UPDATE: Tesla To Supply Batteries for Smart Car

Tesla Motors released additional information yesterday
concerning the supply of batteries to be used in the company’s electric vehicles.

Tesla announced that it will supply battery packs and chargers to Daimler AG (NYSE: DAI) for 1,000 electric Smart cars, scheduled for delivery in
the second half of 2010. 

The compay later announced that it may use battery cells produced by Evonik Degussa GmbH, an affiliate of Daimler, for its own cars if they perform better than products from its current Japanese suppliers.

Tesla recently signed a second supply agreement with an unidentified Japanese battery cell maker to get dual sourcing on the battery cells, Elon Musk, chairman and chief executive of Tesla, said.

It was unclear whether the battery packs for Daimler would incorporate batteris from Evonik or one of the Japanese companies.

Musk said he is trying
to arrange additional supply agreements with other major car companies, similar to Tesla’s supply deal with Daimler. He
said the Daimler agreement could grow to "tens of thousands" of units.

Tesla reportedly is in the process of sending prototypes to Daimler. Daimler

Daimler is aiming for full commercial production of the electric Smart in 2012.

Tesla recently announced that it will begin selling a souped-up
"sport" version of its electric-powered Roadster in June, and is in the
process of increasing production to 30 vehicles a week.

Musk said Tesla will unveil its battery-powered sedan at the end of
February. The vehicle which has been in development for the last two
years is  known as the Model S

Tesla has applied for $450 million in federal loans to fund the
production of the Model S and to build a new plant that would supply
electric-drive components to Daimler and any future customers. 

In November, Tesla instituted a $40 million convertible debt financing round
and cut its workforce. At the same time, Musk took over as CEO and said
he expects the company to be profitable by the middle of 2009.

Daimler is working with utility RWE (RWE.DE) to open recharging stations
for their electric vehicles in Berlin at the end of 2009. The company
said the city will serve as a pilot market for future developments.

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