Tesla May Collaborate with BMW

Makers could share batteries, carbon-fiber components.

by on Nov.24, 2014

Tesla CEO Elon Musk during a recent TV appearance.

(This story has been revised to reflect comments by BMW.)

Battery-carmaker Tesla Motors has begun discussing a possible collaboration with Germany’s BMW AG, according to the U.S. company’s CEO Elon Musk.

The two makers are discussing the use of sharing batteries and the lightweight components that can help improve vehicle range. The news comes a month after Germany’s Daimler AG sold off its 4% stake in Tesla.

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“We are talking about whether we can collaborate in battery technology or charging stations,” Musk said in an interview with the German news weekly Der Spiegel.

Tesla spokeswoman Kathrin Schira subsequently described the talks as informal, telling the Reuters news service, “The conversation between Elon Musk and BMW has been a casual conversation, and not about a formal cooperation.”

From the BMW perspective, spokesman Dave Buchko told TheDetroitBureau.com, “It is not unusual for there to be talks between the BMW Group and other manufacturers, including as Tesla. We share a common interested in advancing the success of electro-mobility. Beyond that, we are not able to comment about the discussions.

(Mitsubishi plugs into battery power with XR-PHEV Concept. Click Here to find out about the production model coming.)

Tesla currently has several other alliances in place, though they may be winding down. The California battery-car start-up has worked on several projects with Toyota , though the Japanese giant recently decided to end production of its RAV4-EV, an electric SUV using a Tesla battery drivetrain.

CEO Musk has said his firm expects to follow with additional projects for Toyota, but the Japanese maker has been outspokenly critical of the use of lithium-ion technology and has been shifting its focus to hydrogen power, last week revealing the Mirai fuel-cell vehicle it will begin marketing next month in Japan. It plans to launch sales in the U.S. and Europe in mid-2015.

(Click Here for more on Toyota’s hydrogen car plans.)

Daimler, meanwhile, has been using Tesla to assist in a number of projects over the years, including an earlier version of its Smart Electric Drive and, more recently, the Mercedes-Benz B-Class battery car it launched in the U.S. earlier this year.

The German luxury maker has said it plans to maintain a relationship with Tesla despite selling off its stake in the U.S. company last month.

(Mercedes’ stock sale one of several unexpected setbacks for Tesla. Click Herefor more.)

An alliance between the Palo Alto-based Tesla and Munich-based BMW offers a number of potential opportunities, several observers suggest.

Tesla recently announced it will put a $5 billion Gigafactory in Reno, Nevada. The facility is expected to become the world’s largest producer of lithium-ion technology. CEO Musk has indicated he would like to find other customers for some of those batteries.

BMW is planning to triple the size of a factory in Washington State that will become the world’s largest producer of carbon fiber for use in automotive applications.

Both makers plan to expand their battery vehicle line-ups. Tesla is expected to introduce the new Model X SUV this coming year, and will follow with the smaller, less expensive Model 3. BMW recently launched a special brand-within-a-brand, starting with the little i3 electric city car and the higher-end i8 sports car. It also wants to add more models.

There are a number of challenges to building bigger demand for such products, however, starting with better range and lower cost. Musk claims the batteries Tesla will build at the Gigafactory will be lighter, more powerful – and significantly cheaper – than current technology. BMW’s carbon fiber plant is the first targeting the mass market with a material until now limited to high-end motorsports and exotic products from the likes of Ferrari and Lamborghini.

Sharing those batteries and components could drive up volume and improve economies of scale, observers suggest.

But whether the Tesla-BMW talks move from informal to an actual alliance remains to be seen.

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5 Responses to “Tesla May Collaborate with BMW”

  1. Jorge says:

    It sounds like Tesla is desperate to find additional revenue streams to pay for the expensive new battery factory?

    • Paul A. Eisenstein says:

      They have said they want to see batteries to other makers, and that would make sense, whether Tesla was struggling to doing well.

      Paul E.

      • Jorge says:

        Usually you try to have these deals finalized before you commit to a mega factory.

  2. veh says:

    interesting stuff about the gigafactory

    • Jorge says:

      You have to wonder how much it is worth to the citizen’s of a given state to have this factory. I know states always try to win the construction of new factories but I wonder how many states actually do the math and stick to what is practical.