply Tesla is heating up.
One way to solve that as a battery company? Buy Tesla.

With a $200 billion market cap. Samsung could certainly afford it.
Would be the best decision they ever made I bet.

Anyway a battery company buying Tesla makes a lot more sense than Tesla buying a battery company you must admit.

I know Elon has said he will hold on to Tesla until Gen III comes along but with just 25% of the float he couldn't exactly prevent a takeover on his own.

Regardless I am sure nobody would want to remove Elon as CEO. He would stay on and make a hell of a lot more than $20,000 a year or whatever token salary he is currently paying himself.

Timo | 7 september 2013

I'm pretty sure somewhere in Tesla secret plan is to buy Panasonic. Not the other way around.

teddyg | 7 september 2013

That may be Timo (well the Panasonic battery division anyway - I really don't think Tesla wants to sell flat screen TV's, etc)
Either way let's not forget SolarCity in this merry-go-round.

Can you imagine what Panasonic, Tesla, SolarCity, and SpaceX could accomplish all under one roof commanded by Elon Musk?

Remember Panasonic is one of the world's largest solar panel manufacturers as well and they will need low cost batteries for energy storage if solar is really ever to become our primary source of electricity.

So my model of Panasonic possibly purchasing SolarCity as well, passing on cost price solar panels to SolarCity in the hopes of making money again on the final product. The solar leasing contracts, installation, etc that SolarCity specializes in.

Anyway more food for thought.

Earl and Nagin ... | 7 september 2013

I think all of this who might buy whom talk is very interesting. I certainly am not going to speculate on how it might shake out as that decision is probably up to a lot of unknowns. The most interesting thing, however, is that what we are talking about is a new energy industry of intertwined relationships that is 100% independent from the current petroleum and coal-based one.
Very interesting times indeed!
Go Tesla!

GeekEV | 7 september 2013

Tesla may not want to sell flat screen TVs, but they certainly do need a steady supply of LCD screens for their dash and center console. Panasonic could give them that too.

teddyg | 7 september 2013

Good point GeekEV...although in terms of touchscreens for the dash Samsung would be better! ;-)

Thinking of all this if I was Samsung (as currently holding 30% of the 18650 cell worldwide production - as opposed to Panasonic's 35%) I would gobble up Tesla, SQM (lithium division), and SolarCity right now (they really do have the market cap to do it unlike Panasonic).
I would supply my new subsidiaries with all the cost price 18650's, solar panels, touchscreens, etc that they can handle and aim to profit on the end products as stated.

teddyg | 7 september 2013

Just in reply to the "Montana" statement above.
Have they even started on the permitting applications, predrilling samples, etc, etc?
I bought a few shares of Western Lithium who had some properties in Nevada that were very rich in lithium back in 2006. However the mining process is so completely bureaucratic that after 6 years of going nowhere they gave up and are now hoping to produce some byproduct needed in the oil and gas drilling business...NOT what I signed up for!

Anyway you are talking at least a decade from discovery to operational mine and processing plant. These things take FOREVER.

SQM is the established world leader in the lowest cost lithium production.
They are a pretty safe bet..and at a near 52 week low I am buying a few shares for my portfolio because if the EV revolution kicks off like I think it will...people will start taking a very good look at SQM.
If they are thinking long term, battery producers like Panasonic and Samsung should be looking at investments in them too.

teddyg | 7 september 2013

Just to add. If Samsung were to buy Tesla think of the integration between Samsung phones/tablets and Tesla vehicles? Not only is it a way to sell more cars but more cellphones and tablets too!

Not to mention they run on the Android operating system and Musk is a big fan and friend of the Google guys...not to mention Google's future self driving car technology.
Would be a pretty cool combination of technology and know-how methinks!
Samsung buying Tesla now makes a lot more sense than Google buying them (as I have written about before) considering the battery production issue and how Samsung could solve that for Tesla.

Cool stuff.

teddyg | 9 september 2013

Well SQM up over 9% today...anyone take my advice?