Tesla's Batteries Could Fund Its Car Production Efforts

Many analysts believe that batteries are the future of Tesla Motors Inc TSLA. They may also help the company achieve its original goals as an automaker. "If you wanted to basically think that, long-term, Tesla's battery technology and battery production capacity will fund their automobile efforts, that's probably an effective way to think of it," Kelley Blue Book senior analyst Karl Brauer told Benzinga. "Right now, selling stock and investment bankers are powering everything because they haven't made a profit in the 12 years they've been around." Brauer said that Tesla must eventually come up with a business model that makes money without stock or venture capital. "If the batteries can get them there, then they will actually have some latitude, some freedom, to really invest in technology to make inexpensive, affordable and real-world electric cars," he said.

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Shortcomings No More

In the meantime, Brauer said that Tesla's battery plans can make up for the company's shortcomings "because the future will have a lot of demand for batteries -- and not just for cars." "We've created this time shifting-based culture, as I like to say it," Brauer explained. "I think the first widespread use of it was the phone answering machine. I call you, but at the time I call you're not available, so I leave a message. And when you're available, you get my message and maybe call me back." VCRs came later, allowing consumers to record live TV while they were away. Netflix, Inc. NFLX has given consumers the chance to bypass traditional TV altogether. "Now we're doing the same thing with energy," said Brauer. "Energy can be made more cost effective at certain times of the day (ex: when it's sunny in the middle of the day), but it's needed sometimes in the middle of the night when there's no sun around." If solar panels continue to improve, consumers will also need a better way to store energy. "We're going to continue to see the solar industry get more influential on energy," Brauer added. "As that happens we're going to need more and more storage capacity to manage when we make the energy and when we utilize the energy and time shift it to when it works for us best." And that applies to more than homes and automobiles. "We're rapidly becoming a culture and civilization of energy users, but we want the energy when we want it," Brauer concluded. "We want it to be portable and easy to use. And then we want to create it when it's most convenient for us. Batteries bridge that gap between those two timeframes." Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.