Tesla Motors Wants What Renewable Energy's Got

Source: Tesla Motors. The AES Corporation may help boost Tesla's charging capacity.

Tesla Motors (NASDAQ: TSLA  ) is in the business of making cars -- but it needs batteries to make them electric and renewable energy to make them clean. The AES Corporation (NYSE: AES  ) is in the business of making electricity -- and its battery research just advanced by leaps and bounds. Here's why Tesla Motors wants what The AES Corporation's got.

Power play
The AES Corporation unveiled a renewable energy game-changer this week. AES lifted the curtain on AES Advancion, "a complete battery-based grid resource." This latest iteration has been six years in the making and further bolsters AES' 200 MW of energy storage currently deployed or in construction.

While it might seem counterintuitive for power plants to need batteries, varying power supply and demand throughout the day makes batteries a very lucrative investment. Rather than fire up expensive "peaking power plants," electricity companies can instead rely on stored power from cheaper fuel sources.

Source: The AES Corporation. Battery storage unit in Chile. 

Rocking renewables
While energy storage can cut costs for any utility, it's especially important for renewables. Solar power runs on sunshine and wind power on wind. So when the sun has set or breezes aren't blowing, these sources are useless. But The AES Corporation's storage technology lets energy companies store solar power for after-sunset peak hours, or for a slew of still weather.

Why Tesla Motors cares
Utility-level energy storage could be a major boost to Tesla Motors, for two reasons. First, Tesla Motors uses batteries in every single electric car it produces. Its recently announced "Gigafactory" has made battery production priority No. 1. Even as the automaker investigates super-fast battery swaps at conveniently placed stations, it would rather improve storage capacity itself.

As Tesla Motors prepares to produce its first mass-market vehicle, it's counting on its Gigafactory to reduce battery pack cost per kWh to drop at least 30% by 2017.

Source: Tesla Motors, Inc.

Tesla Motors may use smaller batteries than the AES Corporation, but by 2020 it will be able to produce the same number of lithium-ion batteries that the entire world manufactured last year. AES' six years of research and 1.5 MWh of service delivered are making major ripples on energy storage R&D in general, and Tesla Motors can ride the coattails of utilities advancing the cost-effectiveness and reliability of battery storage.

Inside Tesla 06.19.12-Assembly Center from Tesla Motors on Vimeo. Source: Tesla Motors. Vehicle assembly.

Zero-emissions automobile?

Source: Tesla Motors. The New Model S, like all Tesla vehicles, is marketed as "zero emission."

Tesla Motors also wants The AES Corporation to succeed so that its "Zero-Emissions" rhetoric can become reality. While Tesla autos are all electric, their electricity may come from carbon-intensive sources like petroleum, coal, or natural gas. Until every Tesla vehicle "fills up" its battery on electricity produced from renewable energy, zero-emission is only an aspiration.

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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 March 09, 2014, at 9:48 AM, davep007 wrote:

    Future Headlines:

    Telsa representatives met with UPS today to discuss electric delivery vehicles. UPS in the past had contracted with a AMP for a small quantity of electric delivery vehicles but they lacked range and reliability. Tesla has been working a prototype delivery vehicle that has a 200 mile range which UPS representatives are very excited about. UPS representatives explained that a mere 150 miles per day is more than adequate for most of their routes while 200 mile range is a bonus and will help convert most of their rural routes as well. Telsa is bringing an added feature to the deal with Solar City partnering with the charging stations at the UPS depot centers. Tesla representatives are excited that with the combination of solar and battery storage the vehicles will be mostly free to operate except on cloudy days. The charging stations combined with the roof top area on the UPS centers will offer a huge area for the Photovoltaic panels needed to charge batteries during the day while the vehicles are making deliveries. UPS and Telsa are excited about the maintenance of the vehicles over the previous ICE models citing huge savings on Brakes, Clutches, engines and other expendables. The electric models will prove themselves as a huge savings to the UPS brand. Prices of TSLA and UPS rose today on the news that they will both gain by this venture. The first test sites will be Florida, Texas, California and Nevada. FedEx has also been reported as in discussions with Telsa. Elon reported that a truck plant will be built on the same property as the Giga-Factory. Elon has started the process for a convertible offering to pay for the truck plant. Elon was excited that the marriage with UPS will pave the way for Tesla to break into the truck market. Tesla will focus on the UPS vehicle first and foremost but Elon was excited to know that with the truck factory that they would also be working on a Pickup style truck for the masses.

  • Report this Comment On March 09, 2014, at 10:01 AM, davep007 wrote:

    UPS Blog Post was fictitious but just serves as notice that the opportunities are endless when you have the technology to achieve great things. Go ahead and bet against them, I love the short term gains when all the shorts gets squeezed.

  • Report this Comment On March 09, 2014, at 10:26 AM, midnighteye wrote:

    Wishful thinking must be differentiated from reality davep007. That is where a lot of greenies fall down, but don't worry for them as their falls are being cushioned by huge wads of taxpayer Dollars.

  • Report this Comment On March 09, 2014, at 12:13 PM, nonqual wrote:

    EVs' environmental harm and wasted energy comes as much from the mining and refining of the Ni, Co, Al, etc used in the batteries as from the source of electricity generation.

    Until there is proven, economic technology (not wishful thinking) for recovering and reusing the elements in the batteries, EVs are just an alternative option for powering personal transportation not a solution, regardless of political jam downs.

    Jonas' assertion that Musk will "disrupt" the utility industry was "talking MS' book," and illustrative of how little he understands. Listen to the Q&A during Musk/Straubel's recent jaunt through Europe. The most frequent response to existing problems with current products, such as chargers capable of dealing with the vagaries in the European grid, 12 V batteries, software updates, etc. was "it's coming soon, it takes time, it's a matter of priorities". Telsa/Musk are under resourced to cope with current undertakings.

  • Report this Comment On March 09, 2014, at 3:41 PM, toomuchgas wrote:

    Even the utility company's batteries have to be charged whether by solar, wind or the usual method by fairy dust.

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