Report: Tesla Will Supply Mercedes-Benz With Batteries For Electric Cars

With all the news yesterday around Tesla Motors signing a deal with Governor Schwarzenegger to manufacture its next electric sedan in California instead of New Mexico (see video), a potentially much bigger deal slipped by almost unnoticed. German magazine AutomobilWoche is reporting that Tesla will be supplying lithium ion batteries to Mercedes. The German car maker plans to make electric versions of its A- and B-class vehicles, as well as its Smart cars as soon as 2010. When I called Tesla for confirmation, the spokesperson there had “no comment,” but did not deny the report either.

I guess that extra $40 million infusion that founder Elon Musk poured into the company last December is paying off.

If Tesla can supply the drive trains for electric cars made by major auto manufacturers like Mercedes that not only would be a huge vote of confidence in its technology, it could also lead to a bigger business than selling its own cars. Are the Tesla Roadster and its upcoming sedan merely demo products for Tesla’s real business—supplying the electric “engines” for the world’s future gas-free vehicles?

What will be a bigger business for Tesla in five years?
( polls)