Tesla aquisition of maxwell
- 2. IT WAS FOUNDED IN JULY 2003 BY MARTIN EBERHARD AND MARC TARPENNING CURRENTLY ELON MUSK IS CEO OF THE COMPANY SPECIALIZES IN ELECTRIC CAR MANUFACTURING ALSO SPECIALIZES IN SOLAR PANEL MANUFACTURING THROUGH IT’S SOLARCITY SUBSIDIARY THE COMPANY AIMS AT EVENTUALLY OFFERING ELECTRIC CARS AT PRICES AFFORDABLE TO THE AVERAGE CUSTOMER IT IS RANKED AS WORLD’S BEST SELLING PLUG-IN PASSENGER CAR MANUFACTURING 2018,BOTH AS BRAND AND BY AUTOMOTIVE GROUP WITH 245,240 UNITS DELIVERED AND A MARKET SHARE OF 12% OF THE PLUG-IN SEGMENT SALES TESLA
- 3. MAXWELL TECH. WAS FOUNDED IN 1965 AS MAXWELL LABORATORIES INC. BY RAYMOND C. O’ROURKE , ALAN KOLB , BRUCE HAYWORTH AND TERRENCE C. GOODING IT WAS ORIGINALLY GOVERNMENT CONTRACTOR , PROVIDING ADVANCED PHYSICS, PULSED POWER, SPACE EFFECTS ANALYSIS AND OTHER RESEARCH AND DEVELOPMENT SERVICES TO THE U.S. MILITARY AND OTHER GOVERNMENT AGENCIES MANUFACTURES ULTRACAPACITORS , HIGH-VOLTAGE CAPACITORS, ENGINE START MODULE(ESM), BACKUP POWER SYSTEMS, POWER MODULES IT WAS ACQUIRED BY TESLA ON MAY 15,2019
- 5. A SIGNIFICANT INCREASE IN ENERGY DENSITY (300 WH/KG WITH HOPE FOR GROWTH TOWARDS 500 WH/KG IN THE FUTURE) INCREASE BATTERY LIFE BY 2X (AND ACHIEVE LONGVEILITY OF 1 MILLIONS MILES IN CARS 16X PRODUCTION DENSITY INCREASE 10-20% COST REDUCTION PUTS TESLA IN BETTER POSITION TO GO FULLY VERTICAL WITH CELL PRODUCTION RELATIONS WITH PANASONIC BEFORE , COULDN’T YIELD PRODUCTION OF BATTERIES AT 35 GWH PER YEAR AT THEIR GIGAFACTORY REASONS
- 6. WHY DID ACQUIRER CHOOSES ACQUISITION OVER OTHER FORM OF GROWTH ?
- 7. ORGANIC BUSSINESS Organic growth focuses on producing more product and sparsing their own business. OTHER FORM OF GROWTH STRATEGIC BUSSINESS It focuses on the long term growth of a business A strategic growth strategy may be to reach a previously untapped market through advertising or create additional products to add to inventory. INTERNAL BUSSINESS This business growth strategy uses current resources and determines how they can be used better
- 8. Acquisition offers some unique benefits and opportunities for market expansion. This strategy of business growth is the riskiest but also with the most potential success. A well laid merger or acquisition can help a business to enter a new market, manufacture more product, and gain the customer loyalty cultivated by another brand. Maxwell is not the rival company of tesla thus merging may not help either of them where as acquisition by tesla increases the battery performance of their product. Buying out a company can be a good investment when it comes to accomplishing one company’s long-term goals whereas merging divides power equally among the two companies .But here in this case as maxwell’s product was just one part of the products of Tesla, merging was not a good option. Concluding, net worth of Tesla is $60.77B as of November 08, 2019 whereas Tesla bought Maxwell at just $249M and Merger is favourable when both companies carry equal value whereas acquisition is favourable when acquiring company is quite strong.
- 9. WHY DID TARGET AGREE TO BE ACQUIRED ?
- 10. President of the company Maxwell Dr. Franz Fink, commented on the Tesla take-over saying: “We are very excited with today’s announcement that Tesla has agreed to acquire Maxwell . Tesla is a well-respected and world-class innovator that shares a common goal of building a more sustainable future. We believe this transaction is in the best interests of Maxwell stockholders and offers investors the opportunity to participate in Tesla’s mission of accelerating the advent of sustainable transport and energy.” 55% premium on the company’s $3.07 stock price benefited Maxwell with a total worth of $218 million (that is $4.75 per share).
- 11. WHY IS THIS ACQUISITION INTERESTING TO STUDY?
- 12. 0% 10% 20% 30% 40% Others Elon Musk FanBase 218 million USD Global Electric Car Leader INTEREST- WISE VALUATION
- 13. DOES THE ACQUIRER HAVE A PARENTING ADVANTAGE?
- 14. WHAT IS PARENTING ADVANTAGE? It is a framework which describes how a parent company can create value. As a corporate parent, a company can add value to a business unit as well as its customers and also any of its potential parents. This is called a parenting advantage.
