Automaker Daimler is better known for German efficiency than sex appeal. But its recent investment in Silicon Valley startup Tesla may change that. Tesla’s $110,000 electric sports cars will certainly bring some allure to the boring Mercedes-Benz manufacturer. Yet with new fuel economy standards taking effect, it’s Tesla’s battery technology that looks like the real prize.
Tesla has attracted lots of attention for its pricey Roadster, which is powered by a 1,000-pound battery and goes from zero to 60 miles-per-hour in less than four seconds. Such buzz is enviable for the fallen giants of the US auto industry. Yet Tesla does have something in common with its gas-powered brethren — financial worries.
The startup is still working to reach profitability and is trying to get a $350 million loan from the energy department to produce the Model S, its more budget-friendly sedan set to retail for less than $50,000. So Daimler’s purchase of a 10 per cent stake in Tesla, the terms of which were not disclosed, comes at an opportune time.
The move makes sense for Daimler, too. It stands to benefit if Tesla’s speedsters go mainstream. And it could put the Germans in pole position to own the startup — though Daimler’s multi-year experience owning Chrysler may give it some pause. Even so, Tesla would add a lot of sex appeal to the trademark efficiency of its Mercedes-Benz lineup.
But the real prize is Tesla’s advanced battery technology. Tesla’s lithium-ion batteries have the best combination of power, range and safety of any scalable model currently available. Mercedes has already tested them in a limited fleet of prototypes. Now it is expecting to roll out its first battery-powered vehicle next year and will offer battery-powered versions of all its models by 2012.
The timing for all this couldn’t be better. The White House just announced its new Corporate Average Fuel Economy standards, which aim to cut emissions by 40 per cent in 2016. A move towards a battery-powered fleet could help Daimler move to the front of the pack. That would make its investment in Tesla much more than just a shot at glamour.
