Tesla is buying Maxwell Technologies Inc for $218 million in an all-stock deal that will help the electric car maker beef up its battery technology. Photo: AP

INTERNATIONAL – Tesla is buying Maxwell Technologies for $218 million (R2.9 billion) in an all-stock deal that will help the electric car maker beef up its battery technology at a time when it is ramping up production of its crucial Model 3 sedan.

Maxwell, whose customers include General Motors and Lamborghini, makes ultracapacitors that are used in automobile batteries to lengthen their lives. They are also used for electric energy storage on power grids.

Improved power storage is critical to two of Tesla’s main products - electric cars and backup power for homes and power utilities.

“We are always looking for potential acquisitions that make sense for the business and support Tesla’s mission to accelerate the world’s transition to sustainable energy,” a Tesla spokesperson said on Monday.

The offer values each Maxwell share at $4.75, representing a 55 percent premium to the stock’s closing price on Friday, the companies said. Maxwell shares rose to trade at $4.72.

Currently, Japan’s Panasonic Corp is the exclusive battery cell supplier for Tesla cars.

Ultracapacitors, combined with the energy of batteries, can enable rapid response times, extend operational temperature range and lengthen battery life by up to two times, according to a blog post on Maxwell’s website.

Tesla chief Elon Musk had highlighted the importance of ultracapacitors back in 2013.

"I'm a big fan of ultracapacitors. Was going to do my PhD at Stanford on them. But we need a breakthrough in energy density...," Musk had tweeted here

Maxwell expects the deal, which has already been approved by its board, to close in the second quarter of 2019, or shortly thereafter.

DLA Piper LLP represented Maxwell as outside legal counsel, while Barclays Capital Inc served as independent adviser to Maxwell. Wilson Sonsini Goodrich & Rosati represented Tesla as outside legal counsel.