4 ms·

Will GM or Ford buy Elon Musk's Tesla in 2014?

9 points by deadfall 13y ago

alexgaribay 13y ago
I do not see this happening. One of the main reasons Musk created Tesla was to remove the middleman, that being dealerships, and to be able to sell directly to the customer. If that buyout were to happen, that would completely contradict that main principle of Tesla. EDIT: At the time of my comment, I forgot about the legalities of buying publicly traded companies. It's something I don't particularly follow.
- polarix 13y ago
  Wait, principle? How does that have anything to do with whether this happens? Tesla is a public company. edit: per http://www.businessinsider.com/elon-musk-borrows-150-million-to-buy-tesla-2013-5 http://www.businessinsider.com/elon-musk-borrows-150-million... it looks like Musk, holding 65%, would be able to block any hostile acquisition.
  - deleted 13y ago
    [deleted]
- apalmer 13y ago
  Big Difference between 'principles' and 'capitalism'. Ulitimately if GM or whoever offers enough for Tesla then it will be sold... even if the founder doesnt want to sell for personal reasons publicly traded companies are under some restrictions as far how they respond... even beyond legal restrictions if the offer is good enough the stock holders will revolt
- maaku 13y ago
  No, Musk started Tesla to force the transition to electric cars. He has already succeeded at that. A buy-out would give Musk the ability to cash out his own shares to keep SpaceX going, if hardships are encountered. (Disclaimer: I don't own any Tesla stock.)
argumentum 13y ago
Don't see it happening, just based on Musk's personality and his strong control of the company/board.
Havoc 13y ago
I doubt that very much. I don't think Musk is interested in a pile of cash anymore - he's already got more than he'll ever need. Changing the world seems to be his current game plan. The only way I see him selling is if he feels the cash might help him get the hyperloop off the ground - the hyperloop and tesla seem to be linked though so I still think its unlikely.
Akujin 13y ago
Tesla has the potential to be GM. I think Musk knows that. In 10 years the 30k USD electric sedan will be affordable and everyone will want one because it will be safer, faster 0-60, cheaper to maintain, and cheaper to charge than a comparable gasoline sedan.
apsec112 13y ago
Buy it with what? GM and Ford have market caps of $60B. Tesla has a market cap of $20B. It couldn't be an acquisition, it would have to be a merger. A merger would: - put Elon Musk de facto in control of Ford/GM, as by far the largest shareholder; - give people who are now holding big chunks of Tesla stock big chunks of Ford/GM stock. I can't imagine Ford/GM being happy about #1, and I can't imagine Tesla shareholders (including Elon) being happy about #2.
- ZachPruckowski 13y ago
  Tesla's P/E ratio is literally 1000-1[A]. Most of that market cap of $20B is based on expectations that Tesla is going to have hockey-stick growth rates over the next 5-10 years. So in order to keep that stock price, they need to go gangbusters - "we sold more cars than last year" is bad news for them because investors are counting on them to like double or triple sales. A sustained anti-Tesla campaign (which you'll notice is already underway) combined with a few minor setbacks could cause some big stock price losses and make Tesla a more attractive buy. Personally though, I don't think it's that likely that Tesla will be acquired in the near term. The only reason the article gives is "GM sucks at making electric cars for consumers" and buying Tesla would help GM solve that problem. But the fact is that Tesla hasn't yet solved the real problem either - they can build kickass electric sports cars and luxury sedans, but that doesn't necessarily translate into a viable consumer car. Ford and GM have tried selling consumer-model electrics and they've failed because of budget - when you try to build an electric car with today's tech for $30K (the average US new car price) you wind up having to make a lot of compromises, even accounting for the generous tax credit. Ford and GM are building inadequate electric cars at roughly the $30K pricepoint, while Tesla's building a great electric car at twice the price. Tesla's doing a lot of clever engineering and making good cars, but it's not really clear to me that "cut the Model S's price in half" is so much easier than "make the Volt/Leaf/etc. not suck" to justify a buyout/merger. [A] - Stock price divided by this quarter's project earnings per share.
  - revelation 13y ago
    As usual, you can't take new technology and expect to instantly engineer it into a mass-market solution, and it certainly won't work if you then do a half-assed job. That, frankly, has been GM and others approach to electric cars. Tesla is eating up a large part of the global lithium production and is contracting with Panasonic and others to source massive numbers of custom batteries. Panasonic then goes and builds factories, a supply chain, etc. The massive scale here is what will drive cost reductions across the board. Some estimates are that Tesla is already only paying 100$/kWh of raw battery capacity.
lazyjones 13y ago
Google will buy it and build a self-driving, electric car... I do hope that Elon Musk keeps Tesla though.
codecrusade 13y ago
Form and GM would need Tesla(technology, talent). But does Tesla need Ford or GM(diffused operations, liabilities,redundancies, old generation talent)? Nope- Therefore unlikely

