With Tesla's stock price continuing to sag, discussion of potential acquisitions is heating up. But would anyone buy Tesla and why?
Share to twitterFILE- In this March 14, 2019, file photo Tesla CEO Elon Musk speaks before unveiling the Model Y at Tesla's design studio in Hawthorne, Calif. Musk was the top paid CEO in California for 2018, as calculated by The Associated Press and Equilar, an executive data firm. The survey includes only CEOs who have been in place for at least two years, but it does not limit the survey to companies in the S&P 500, as the AP's general compensation study does.
Unfortunately for Tesla, it only owns the building and pack and motor assembly equipment. The most valuable asset at the Gigafactory, the cell production equipment belongs to Panasonic. An acquisition of the automaker would not include the cell production. In order to get Panasonic to invest somewhere over $1.5 billion, Tesla had to commit to buying all the cells produced there.
The other aspect of Tesla that has value is the brand which has developed a hardcore fanbase over the past decade. A company could generate enormous goodwill by preserving the brand and its mission to electrify transportation. Tesla has done more than any other company to demonstrate the appeal and viability of electric vehicles. Unfortunately, every day that goes by without addressing the quality and customer service problems erodes that brand value.
Companies like Apple or Alphabet that have the financial resources to make a deal, would be unlikely to assume Musk as part of any purchase. He would simply be too disruptive to the existing organization, much as H. Ross Perot was to GM after they acquired EDS in the 1980s. Apple’s Tim Cook has shown a willingness to get rid of executives like Scott Forstall that weren’t seen as team players.
The other more likely scenario is that Tesla simply runs out of cash and has to file for bankruptcy. In the resulting reorganization, existing equity would be wiped out, leaving Musk out in the cold. In this case, there is the opportunity to cherry pick the assets of value.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Why Tesla is Not a Car Company and What You Can Learn From Elon MuskWhen I was in business school, I learned that most companies were often not in the “business” they appeared to be. It is indeed comfortable to categorize a company’s business by its industry: transportation, financial services, manufacturing...etc.
Read more »
As Tesla Falls, Who Is Kicking The Tires?With Tesla shares in freefall once again and the company burning cash and customers losing confidence, who are the companies looking at rescuing and possibly taking over Tesla.
Read more »
Tesla's China-made Model 3 may be priced in $43,400-$50,700 range: BloombergTesla Inc is considering pricing its China-manufactured Model 3 vehicles between...
Read more »
Tesla CEO urges employees to 'catch up' to hit delivery recordTesla Inc has 'a lot of catching up' to do but still can achieve a rec...
Read more »
Outside of Tesla, future EV sales in U.S. may be thin for most brands: studyU.S. demand for electric vehicles, including hybrids, could rise to 1.28 million...
Read more »
Exclusive: Tesla woes send Panasonic's U.S. solar cells to PhilippinesMost of the solar cells made by Panasonic at Tesla Inc's New York manufactu...
Read more »
Elon Musk tells Tesla employees in leaked email that the company needs to catch up on car deliveries before the end of the quarterMusk told Tesla workers that he will be holding 'skip-level' calls with delivery teams every other day to help speed up deliveries.
Read more »
Soccer Star Megan Rapinoe’s ‘Biggest, Baddest, Coolest’ Tech ToysMegan Rapinoe, co-captain of the U.S. women's national soccer team, describes her favorite tech toys, including the daily wellness app her team's coaching and medical staff use to build sessions around players
Read more »
Can The Dyson Vacuum Cleaner Guy Build A Better Electric Car Than Tesla's Elon Musk?Vacuum cleaner maker James Dyson will invest billions to bring electric cars to market. A fool's errand or a wily gambit from a proven engineer with more than one ace up his sleeve? Here's why Sir James might well be able to take on Tesla.
Read more »