- 15. While Tesla’s interest is clearly in the battery technology, by buying Maxwell, Tesla acquired the company’s main business: ultracapacitors. Batteries are one of the few components of Tesla vehicles made with patents that are not available for other companies to use. PARENTING ADVANTAGES
- 16. DOES THE DEAL PASS THE TWO TESTS OF PARENTING ADVANTAGE?
- 17. Tesla’s battery research team recently applied for a battery patent that will lead to reduced charging times, higher energy density, and a lower cost.TESLA - A BIT AHEAD The $35,000 Model 3 will likely be made available as a result of these new advancements. Kia Niro fits 64 kWh compact battery qas compared to Tesla's 100 kWh battery in Model 3 designed in association with Maxwell Technologies. Tesla passes the two tests of parenting advantage as expained. Model 3 serves a perfect example to a competitive advantage in the electric car industry.
- 18. WHAT HAS BEEN DONE THIS FAR IN INTEGRATING THE ACQUISITION, AND DOES IT MAKE SENSE TO YOU?
- 19. INTEGRATION Tesla presently is running all the ultracapacitors factories owned by Maxwell Inc. to fulfill previous orders of the company. And spending on RnD for further development of ultracapacitor technology. However, most of the things are still unclear, and not been disclosed by them.
- 20. IF THE ACQUISITION IS VERY NEW, WHAT WOULD YOU FOCUS ON FOR THE INTEGRATION?
- 21. POINT OF FOCUS Tesla is a renewable energy giant and the technology of Maxwell can be used a lot to improve the quality of its products and lower down the cost both of production and cost. It will also provide a strategic advantage over competitors. Considering that in our opinion forintegration more funds must be spent on R&D for the integration of technologies of both companies while continuing already existing orders.
- 22. WHAT ARE THE MAJOR PITFALLS TO EXPECT IN THIS PARTICULAR ACQUISITION INTEGRATION?
- 23. EXPECTED PITFALLS Tesla had a long term partnership with Panasonic for battery manufacture of Li-ion type. This acquisition laid to the doubts in the mind of long term partners that Tesla is going to start its own battery manufacturing unit, Which is troubling Panasonic and Tesla market relations.
- 24. HOW DOES THE ACQUISITION PROVIDE A COMPETITIVE ADVANTAGE TO TESLA?
- 25. Tesla Model 3 currently has an energy density (at cell level) of 210 Wh/kg and 275 Wh/liter at the battery pack level. Maxwell claims that its patented dry cell electrode can produce energy density of over 300 Wh/kg which is 42.8% increase whereas the planned energy density of over 500 Wh/kg would be a 138% increase compared to Tesla’s current batteries. Such a boost in the energy density will be a breakthrough in the EV industry as it can propel Tesla cars from the current range of 220 miles to around 375 miles. The end result of applying Maxwell’s dry cell technology would be a simplified manufacturing process which can lead to 10 to 20% cost reduction with better battery life (up to 2x).
- 26. Pairing Tesla’s Powerpack with Maxwell’s ultra-capacitor storage systems for utility- scale applications such as primary frequency response and grid stabilization. Automotive applications – start-stop, regenerative braking, and actuated power. The dry electrode manufacturing process which is an environmentally friendly process without solvents will improve battery performance including energy density and range while cutting down manufacturing costs. They acquire an experienced technical and manufacturing team in Maxwell which is noticeably capable of making important advancements in the EV and storage industry. Given the fact that Musk already has a background on ultra-capacitors, Tesla is expected to commercialize the dry electrode manufacturing technology sooner than expected with potential synergies for the company which will further cement its position in the lucrative EV business.
- 28. The competitive advantage gained by Tesla by acquiring Maxwell Tech. is certainly sustainable in the short run, and perhaps in the medium run also. The electric vehicle business is a fast growing sector, and the demand for E- vehicles is only expected to rise in the future. It currently acts as an oligopoly, with Tesla controlling the major portion of the market, and its share will grow big as a result of the battery technologies that it would gain from the acquisition. This will allow it to have first mover advantage when the other major automotive companies shift from fossil fuels to electricity, which would perhaps allow it to have a near monopoly of the market for sometime. The long term predictions are less certain, but it would certainly not fare badly for the company, unless some disruptive technology appears in the market.
- 29. WHAT IS YOUR ASSESMENT OF THIS AQUISITION?
- 30. FINAL ASSESSMENT Analysts reacted positively to the news, with several suggesting the acquisition will help Tesla control battery costs and provide access to advanced battery technology that Maxwell has in its portfolio. This seems like a low-risk, bolt-on acquisition for Tesla with significant upside potential. Tesla is a well-respected and world-class innovator that shares a common goal of building a more sustainable future. We believe this transaction is in the best interests of Maxwell stockholders and offers investors the opportunity to participate in Tesla's mission of accelerating the advent of sustainable transport and energy.
- 31. RAJAT SHARMA B18CSE043 NIKHIL MORE B18CSE037 NISAR AHMAD B18CSE038 NIVEDIT JAIN B18CSE039 JASH PATEL B18CSE040 MITUL PATEL B18CSE041 PRIYANSHI JAIN B18CSE042 RAJMOHAN SATTAVAN B18CSE044 YASHVI RAMANUJ B18CSE045 TEAM
- 33. thank you!