The news of the day is that Tesla bought around 79% of Maxwell’s shares on May the 15th, 2019, after the acquisition offer was extended twice. The original proposal was from February 4th, 2019, and was discussed well by our authors in “Tesla Inks Deal To Acquire Maxwell Technologies In Stock Deal” and “The Ultracapacitors, Electrodes, & Battery Manufacturing Tech Tesla Gets With Maxwell Technologies.”
To make it clear that this is a 100% merger, the stock not offered is converted to a right to get Tesla shares and cash on the same conditions as the shares offered and accepted in the acquisition. They are not shares any more — they are essentially IOUs.
It is a short but very important announcement. Now let’s look a bit more closely at what Tesla bought.
Maxwell Technology was a company specialized in high-quality supercapacitors. A supercapacitor is a kind of electricity storage device that can charge and discharge very fast and many thousands of times without any wear and tear. But the density of energy is very low, making supercapacitors unusable as permanent storage. It has been speculated, though, that use of supercapacitors could enable better storage and reuse of braking energy, making EV’s better track cars.
Perhaps, but that is not what made Maxwell a target for Tesla. Maxwell developed a way to improve battery production. The company’s own estimate was that, in time, Maxwell could grow to a many-billion-dollar company, multiplying their stock value at least tenfold and perhaps a hundredfold. If only they could bring the patents to production. An excellent description of the technology is in an article by Randy Carlson, “Tesla and Maxwell: Assessing the deal.”
To become so valuable, you need customers for your batteries and/or other battery companies willing to use your technology for a fee. Alas, only Tesla was a little bit interested. Tesla and Panasonic can likely realize the billions in saving on battery production that Maxwell predicted. Others?
This would give Tesla, currently having already the lowest cost batteries, an unassailable advantage over the competition for the coming years. The questions are how fast this can be incorporated into the Panasonic processes at GF1, and how big the savings will really be.
For the time being, Maxwell will continue with its business all over the world. Too many employees and customers and contracts to do anything else.
What the future will bring we can only guess. I would not be surprised if the capacitor business gets a management buyout after the battery technology is transferred to Tesla.
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