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Tesla (TSLA) Stock Drops by 0,3% After It Acquires Maxwell Technologies for $218 Million

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by Bhushan Akolkar · 3 min read
Tesla (TSLA) Stock Drops by 0,3% After It Acquires Maxwell Technologies for $218 Million
Photo: mariordo59 / Flickr

The latest announcement for Maxwell acquisition comes to ramp up the production of Tesla Model 3 cars to meet the new orders coming from the Chinese mainland.

Last Friday, February 1, electric vehicle maker Tesla Inc. announced taking orders for its lower-priced Model 3 sedan. The company is looking to accelerate its China sales hit by the ongoing trade tension between China and the U.S. To ramp up the production of its Model 3 Sedan, Tesla Inc. acquired an ultracapacitor company – Maxwell Technologies on Monday, February 4.

The announcement comes at a time when the automaker is going through significant troubles in recent times. The recent earnings report shows that the company failed to meet its expectations. Furthermore, Tesla chief executive recently announced the departure of its CFO Deepak Ahuja. The company also announced cutting down its workforce by 7%.

All-Stock Deal

Without putting further pressure on its cashbooks, Tesla performed the Maxwell acquisition in an all-stock deal. The $218 million all-stock deal puts Maxwell’s shares at $4.75 per share. This is a 55% to its closing price on Friday. On Monday, Maxwell stock surged on the announcement of the acquisition. Today, Maxwell Technologies is trading 50% higher from its previous closing, at the press time. Commenting on this deal, a Tesla spokesperson said:

“We are always looking for potential acquisitions that make sense for the business and support Tesla’s mission to accelerate the world’s transition to sustainable energy.”

Maxwell is a reputed car battery supplier with its profound client base including giants like Lamborgini and General Motors. Thus their battery is already proven and tested by automakers in the factories to offer better performance. Besides, the capacitors are also used for power grid applications.

Maxwell Technologies noted that the deal was an outcome of a combined approval from its board of directors. The company plans to complete the acquisition by the end of June, this year. According to the Reuters report, the legal counsel representing the two companies for this acquisition includes Wilson Sonsini Goodrich & Rosati for Tesla and DLA Piper LLC for Maxwell.

Advantages of Ultracapacitors

The use of ultracapacitors in resistors has a lot more advantages over resistors. According to Electronics Tutorials

“Ultracapacitors are electrical energy storage devices that have the ability to store a large amount of electrical charge. Unlike the resistor, which dissipates energy in the form of heat, the ideal capacitor does not lose its energy”.

Some of the most suitable applications of ultracapacitors for Tesla Inc. include:

  • Efficient electricity storage and durability for longer product life of Tesla Powerwall, the company’s home battery that provides backup power for homes.
  • Useful for regenerative braking systems employed in Tesla’s electric vehicles.
  • Providing voltage stabilization and supplying cranking power in the start/stop systems present in the Tesla vehicles.

The ability of the ultracapacitors to store higher energy helps to create more energy sources for the electric vehicles use while enabling faster responses. Also, the voltage stabilization feature improves operational temperature ranges while increasing the battery life by nearly 100 percent.

Elon Musk is also aware of the technological prowess and has also expressed his liking for the technology in the past.

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