Tesla agreed to buy battery maker Maxwell for $218 million, move may...

Tesla agreed to buy battery maker Maxwell for $218 million, move may help to cut costs

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Tesla Inc came to an agreement with Maxwell Technologies Inc to buy it in an all-stock deal of $218 million.

Tesla has been facing growing electric car competition and desperately needs to cuts the costs of its cars and in that scenario move to acquire a battery maker will largely help it to produce batteries which could have longer timing and more power capacity.

Tesla has made its efforts to the highest pace by increasing production of Model 3 sedan, an electric vehicle, and for that model, company is desirous to build up such a customer base that would be broader than that of its pure luxury cars.

In January, development and patenting of a “dry electrode” technology, that could significantly reduce the cost of batteries used in electric vehicles and increase the driving range, was unveiled by the executives of the Maxwell to the investors, and for having that technology company had also uttered its expectations to be strategically allying with electric car maker in a time span of six months.

Maxwell has been holding another product to its credit that can be more lucrative for Tesla and that is the ultracapacitors, a technology which discharges energy faster than batteries and when these ultracapacitors combines with battery energy then they provide quick response time; make the battery life longer by two times and able to function across a broader temperature range.

Lamborghini and General Motors are also among the customers of Maxwell.

Maxwell’s shares have been valued by Tesla at $4.75, which represents a premium of 55 percent to its closing price of $4.58 on last Friday.

Currently, Tesla has been using battery cells in its electric cars provided by Japan’s Panasonic Corp as an exclusive supplier.

Maxwell’s board has already approved the deal with Tesla and it is expecting the deal to be closed by second quarter of this year.

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Zac Berry is presently a full time editor at Market Morning. He covers the M&As and follows live market commentary. Before joining Markets Morning, Zac Berry worked with a start-up, where he worked in the capacity of a Team Leader tracking company events and results. Born in the U.A.E, he spent most of his growing up years in Dubai. Currently, he resides in U.S. and is pursuing his charter in Accountancy.

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