The Real Reason Tesla Wants to Help Boeing
Jan 30th 2013 7:40PM
Updated Jan 31st 2013 6:50PM
Elon Musk, CEO of Tesla Motors , 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 , 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 , 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 , 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.
The article The Real Reason Tesla Wants to Help Boeing originally appeared on Fool.com.Fool contributor Tamara Rutter owns shares of Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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