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Commoditization Key To Tesla Motors Inc (TSLA) Rocketing Up, Says This Expert

What would take Tesla Motors Inc (NASDAQ:TSLA) to the stratosphere? It’s just not cars, according to this executive.

In an interview with Cory Johnson on Bloomberg West, Momentum Dynamics CEO Andy Draga says that there is massive upside in the company if it succeeds with battery technology.

“If they are successful, what that factory can do is push down the price of the battery cell so low that it becomes a commodity. That is something that we haven’t done yet that needs to be done. And if he does that, it will go into homes, it will go into grid storage and it will go into cars and it will change the paradigm completely,” Draga tells Johnson.

According to the chief executive, there are two business models for grid storage and homes for Tesla Motors Inc (NASDAQ:TSLA). One is direct production and going into grid storage, he says, which means that the company will become a power company aside from a car maker. The second business model is what he calls “second life” which is taking a battery that isn’t really as functional as it ought to be for a car or a truck and putting that battery into grid storage where it is used less frequently and less intensively.

Draga says that a battery may be good for six, seven or eight years in a car before it needs to be replaced. This is because after every year of use, the battery begins to fade a little bit. After its eight or tenth year, it may have faded so much that you need a new battery, he tells Johnson. However, current technology implies that that battery still has life in it, Draga adds.

He says, however, that he is not saying Tesla Motors Inc (NASDAQ:TSLA) are no good after five years as they “are doing better than people expect”. Nonetheless, the battery will eventually need to be replaced and as they are swapped out, he argues that these batteries can still be used as part of the electric grid.

If Tesla Motors Inc (NASDAQ:TSLA) also succeeds in making batteries cost so low, the company has another business altogether in its hands, Draga implies.

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Blue Mountain Capital managed by Andrew Feldstein and Stephen Siderow owned 15 million Tesla Motors Inc (NASDAQ:TSLA) shares by the end of 2014.

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