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The Real Reason Tesla Wants to Help Boeing

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Elon Musk, CEO of Tesla Motors (NASDAQ: TSLA  ) , has often been described as the inspiration for Jon Favreau's cinematic version of Tony Stark, better known as the heroic Iron Man. But today, Musk is coming to the rescue in a very real way. Musk recently stepped up to help aerospace giant Boeing (NYSE: BA  ) , as the company struggles with problems related to the rechargeable batteries onboard its new 787 aircrafts.

Now, let's think about this... is it mere publicity that Tesla is after, or the opportunity to sell its lithium-ion batteries to one of the world's leading aerospace and defense companies? Some analysts are of the belief that the Tesla CEO is chasing profile-raising exposure by offering Boeing a helping hand. I, on the other hand, think Musk is after something much more valuable -- battery sales.

Plugging into the facts
Earlier this week, Musk reportedly told Reuters that the high-capacity lithium-ion batteries, which power SpaceX's rockets, could be effective for Boeing's commercial aircraft. This should be a relief for Boeing, as the company is suffering regulatory scrutiny after lithium-ion batteries used on two of its new 787 jets caught fire.

The Federal Aviation Administration has since grounded all Boeing 787s currently in service around the world. While no definite cause for the fires has been determined, the U.S. National Transportation Safety Board found that the battery onboard the Boston plane experienced both thermal runaway and short circuit conditions. Perhaps this is where Tesla's Elon Musk can be of assistance.

You see, Tesla's battery technology has a pretty remarkable track record. In an email to Reuters earlier this week, Musk emphasized, "We have never had a fire in any production battery pack at either Tesla or SpaceX."

This would explain why even rival auto companies continue to buy powertrain technology from Tesla for use in their own hybrid and electric vehicles. Much more established automakers, including Daimler and Toyota (NYSE: TM  )  , are among those with ongoing supply deals with Tesla. In fact, Toyota purchased battery packs and motors from Tesla to power the electric version of its RAV4 compact SUV.

Meanwhile, other auto companies, such as General Motors (NYSE: GM  ) , whose cars rely on its own battery cells, suffered negative press after engine fires broke out because of complications with the battery packs. Perhaps they, too, should turn to Tesla for support. GM's Chevrolet Volt was the victim of a 2011 investigation by the National Highway Traffic Safety Administration after its lithium-ion battery pack burst into flames three weeks after a side-impact crash test.

Show 'em how it's done
Tesla may not be directly related to these instances, but it doesn't help the company's cause of accelerating EV adoption, when there are so many blatant flaws in lithium-ion battery design. This is why it's important that Musk step in and offer his expertise.

Not only does the former PayPal entrepreneur's battery technology power Tesla's all-electric vehicles, but it also fuels rockets for SpaceX. Elon Musk founded Space Exploration Technologies, better known as SpaceX, in 2002. The privately-held company has since passed many milestones. In May, the company's Dragon spacecraft made history when it became the first privately-developed rocket to dock with the International Space Station.

Clearly, the Tesla and SpaceX rocket man knows what he's doing when it comes to battery technology. If Boeing is smart, it will work with him to find a safe solution for its recent battery woes. As Boeing works through these problems, many investors are left wondering where the stock will go from here. Our latest research report on Boeing offers insight into the challenges and opportunities Boeing faces in the year ahead.

In this premium research report, two of the Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues around Boeing. They'll be updating the report as key news hits, so make sure to claim a copy today by clicking here now.

Editor's note: A previous version of this story stated that Fisker Automotive had suffered negative press after engine fires broke out because of complications with the battery packs in its cars. The batteries used by Fisker Automotive were not identified as the cause of any fires in it vehicles. The Motley Fool regrets the error.

Read/Post Comments (7) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 30, 2013, at 7:48 PM, matthewluke wrote:

    I'm confused. Is Tesla offering to helping Boeing or is SpaceX offering to help (or is Musk just being offering general, non-specified help)? If Boeing accepted Elonn Musk's offer, which one of Musk's companies would benefit from said help (benefit from something other than positive exposure; financially benefit)?

  • Report this Comment On January 30, 2013, at 8:01 PM, matthewluke wrote:

    SolarCity (another Musk company) also has lithium-ion products. But I doubt SolarCity will be offering Boeing any direct help.

  • Report this Comment On January 30, 2013, at 9:52 PM, kthor wrote:

    @WhichStocksWork it's a tesla battery but spaceX uses it ...i think ...but wow Tesla would score a coup if BA gives a contract here

  • Report this Comment On January 30, 2013, at 10:53 PM, SkepikI wrote:

    Yes, Tesla could get some battery sales from Boeing 787, but at even 42 planes a month (their target) even with multiple cells per plane that's a drop in the bucket compared to autos. Perhaps with back fit of other aircraft, that could amount to something, but it still pales in comparison to Auto use... HOWEVER if I am Elon Musk, my main product (car) is dependent on my batteries, a bum rap from Boeing publicity about fires is a stake to the heart. On the reverse, if I FIX BA problems with battery, and keep safety record prominent I get PRICELESS good PR AND massage my customer's biggest fear. Kind of a 2fer Very astute and zero cost to positive bottom line add - passes the "no losers test"

  • Report this Comment On January 30, 2013, at 11:18 PM, Shiggity wrote:

    What many people don't really know is that SpaceX has 0 intellectual property. This may sound ridiculous, but it is true, look it up. Elon Musk is on record saying this because he doesn't want other countries simply stealing who don't respect IP *cough* China *cough*.

    Tesla Motors has IP though, so they could legally do a deal, but Elon has all the tech at his disposal.

  • Report this Comment On January 31, 2013, at 6:15 AM, kafantaris wrote:

    Since large lithium batteries are a headache -- if not inherently dangerous -- we have to look at alternatives. One is to go back to the heavier nickel-cadmium batteries.

    Another is to use fuel cells. Fuel cells are now used in warehouse lifts and they supply unattended backup power to cell towers.

    Why not use them in commercial airplanes? They have proved reliable for over a decade in our space Shuttle.

    What about cost? With $16,000 for a lithium battery, cost is relative. Moreover, fuel cells are now a sixth of what they were five years ago.

    What about the Hindenburg?

    Those flames etched in our minds came from the fresh paint on the tarp. Hydrogen itself burns colorless, last about a second, and the flames go straight up.

    But where would we store the hydrogen? In tanks of the type now used in fuel cell cars -- and they can be refilled every time the plane refuels.

    Or we could go with low pressure, though heavier, metal hydride tanks. This could eventually lead to our use of hydrides as artificial muscles -- to operate the plane's wings, brakes and landing gear. Metal hydrides can do this easily by us merely changing the current of the heating element inside the tank.

  • Report this Comment On February 01, 2013, at 8:55 AM, gene132 wrote:

    The two battery applications are different-Automobile batteries are high current, low voltage battery packs. The aircraft batteries are high voltage, lower current types. Agree that Musk wold score a lot of goodwill for this, but it does point to the main issue facing Tesla-the (relatively) small market for electric cars. In essence, he has sold to all the "early adopters"-and sales of all-electric vehicles are unlikely to grow for a long time.The real solution to the gasoline pollution and cost, is LNG-clean and cheap, and the conversion is easy. Now that the US Government (in its infinite stupidity)has decided to force people to buy 15% ethanol gasoline blend (which will destroy the engines of most pre-2012 cars), LNG powered cars are the only real option.

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