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GM should just attempt a merger with Tesla. Not possible now, but in a year or two it might.

by sgt 6y ago

jp555 6y ago
The question required to justify a merger instead of partnership: Why would merging make things greater than the sum of the parts? If it doesn't, partner. I dont see any reason why a GM-Tesla merger makes any sense. But would be happy to hear some.
- marvin 6y ago
  I thing sgt is alluding to the fact that if Tesla hits an internal economic crisis, its stock price could fall far enough that one of the established automakers could acquire it or merge. And that this would be in their best interest, as Tesla now obviously has a significant lead in EV development and deployment. But this is contingent on Tesla losing its current trajectory. There would be no incentive for Tesla shareholders to do such a merger the way things look today.
- hedora 6y ago
  Actually, it probably makes sense for GM, in the same way that the AOL - Time Warner merger made sense for AOL. GM’s core businesses is threatened by technological change. They might not be around in ten years. Batteries and self driving cars are a big threat, of course. However, Detroit can probably catch up on those, eventually. Factory direct sales and service (i.e., “the internet”) are the bigger long term threats, and are ones that GM is contractually forbidden to address. Also, they’ve had 20 years to adapt, and have clearly failed to do so. There’s no reason to expect that to change. That gives Tesla a sustainable advantage. I’d certainly pay a premium for a car if it meant bypassing the local dealerships’ service counters.
JeffL 6y ago
What advantage would Tesla gain picking up all the dead weight that GM has, with its dealerships, unions, pensions, and huge factories dedicated to building ICE's?
- hedora 6y ago
  If GM went bankrupt and Tesla acquired them, they could get rid of the dead weight you mentioned, dismantle the consumer dealership network, close obsolete union factories, default on pensions, etc. Most of what would be left is the brand (mostly worthless, except stuff like Chevy trucks and Camero), and the engineering / IP. That might let them expand into more body styles more quickly. They could also take over GMC’s fleet contracts, and the financing divisions loan servicing. Those are pretty lucrative. Having said that, I doubt it makes sense, or would go well. Union busting and stealing pensions would severely damage the Tesla brand, and I don’t think they could do any of that stuff outside bankruptcy proceedings. If they could, GM would have already done much of it. Also, trying to integrate a car company with a completely different business model and tons of legacy baggage is probably riskier than continuing down the path Tesla is on.
  - gpm 6y ago
    > That might let them expand into more body styles more quickly. Is this positive or negative value for Tesla? A lot of a Tesla's value is it's distinctive look as a status symbol, meanwhile Tesla is primarily production constrained in how many they sell. Expanding into more styles lowers the value proposition of buying a tesla, and they probably can't actually produce enough cars to take advantage of the moderately larger market.

GM should just attempt a merger with Tesla. Not possible now, but in a year or two it might.

by sgt 6y ago

GM should just attempt a merger with Tesla. Not possible now, but in a year or two it might.

The question required to justify a merger instead of partnership: Why would merging make things greater than the sum of the parts? If it doesn't, partner. I dont see any reason why a GM-Tesla merger makes any sense. But would be happy to hear some.

marvin 6y ago
I thing sgt is alluding to the fact that if Tesla hits an internal economic crisis, its stock price could fall far enough that one of the established automakers could acquire it or merge. And that this would be in their best interest, as Tesla now obviously has a significant lead in EV development and deployment. But this is contingent on Tesla losing its current trajectory. There would be no incentive for Tesla shareholders to do such a merger the way things look today.
hedora 6y ago
Actually, it probably makes sense for GM, in the same way that the AOL - Time Warner merger made sense for AOL. GM’s core businesses is threatened by technological change. They might not be around in ten years. Batteries and self driving cars are a big threat, of course. However, Detroit can probably catch up on those, eventually. Factory direct sales and service (i.e., “the internet”) are the bigger long term threats, and are ones that GM is contractually forbidden to address. Also, they’ve had 20 years to adapt, and have clearly failed to do so. There’s no reason to expect that to change. That gives Tesla a sustainable advantage. I’d certainly pay a premium for a car if it meant bypassing the local dealerships’ service counters.

JeffL 6y ago

What advantage would Tesla gain picking up all the dead weight that GM has, with its dealerships, unions, pensions, and huge factories dedicated to building ICE's?

hedora 6y ago
If GM went bankrupt and Tesla acquired them, they could get rid of the dead weight you mentioned, dismantle the consumer dealership network, close obsolete union factories, default on pensions, etc. Most of what would be left is the brand (mostly worthless, except stuff like Chevy trucks and Camero), and the engineering / IP. That might let them expand into more body styles more quickly. They could also take over GMC’s fleet contracts, and the financing divisions loan servicing. Those are pretty lucrative. Having said that, I doubt it makes sense, or would go well. Union busting and stealing pensions would severely damage the Tesla brand, and I don’t think they could do any of that stuff outside bankruptcy proceedings. If they could, GM would have already done much of it. Also, trying to integrate a car company with a completely different business model and tons of legacy baggage is probably riskier than continuing down the path Tesla is on.
- gpm 6y ago
  > That might let them expand into more body styles more quickly. Is this positive or negative value for Tesla? A lot of a Tesla's value is it's distinctive look as a status symbol, meanwhile Tesla is primarily production constrained in how many they sell. Expanding into more styles lowers the value proposition of buying a tesla, and they probably can't actually produce enough cars to take advantage of the moderately larger market.