Battling ‘battery cell scarcity’ and manufacturing hiccups, Tesla quietly buys Ontario automation firm
Tesla Inc. has quietly acquired an Ontario-based battery manufacturer in its latest investment in Canada.
Richmond Hill-based Hibar Systems Ltd., which specializes in building “complex high speed integrated battery assembly lines,” is now a subsidiary of the California-based electric vehicle maker.
Terms of the deal, including price, were not disclosed, but Tesla filed lobbying forms in October in Ottawa that list Hibar as a subsidiary, as first reported by trade magazine Electric Autonomy, and the company has scaled back its website to a single page.
The move comes amid Tesla’s well-known manufacturing challenges, having consistently missed ambitious production targets despite making large investments in robotics and other technology to automate its processes.
Adding Hibar to its holdings could help alleviate shortages of battery parts, a problem the company identified as a bottleneck earlier this year, or it could help with general improvements to its manufacturing capacity.
“Hibar is a world leader in the development of battery manufacturing technology,” the company said in a screenshot of its website from July, which has since been removed.
According to its website, the company was founded 30 years ago and has accumulated “technical knowhow and manufacturing capability for automated production of lithium-ion, zinc chloride, lead acid, nickel metal hydride and alkaline batteries.”
The company, which also has a footprint in China, where Tesla is building a factory, also touted its ability to build state of the art automated systems, according to screenshots of its website archived on The Wayback Machine.
Neither Hibar nor Tesla provided comment for this article.
In the first quarter, Tesla chief executive Elon Musk called “battery cell scarcity” a challenge to its production targets for its Model 3.
“We’re essentially scrounging cells from all around the world,” he said on the call, adding in a shareholder letter that quarter that “supplier limitation” had held back production on Model 3s.
We’re essentially scrounging cells from all around the world
Earlier this month, Tesla announced it produced 96,000 vehicles in the third quarter, a record number for the company but still short of analysts expectations of 99,000 and goals laid out by Musk. It would need to produce 105,000 vehicles in the fourth quarter to meet its guidance of 360,000 to 400,000 vehicles this year.
Linda Nazar, a professor at the University of Waterloo who works on electrochemical energy storage, said it makes sense for Tesla to invest in batteries.
“A (conventional) car company would be invested heavily in its combustion engine,” said Nazar. “There is no engine in an electric vehicle, just a battery and a motor.”
Since 2015, Tesla has had a research partnership with Dalhousie University in Halifax, where professor Jeff Dahn is working to improve energy density and performance in batteries.
In August, Dahn and his team of researchers at Dalhousie published a paper in the Journal of the Electrochemical Society, laying out how a battery that utilizes a new lithium-ion chemistry “should be able to power an electric vehicle for over 1.6 million kilometres (1 million miles)” — about double the current capacity of a Tesla battery, and what would be an industry leading capacity.
Maynard Um, an analyst at Macquarie Research who covers Tesla, wrote in a note last year that electric vehicles have many fewer parts — “effectively basic motors and gearboxes” — when compared to conventional automobiles.
That’s lowered the barriers for new companies to enter the market, he wrote.
“That said, Tesla’s manufacturing hiccups show that there are some levels of manufacturing experience that are necessary to get to volumes,” Um wrote.