Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why Couldn’t Tesla Motors Inc (TSLA) Just Swap Batteries?

Page 1 of 2

Recently, I wrote an article about the advances in battery and other green technology that could be a risk factor for Tesla Motors Inc (NASDAQ:TSLA). A question that was raised was why Tesla couldn’t just switch to another battery technology. That’s a very good question. Here’s why it’s not as easy as it sounds, and how it could affect Tesla Motors Inc (NASDAQ:TSLA)’s stock.

Photo: Oleg Alexandrov, via Wikimedia Commons.

Is it easy to switch between batteries?
In a Congressional Research Service for Congress, Bill Canis wrote regarding the development of lithium-ion batteries, “the automaker’s decision as to which battery to procure will be in effect for a prolonged period, perhaps the life of the vehicle model, as a battery designed for one vehicle may not function optimally in another.”

He also points out that even when an automaker enters into an agreement with a battery manufacturer — as Tesla Motors Inc (NASDAQ:TSLA), Nissan Motor Co., Ltd. (ADR) (OTCBB:NSANY) and Toyota Motor Corporation (ADR) (NYSE:TM) have done with Panasonic Corporation (ADR) (OTCMKTS:PCRFY)

— the automaker is “integrally involved” in the design and production of the battery.

The reason is straightforward: Each automaker has proprietary technology that reacts in a specific way with the battery’s output and overall vehicle operations. As General Motors Company (NYSE:GM) put it, “The Volt’s battery pack design is directly coupled with the vehicle design to assure complete integration between the battery pack and the vehicle.”

Tesla Motors Inc (NASDAQ:TSLA)

In other words, each battery is designed specifically for the car it’s going to be used in — a battery made for a Tesla Model S is optimally designed for that car; a battery made for a Nissan Motor Co., Ltd. (ADR) (OTCBB:NSANY) Leaf is optimally designed for i car. More pointedly, the battery itself influences the car’s design.

Swap shop
So is Tesla Motors Inc (NASDAQ:TSLA) tied to its current battery? Absolutely not. Tesla uses a modular battery design, and as technology advances in li-ion batteries, it can swap out the cells. But that’s swapping li-ion for li-ion. As technology changes, Tesla could switch to a different battery type, but it’s not as simple as swapping one battery for another; the battery itself has to be specifically designed to integrate with Tesla Motors Inc (NASDAQ:TSLA)’s vehicles.

Consider: When Tesla designed its battery pack and electric powertrain system, it did so to meet the requirements of a li-ion battery. Tesla states: “Designing an electric powertrain and a vehicle to exploit [li-ion battery] energy efficiency has required extensive safety testing and innovation in battery packs, motors, powertrain systems and vehicle engineering. Our proprietary technology includes cooling systems, safety systems, charge balancing systems, battery engineering for vibration and environmental durability, customized motor design, and the software and electronics management systems necessary to manage battery and vehicle performance under demanding real-life driving conditions.”

Different types of batteries behave differently. More importantly, li-air batteries are still being developed, so things like specific energy, energy density, specific power, charge/discharge efficiency, self-discharge rate, and cycle durability are all theoretical. However, two known differences are size and weight — li-air batteries are smaller and lighter. Consequently, you can’t simply exchange a li-ion battery for a li-air battery.

So what does this mean for Tesla?
There are a number of ways Tesla Motors Inc (NASDAQ:TSLA) could incorporate new technology:

1. It could completely redesign its vehicles around the specifications of new battery technology — the most expensive option, and unlikely.

2. It could combine its li-ion battery with a new type of battery, as is believed to be the case with its patent for metal-air batteries — unfortunately, this still uses expensive li-ion technology.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!