Tesla looking to build battery fab in Germany, in talks to partner with BMW

Tesla CEO Elon Musk has called Daimler’s decision to exit battery cell production in Germany a "mistake" and said he expected the U.S. electric vehicle maker to have a battery production plan in Germany in five to six years.

In an interview with German weekly Der Spiegel, Musk called on German automakers to increase their commitment to battery development, arguing that large-scale production of batteries could lead to overall lower prices for electric cars.

Tesla is currently planning a $5 billion battery gigafab in Nevada.

Daimler last week announced it was shutting down its battery cell production in Germany. Although competitive, demand is too low to make cell production economical, particularly in view of much bigger rivals like LG Chem, which will provide Daimler’s battery cells in the future, the company said. The Stuttgart-based automaker nevertheless said it would continue to produce batteries and expand its offering to include stationary and industrial storage systems for solar photovoltaic plants.

While Daimler and Tesla will continue to work together despite the German company’s recent sale of its Tesla stake, Musk said the California company was also talks with fellow German automaker and Daimler rival BMW to partner on battery technology, charging stations and the Bavarian carmaker’s production of carbon fiber reinforced car body parts.

Musk also played down the significance of Daimler as well as Toyota’s sale last month of Tesla shares, saying the two automakers "simply wanted to make a profit."

Toyota bought a 2.4% share in Tesla for $50 million in 2010 and made a reported profit of some $640 million from the sale. Daimler bought a 9.1% stake in Tesla in 2009 for some $50 million and in October sold its remaining 4% in the company for $780 million.

LG Chem, meanwhile, announced last week that it was intensifying its partnership with German engineering group Siemens on industrial battery storage systems.