The investment signals that they are dedicated to developing battery technologies that will enable mass production and market viability for electric cars which are still considered cost prohibitive for mass market appeal due to high battery cost.
Though Tesla is the biggest name in the electric car market, they aren’t alone in their pursuit of mass market electric vehicles. All of the major automotive companies are currently working on similar projects, and though Panasonic is on board with many of these companies there are some other important players in the battery market.
A123 Systems (NASDAQ: AONE) produces lithium Ion batteries that are ideally suited to the electric vehicle application. According to technical analysts, their technology is superior to what Panasonic delivers. Ener1 is another company that delivers exceptional lithium-ion cells. Tesla was reported to have chosen Panasonic because of its scale, reach, and ability to deliver cost effective solutions.
For Panasonic and Tesla this is a great partnership. Panasonic gets recognition as the battery supplier for the premiere electric vehicle company, and likely the first company to make all electric vehicles cost effective for the mass market.
Tesla gets a boost in its credibility, and the ability to work with Panasonic to deliver the best solutions that they can. This all combines to increase the brand credibility of both companies in a young market with huge potential.
By 2015, Panasonic aims to capture 40 percent on the global market for lithium-ion batteries, 4 times their current market share. They see Tesla as an investment that could potentially be the poster child that propels their brand into the spotlight.
Further Tesla is not bound to Panasonic cells other than it being their “preferred” lithium-ion cell provider. They currently utilize cells from multiple manufacturers in their battery packs, and that trend is likely to continue. Analyst Thomas Schwartz of Earle, Carlton & Hughes believes that the partnership is a signal of things to come.
“We believe that this investment is a sign of an industry that is on the cusp of mass adoption. There are a handful of credible battery companies that make cells suitable for this application, and as soon as the industry takes off they are all going to do very well. For Panasonic this is great, but as a huge company their stock isn’t likely to see the same kind of gains as the pure battery players such as A123 Systems or Ener1.”
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