Green

Dynamic duo: Tesla and Panasonic team to build a better car battery

Not only is it official that Tesla Motors has chosen Panasonic to supply battery packs for its electric vehicles, the two companies will also be working together to build more affordable and efficient lithium nickel batteries for green cars present and future, they announced today.

Before now, Tesla had been buying batteries from a variety of sources. But Panasonic, which recently swallowed leading lithium-ion battery seller Sanyo, has the manufacturing capability to drive down costs for the green car maker. That way, Tesla can focus on testing various batteries with its products, both its Roadster and the Model S. If their combined efforts do produce a cheaper, longer-lasting model, it could help EVs overcome one of the biggest hurdles standing in the way of wide adoption: the exorbitant cost of their battery packs.

Daimler, a third-party here, also stands to benefit from the deal. When it first acquired its 10 percent stake in Tesla last May, it also gained access to the company’s unique power train technology. With Panasonic supplying batteries to meet Tesla’s specifications, Tesla might be setting itself up to bring in more revenue supplying EV components than actually manufacturing cars itself.

But the connection between Daimler and Tesla gets complicated. Daimler also owns a 49.9 percent stake in Li Tec, a German lithium-ion battery manufacturer, and plans to use the company’s cells in its forthcoming Smart Car. This could block Daimler from reaping the fruit of the Panasonic-Tesla collaboration. Then again, Tesla’s deal with Panasonic isn’t exclusive, and there’s a chance it could simply help it design the appropriate battery packs and chargers and turn them over to Li Tec to manufacture. It will be interesting to see how Daimler navigates its various relationships.

And what will Panasonic get in return for its expertise? The partnership with Tesla has significantly raised the visibility of its battery programs, even when it was just speculation. Tesla is by far the most recognizable brand dedicated to electric vehicle production, and it’s cultivated a pretty glamorous and prestigious image. It’s a pretty good star for Panasonic to hitch its wagon to in this area, making it clear that the electronics company is ready to take on energy storage, first at the automotive level, and eventually even at home and grid scale.

The choice of using lithium nickel batteries in Tesla’s cars is an interesting one. Right now, Tesla uses lithium cobalt batteries in its cars. Remember those laptops that burst into flame? They used lithium cobalt too. With Panasonic refining its less combustible lithium nickel technology, it looks like the deal may also provide a safer choice, as well as a cheaper one for the green automaker.