Forbes – Tesla is ripe for a takeover. (Huh?)

May 31, 2019 by Steve Hanley

With all the rumors about mergers and consolidations in the auto industry these days, it is inevitable that the conversation turns to Tesla. Notice that nobody says (publicly, at least) that he wants to buy Tesla and that the company did not say anything about being a target of acquisition (on the contrary), but that did not stop the media from speculate and ask, "And what would happen if?"

Image credit: Kyle Field

Forbes – Who would buy Tesla and why?

Write in Forbes, Sam Abuelsamid, Transportation Analyst at Navigant Research (very negative about Tesla for some time), begins with evidence. Tesla's stock is down, well in fact, which means that any potential buyer would get the company at a lower price than its stock at around $ 380 a share.

He considers the company's badets as a factory in Fremont, the hull of a new factory in China and Gigafactory 1 in Nevada, not to mention the battery cell manufacturing component owned by Panasonic. In exchange, the buyer should badume more than $ 11 billion in debt and the commitment that Tesla has made towards Panasonic to buy $ 16 billion worth of battery cells. Then there is the Tesla autopilot and battery technology, which he describes as "interesting" but which is hardly unique in the world. (Huh ???)

"The Fremont badembly plant is also one of the most inefficient in the industry and has terrible quality problems," he writes. "It is therefore unlikely that a well-established actor wants to add it to his portfolio, especially at a time when many companies are closing down underutilized factories." (Tesla recently reorganized the Fremont factory because of growth request. Perhaps underutilization is more of a demand problem than Tesla would help these companies solve.)

Then there is the intangible called brand equity. "A company could generate a huge craze in preserving the brand and its mission of electrifying transportation. Tesla has done more than any other company to demonstrate the attractiveness and viability of electric vehicles. …

"However, there is a huge business killer for Tesla: Musk. What part of the value of the Tesla brand is linked to an irrational faith in Musk himself? If Musk goes away, what will happen to the value of the brand? "(" Irrational "- hmm, it seems like Sam is trying to shape the perceptions here in a way that many would not describe as objective or … of rational.)

Abuelsamid writes that mergers with such prestigious leaders involved would be most often degraded. "Many of Tesla's operational problems as a business are a direct result of Musk's culture of micromanagement and lack of organization and planning. I can not imagine that the CEO of a car manufacturer is big enough to consider an acquisition would even consider integrating Musk into their organization. (But Elon Musk would surely be good at giving up his control and working for a CEO of a traditional auto company.) Of course.

"The only way to move forward seems to be a fire sale rather than an outright acquisition. Musk personally has hundreds of millions of dollars in personal debts backed by his Tesla shares. If the stock price continues to fall, he may eventually face a margin call that makes him lose up to half of his stake.

"It could trigger a downward spiral for the stock. This could possibly bring down the acquisition price enough to convince someone to make an offer. However, this would require baduming all those debt and purchase obligations that any rational CEO would want to avoid. "

According to Abuelsamid, the only other scenario is a bankruptcy of Tesla, which would let traditional manufacturers enter and pick their most valuable components at the lowest prices. He thinks the most likely candidate is Amazon. (Remember that not so long ago, short sellers were obsessed with the fact that Amazon was an overexpressed stock market bubble that could never make a profit.)

"Amazon could push a mix of Tesla badets with its stake in the Rivian electric truck start-up. He could even follow Tesla's online sales model and sell contracted vehicles by someone like Magna through his site. Amazon is also far more knowledgeable in logistics than Tesla has been so far. Alphabet could take advantage of contracted Teslas for future robotaxi services using their respective automated driving systems.

"There are many ways this could possibly happen, however, none of them should involve a direct acquisition of the company as long as Elon Musk is part of the deal," he concludes.

Wait a second, where did Tesla's idea come from, potentially needing a bailout? This article deserves to be read further: "The media story about Tesla is wrong, the facts tell another."

For those of us who want to see Elon Musk and Tesla succeed and materialize the electric vehicle revolution that she started, all this talk seems a bit fanciful, almost as if Tesla was selling unicorns. We do not want Musk to be muzzled or put aside simply because he does not conform to a School B paradigm of what a true CEO should be. In musk we have confidence! That's always so.

We recommend again this text: "The media story about Tesla is wrong, the facts tell another story".

Keywords: Amazon, Apple, Elon Musk, Tesla, Tesla acquisition, Tesla factory

About the author

Steve Hanley Steve writes about the interface between technology and sustainability from his home in Rhode Island and wherever the singularity could lead him. His motto is: "Life is not measured by how many breaths we take, but the number of moments that take our breath away!" You can follow him on Google + and on Twitter.