Rivals Rise Up to Threaten Tesla’s Battery Business
Batteries to run cars. Batteries to store solar power. Batteries … to prevent blackouts.
Everywhere you look in the field of battery technology, Tesla (NASDAQ:TSLA) seems to be there already. The company’s even building a battery gigafactory in the Nevada desert to keep its battery empire well-supplied, and one of the reasons for this is that Tesla is rapidly outgrowing its origins as a car company, and finding new ways to make money by building huge, utility-scale energy storage complexes to help electricity companies shore up the stability of their electric grids.
It’s a lucrative business — and Lockheed Martin (NYSE: LMT) wants in.
Lockheed looks for electricity
Last month, Lockheed Martin (NYSE:LMT) announced that it’s found a way to make storage batteries for a whole lot cheaper than what lithium-ion batteries currently cost — by forgoing the lithium.
Now, Lockheed might seem a strange candidate to come up with such a plan. Most investors probably know Lockheed Martin only as a defense giant. And yet, Lockheed Martin also has an active side business in green and renewable technologies, covering everything from generating power from ocean waves to filtering out salt to create potable water to nuclear fusion.
And this is the direction in which Lockheed is leaning with its latest venture. As explained in a Reuters story, Lockheed is working to develop a “flow” battery that utilities can use to store their energy and stabilize their electric grids. Because utilities tend to be geographically grounded, and not move around a lot, light-weighing lithium metal isn’t a sine qua non in the batteries they use. Simply put, cost trumps lightness when it comes to building utility-scale batteries.
Playing to this strength, Lockheed says its new battery technology will be made from nontoxic rare-earth metals and chemicals dissolved in a water solution to hold their charge. These materials will be cheap, but not necessarily lightweight like lithium.
Context: Competition is heating up for Tesla
Will Lockheed Martin’s new battery initiative upset Tesla’s recent success in building utility-scale batteries? Actually, Tesla is already encountering some competition here. After winning one Australian energy storage deal (for 129 megawatts) last year, then a second (for 250 megawatts of “distributed” storage) this year, Tesla was tapped a third time to build a 25 megawatt energy storage facility co-located with the Gannawarra Solar Farm near Kerang, Victoria. (Tesla has also built a smaller 20 megawatt battery system supporting a wind farm at the Bulgana Green Power Hub in Western Victoria.)