Tesla Spent Only $3 for Patents That Could Dramatically Improve a Critical Area of the Company
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Tesla is a car brand that people aspire to own. The company manufactures luxury vehicles that some people consider to be among the best in the industry. Tesla has become so successful that it has made CEO Elon Musk a net worth of well over $100 billion.
Part of Tesla's incredible financial success comes from making smart business decisions. Tesla purchased patent applications for just $3 from a battery startup. This will be the core of a new process of manufacturing batteries that dramatically improves the financial and environmental cost of making electric vehicles (EVs).
This technology could also help Tesla owners with their car insurance costs as electric vehicles become cheaper to manufacture.
How will the patents help improve Tesla’s battery production?
TechCrunch reports that last September, Elon Musk promised at Tesla's Battery Day to cut the price of lithium-ion batteries in half. These savings would come from simplifying the process of making nickel metal cathodes and making it more eco-friendly to manufacture.
Currently, for every ton of cathode material produced, up to 4,000 gallons of contaminated water are generated. The contaminated water contains metal particles, ammonia, and toxic chemicals.
One of the patent applications includes a way for manufacturers to reuse the contaminated water that comes out of producing cathodes. This will cut operational costs by more than 75% since there won’t be a need for expensive water treatment.
Drew Baglino, senior vice president of engineering at Tesla, says Tesla "can also use that same process to directly consume the metal powder coming out of recycled electric vehicle and grid storage batteries." Springpower International, which the patents are purchased from, is a small company near Toronto in Canada.
Springpower will probably work closely with Tesla
Tesla bought Springpower International's intellectual property for a low cost, but this doesn’t seem like the only thing Tesla purchased. Shortly before Battery Day, Springpower's website was replaced with a single page listing the company's contact information.
A few months later, a number of Springpower's researchers updated their LinkedIn profiles to show that they work at Tesla. Michael Wang, CEO of Springpower International, has dozens of updates from Tesla employees on his own LinkedIn profile.
There’s strong evidence that Springpower was purchased by Tesla, but there hasn’t been any confirmation. If the companies join forces, it’ll help make scaling the battery production process quicker and easier.
Other benefits of the company’s new battery process
Musk has wanted to produce batteries in-house for years so the company doesn’t have to rely on suppliers like Panasonic and LG Chem. According to Baglino, having this new process will allow Tesla "to start building our own cathode facility in North America."
That would lead to further cost savings for the company, and Musk has said that the benefits of the new battery technologies could allow the luxury brand to make $25,000 vehicles—just don't expect it any time soon.
Musk said "it will take us probably a year to 18 months to start realizing these advantages, and three years or thereabouts to fully realize them." So while lower-priced Teslas are on the horizon, don’t wait on these if you need a new car now.
The improvements for Tesla’s battery production process will hopefully reduce the cost of insurance for EVs. Right now, it’s still expensive to insure a Tesla. But that doesn’t mean you have to overpay for car insurance.
You can use Jerry to shop for the most affordable coverage. The free app will help you save money by comparing rates from the top insurance companies.