Some complete speculation on the Daimler-Tesla deal

It's time to throw some ideas against the wall and see what sticks. Disclaimer: I have no inside knowledge to back up any of what follows. This is all pure speculation based on putting together some puzzle pieces that may or may not actually fit. Let's begin with a few things that we do know:

Daimler and Tesla Motors have some sort of deal, but we have no knowledge about the details. This news came out of an interview that Tesla Chairman Elon Musk did with Fox Business News a couple of months ago. At the time I speculated that this could be either a deal to license some battery management technology to Daimler or for the Germans to supply the Smart engine to Tesla as a range extender for the Model S. We now know that the idea of an ER-EV Model S has been discarded which brings us back to the first idea.

Recently we've heard about a couple of different Daimler projects that involve batteries. One is the ML450 hybrid. Mercedes has a contract with Cobasys to supply nickel metal hydride batteries for the ML450. However, business problems at Cobasys have led Mercedes to file suit against the company. A Mercedes spokesman told ABG that the program is still on track but did not comment on whether a sourcing change would be made. Continue reading this twisted little tale after the jump.

There are several possibilities here. Mercedes could reach an agreement with Cobasys and use those batteries as planned. Mercedes could switch to a different NiMH battery supplier or they could switch suppliers and go with a lithium battery. If the last were to be the case is it possible that Tesla could supply battery packs to Mercedes for its hybrid SUV? Possible? Yes. Likely? Not very. Tesla hasn't done packs for a hybrid system which would be more of a power battery while an EV uses an energy battery. Tesla also may not be ready to supply the kinds of volumes that Mercedes might need in 2009. On the other hand, Tesla is now assembling its packs in the U.S. and the ML is built in Alabama. Still, this an extreme long-shot.

Now the other possibility. Daimler is currently field testing a fleet of battery-powered Smarts in the UK using zebra batteries. The German company has already said they would switch to using lithium batteries sometime in 2009. They have also hinted at expanding the test fleet to California. Tesla makes lithium packs in California for its electric Roadster. Is it possible that Tesla might supply packs to Daimler for its California test fleet? It certainly seems plausible. The volumes of vehicles would likely be small, probably no more than 100-200 cars. Tesla could probably supply that number of battery packs.

In the fall of 2007, Tesla had a deal to supply packs to Norway's Th!nk but the deal was canceled after management changes at Tesla. The company decided to focus on launching production of its cars rather than supplying batteries to other companies. With the Roadster production still running exceedingly slowly it seems unlikely that Tesla is ready to jump back into this arena. On the other hand it could generate some extra revenue that the start-up could certainly use.

Tesla representatives declined to comment on any of these ideas. I could be full of hot air; it certainly wouldn't be the first time. It's all just food for thought. What do you think?

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