NEW YORK -- Tesla plans to acquire a California-based battery technology company for $218 million, part of Elon Musk's efforts to make his electric car startup more price competitive.
Maxwell Technologies, the battery company, announced the deal on Monday in the U.S.
Tesla, whose cars are known for their relatively long range, is struggling to reach the lower price points of its competitors in the expanding electric car market. The company says its base Model 3 sells for just under $36,000, which is close to what the Chevrolet Bolt EV sells for. Ford Motor, Hyundai Motor and Nissan Motor all make electric vehicles that start at around $30,000.
Musk himself has said his company's products are still expensive for most customers.
In the all-stock transaction, Tesla is to obtain all issued and outstanding shares of Maxwell. After the deal is completed, likely in the April-June quarter, Maxwell will become a wholly owned subsidiary of Tesla.
The San Diego-based Maxwell produces ultracapacitors, a key component that help batteries last longer. Global automakers such as Zhejiang Geely Holding Group, the parent company of Volvo Cars, and General Motors also use Maxwell's technology.
Tesla has been taking other measures, including the axing of 3,000 jobs from its global workforce, to lower its costs and eventually bring down the prices of its automobiles. The company also hopes to reap economy of scale benefits as it ramps up production.
Tesla is a partner of another battery maker, Japan's Panasonic. But "Maxwell's technology will not compete with Panasonic [batteries]," said Hideki Yasuda, a senior analyst at Ace Research Institute. "Maxwell's technology will lead to improvements in the batteries Tesla and Panasonic develop together."
Akihide Anzai in Tokyo contributed to this report.