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Buying a major car company is buying a whole heap of liabilities and depreciating assets. The major value drivers (contributors to market cap) are brand, patent

by jmole 4y ago

Buying a major car company is buying a whole heap of liabilities and depreciating assets. The major value drivers (contributors to market cap) are brand, patent portfolio, and future revenues from existing capex. Tesla doesn't want to support the supply chain of new and used parts for a legacy car company, they can barely keep up with their own (and they only make 4 models!).

glitchc 4y ago
Well, you know, you also get an established luxury brand, a cadre of brand-loyal customers, a significant increase in the manufacturing base and tons of proprietary tech. Are you telling me Mr. Musk would have bothered to create his own brand if he had enough capital to buy an existing brand to start with? The latter is a much safer strategy in bringing a car to market. He took big risks creating his own brand because he lacked the initial capital to buy one outright.
- bobthepanda 4y ago
  you inherit all the politics that comes with an existing company as well. owners and CEOs are powerful but not infallible; Carlos Ghosn got thrown in jail when he got too big for his britches as CEO of Nissan (in Japan Inc.'s view, at least).
- ultrarunner 4y ago
  Well, technically Musk bought an ownership stake in Tesla
- deleted 4y ago
  [deleted]
oblio 4y ago
> legacy car company Let's drop the BS, please. Mercedes is a car company. They are not legacy anything. They're the inventor of the car and a myriad other innovations. They're making a ton of EVs and will sell a ton more next year and the year after that. They have AR navigation and now are close to L3 self driving.
- bookofjoe 4y ago
  Also, unlike the well-publicized issues re: Tesla repair difficulties, you can take a Mercedes in anywhere and get it fixed by authorized mechanics.
- jmole 4y ago
  “Legacy” is not a pejorative term, it’s descriptive. They have a dealer network. They have a parts counter. Their operations are the result of a 120 year legacy. Their valuation is based on longstanding economics of the automobile industry. I’m saying all this to draw a comparison against Tesla. Tesla doesn’t want a dealer network, or a parts counter, or a typical car company valuation. Buying a legacy car company is not in Tesla’s interest, because they don’t want to play by the rules (unwritten or written) that every other auto manufacturer plays by.
  - oblio 4y ago
    > “Legacy” is not a pejorative term, it’s descriptive. 99% of the time I see "legacy" used for established car companies is when it's an article or comment about Tesla. And it is meant as a pejorative. Maybe you're the exception:-)

by jmole 4y ago

glitchc 4y ago

Well, you know, you also get an established luxury brand, a cadre of brand-loyal customers, a significant increase in the manufacturing base and tons of proprietary tech. Are you telling me Mr. Musk would have bothered to create his own brand if he had enough capital to buy an existing brand to start with? The latter is a much safer strategy in bringing a car to market. He took big risks creating his own brand because he lacked the initial capital to buy one outright.

bobthepanda 4y ago
you inherit all the politics that comes with an existing company as well. owners and CEOs are powerful but not infallible; Carlos Ghosn got thrown in jail when he got too big for his britches as CEO of Nissan (in Japan Inc.'s view, at least).
ultrarunner 4y ago
Well, technically Musk bought an ownership stake in Tesla
deleted 4y ago
[deleted]

oblio 4y ago

> legacy car company Let's drop the BS, please. Mercedes is a car company. They are not legacy anything. They're the inventor of the car and a myriad other innovations. They're making a ton of EVs and will sell a ton more next year and the year after that. They have AR navigation and now are close to L3 self driving.

bookofjoe 4y ago
Also, unlike the well-publicized issues re: Tesla repair difficulties, you can take a Mercedes in anywhere and get it fixed by authorized mechanics.
jmole 4y ago
“Legacy” is not a pejorative term, it’s descriptive. They have a dealer network. They have a parts counter. Their operations are the result of a 120 year legacy. Their valuation is based on longstanding economics of the automobile industry. I’m saying all this to draw a comparison against Tesla. Tesla doesn’t want a dealer network, or a parts counter, or a typical car company valuation. Buying a legacy car company is not in Tesla’s interest, because they don’t want to play by the rules (unwritten or written) that every other auto manufacturer plays by.
- oblio 4y ago
  > “Legacy” is not a pejorative term, it’s descriptive. 99% of the time I see "legacy" used for established car companies is when it's an article or comment about Tesla. And it is meant as a pejorative. Maybe you're the exception:-)