How Can Tesla, Nikola Set The Future Of Electric Vehicles If They Don’t Own The Batteries?

Tesla TSLA is preparing for a big event next week. On September 22, at 4:30 pm eastern, Tesla will live stream its Battery Day in conjunction with its annual meeting. Car and Driver expects that Tesla will announce a battery that can be used for one million miles, information about battery range, information about reducing the use of cobalt in batteries, and cost reduction for batteries. This all sounds fantastic, but we must wonder: Are these innovations and advancements really Tesla’s to tout since Tesla still cannot manufacture batteries of its own?

Should Tesla or any electric vehicle (EV) maker be credited for the electric part of the vehicle if it does not manufacture the heart of that EV? 

Tesla still  partners with Panasonic to innovate and manufacture most of Tesla’s batteries. The two firms just signed another three-year amendment to their deal in June. Electrek, an industry website, insists that Tesla is preparing to manufacture its own power cells in Fremont, California, but that appears to be in the planning and testing phase, at best. Moreover, that one-million-mile battery that Car and Driver wrote about is apparently the brainchild of a collaboration with China’s Contemporary Amperex Technology Ltd.

Now, we can expect big announcements from Elon Musk and others at the September 22 event, just as we have heard other big announcements from them before. Last year, it was a conceptual EV pickup called the Cybertruck. Three years ago, Tesla announced an EV 18-wheeler and a new roadster. Four years ago, Tesla touted solar roof tiles and the Powerwall 2, a new residential home battery. Of these big announcements, only Powerwall 2 has been put to use by a number of consumers yet. Therefore, it is best to take any September 22 announcements with at least a little skepticism.  

Despite the skepticism, a claim to a long-lasting and cheaper battery would be big news. (Note, this means one-million-miles for the lifespan of the battery. It would still require regular recharging). Tesla will probably benefit with another jump in its stock price, but we cannot assume that news is Tesla’s alone. 

Nikola, an unrelated EV truck maker that IPO’d just this spring, announced a deal with GM last week that sent its stock price up 40%. In fact, GM, which has invested heavily in its own battery and electric technology without the fanfare and stock price benefit of shiny startups. GM also recently signed a memorandum of understanding to provide some of that technology to Honda. Nikola is now under SEC investigation after a short-seller published a report accusing it of wrongdoing, but both GM and Nikola insist there is no reason to worry.  

Here we have Tesla partnering with several others, including Panasonic and a Chinese firm, to make batteries. Nikola partners with GM to make its batteries. Even Honda intends to get the batteries for from GM for its electric vehicle line. Meanwhile Tesla’s stock price is up over 800% in a year, Nikola’s rises 40% on announcement of a deal. Panasonic’s stock is up just over 10% for the year, and GM’s stock price is down on the year. However, if we are pricing based on long-term potential for EV’s, maybe there is a problem here. 

The splashiest EV companies do not provide their own batteries. In other words, they don’t provide the electric part of the electric vehicle. Yet, they get all the credit for it. GM and Panasonic and other battery makers need to do a better job of promoting their work, and we need to consider who will really dominate the industry if EV’s take over. Will it be the name brand or the company that can build the hearts of the machines?

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