9 points by deadfall 13y ago

I do not see this happening. One of the main reasons Musk created Tesla was to remove the middleman, that being dealerships, and to be able to sell directly to the customer. If that buyout were to happen, that would completely contradict that main principle of Tesla. EDIT: At the time of my comment, I forgot about the legalities of buying publicly traded companies. It's something I don't particularly follow.

polarix 13y ago
Wait, principle? How does that have anything to do with whether this happens? Tesla is a public company. edit: per http://www.businessinsider.com/elon-musk-borrows-150-million-to-buy-tesla-2013-5 http://www.businessinsider.com/elon-musk-borrows-150-million... it looks like Musk, holding 65%, would be able to block any hostile acquisition.
- deleted 13y ago
  [deleted]
apalmer 13y ago
Big Difference between 'principles' and 'capitalism'. Ulitimately if GM or whoever offers enough for Tesla then it will be sold... even if the founder doesnt want to sell for personal reasons publicly traded companies are under some restrictions as far how they respond... even beyond legal restrictions if the offer is good enough the stock holders will revolt
maaku 13y ago
No, Musk started Tesla to force the transition to electric cars. He has already succeeded at that. A buy-out would give Musk the ability to cash out his own shares to keep SpaceX going, if hardships are encountered. (Disclaimer: I don't own any Tesla stock.)

argumentum 13y ago

Don't see it happening, just based on Musk's personality and his strong control of the company/board.

Havoc 13y ago

I doubt that very much. I don't think Musk is interested in a pile of cash anymore - he's already got more than he'll ever need. Changing the world seems to be his current game plan. The only way I see him selling is if he feels the cash might help him get the hyperloop off the ground - the hyperloop and tesla seem to be linked though so I still think its unlikely.

Akujin 13y ago

Tesla has the potential to be GM. I think Musk knows that. In 10 years the 30k USD electric sedan will be affordable and everyone will want one because it will be safer, faster 0-60, cheaper to maintain, and cheaper to charge than a comparable gasoline sedan.

apsec112 13y ago

Buy it with what? GM and Ford have market caps of $60B. Tesla has a market cap of $20B. It couldn't be an acquisition, it would have to be a merger. A merger would: - put Elon Musk de facto in control of Ford/GM, as by far the largest shareholder; - give people who are now holding big chunks of Tesla stock big chunks of Ford/GM stock. I can't imagine Ford/GM being happy about #1, and I can't imagine Tesla shareholders (including Elon) being happy about #2.

ZachPruckowski 13y ago
Tesla's P/E ratio is literally 1000-1[A]. Most of that market cap of $20B is based on expectations that Tesla is going to have hockey-stick growth rates over the next 5-10 years. So in order to keep that stock price, they need to go gangbusters - "we sold more cars than last year" is bad news for them because investors are counting on them to like double or triple sales. A sustained anti-Tesla campaign (which you'll notice is already underway) combined with a few minor setbacks could cause some big stock price losses and make Tesla a more attractive buy. Personally though, I don't think it's that likely that Tesla will be acquired in the near term. The only reason the article gives is "GM sucks at making electric cars for consumers" and buying Tesla would help GM solve that problem. But the fact is that Tesla hasn't yet solved the real problem either - they can build kickass electric sports cars and luxury sedans, but that doesn't necessarily translate into a viable consumer car. Ford and GM have tried selling consumer-model electrics and they've failed because of budget - when you try to build an electric car with today's tech for $30K (the average US new car price) you wind up having to make a lot of compromises, even accounting for the generous tax credit. Ford and GM are building inadequate electric cars at roughly the $30K pricepoint, while Tesla's building a great electric car at twice the price. Tesla's doing a lot of clever engineering and making good cars, but it's not really clear to me that "cut the Model S's price in half" is so much easier than "make the Volt/Leaf/etc. not suck" to justify a buyout/merger. [A] - Stock price divided by this quarter's project earnings per share.
- revelation 13y ago
  As usual, you can't take new technology and expect to instantly engineer it into a mass-market solution, and it certainly won't work if you then do a half-assed job. That, frankly, has been GM and others approach to electric cars. Tesla is eating up a large part of the global lithium production and is contracting with Panasonic and others to source massive numbers of custom batteries. Panasonic then goes and builds factories, a supply chain, etc. The massive scale here is what will drive cost reductions across the board. Some estimates are that Tesla is already only paying 100$/kWh of raw battery capacity.

lazyjones 13y ago

Google will buy it and build a self-driving, electric car... I do hope that Elon Musk keeps Tesla though.

codecrusade 13y ago

Form and GM would need Tesla(technology, talent). But does Tesla need Ford or GM(diffused operations, liabilities,redundancies, old generation talent)? Nope- Therefore unlikely