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Will Tesla Be Taken Over?
- Thread starter Causalien
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- Tesla Inc.
moltenfire
Member
I don't think it'll necessarily be by intent. GM or Ford can very well destroy the Tesla dream by sheer incompetence without meaning to do so.
Tesla shouldn't be bought out unless they want to be, and I'm sure they don't want to be. As everyone says, Musk is having the time of his life running Tesla and SpaceX, he seems able to cope. If there was a legacy auto company that was doing really well with electric cars, had competitive products, and looked to be pushing things forward, then I could see Musk at least considering a buy out by them, because the dream would live on.
If Tesla doesn't want to be bought out, then they have lots of possibilities to defend themselves like poison pill defenses, plus Musk and other insiders probably control enough stock. They could do things like increase the number of shares to offset any that were bought by potential takeover companies.
And they could do things like give stock to current owners. Something like if you can supercharge at only 90kw you get 10 shares, but if you can charge at 120 then you get 50 shares. :wink: 60kwh battery owners are just left out, sorry.
If Tesla doesn't want to be bought out, then they have lots of possibilities to defend themselves like poison pill defenses, plus Musk and other insiders probably control enough stock. They could do things like increase the number of shares to offset any that were bought by potential takeover companies.
And they could do things like give stock to current owners. Something like if you can supercharge at only 90kw you get 10 shares, but if you can charge at 120 then you get 50 shares. :wink: 60kwh battery owners are just left out, sorry.
This is a case of "this nonsense needs to stop".
Ford (or GM) shareholders will never agree to buy a company for $20 Billion and hand it over to a management team with a competency in growing a business by only 4% annually.
Without the dedicated elite management team with competence in disruptive technology and ultra-rapid growth, Tesla is just a brand name whose value would be lost in the hands of Ford or GM.
Elon Musk. Is it really so hard to see into the mind of this man? If so he has not made the salient points a secret. Elon has made it categorically clear in numerous interviews that his goal is to see 50% of all new car production electric and for Tesla to function as a catalyst to move the industry much more rapidly in that direction than would otherwise be the case. He has also made a character trait abundantly clear: If something needs to be done (electrification of transport, transit link to Mars) it's fine if someone else is doing it but if they are not doing it it still needs to be done, therefore I will do it. After 2017 the only way for an Auto manufacturer to sell a car at a profit will be to make something competitive to the Tesla Gen III. By the looks of it it will take another 5 years at least after the launch of the Gen III for anything to come to market to answer that description and Tesla will have the world at its feet to pick and choose how to handle the enormous wait lists of former Ford, GM (+Toyota, BMW etc etc) customers on its books. Most likely when that day comes (2016~2018) Ford GM will beg Tesla for the rights to become its contract manufacturers.
Elon Musk has enough voting stock to veto a buyout. Tesla is not subject to hostile takeover against Elon's will (quite apart from the fact that the majority of shareholders would not vote for a Tesla without Musk). The fact is that the nobody could realistically expect to take over the assets of Tesla and make more of them than the current team - lol - and the good will is not easily transferable. Nobody spends $20+ bn for nothing - i.e. to shut down a company.
Ford has a market cap of only $60 bn that is very unlikely to grow as new technologies encroach on it market. In 10 years time Musk himself could quite likely afford to buy a controlling interest in Ford personally and mostly in cash. How? His >50% controlling interest in SpaceX. Rough calculation: 2 years time SpaceX runs fully operational reusable space launch program with $30 million profit per launch. $15 million cash per launch to Musk (personally) x 250 launches annually = $3.75 Bn per year income = $30bn cash over 8 years.
If Musk can look forward to conceivably buying out Ford personally, Musk can certainly look forward to calling the shots with Tesla.
If Musk can manage a team (SpaceX) that is rapidly proving capable of eating Boeing and Lockheed Martin's lunch, given the talent-magnet represented by Tesla why would anybody waste time speculating that Musk would have any need of Ford or GM (or Apple or Google) to buy out Tesla. It is a real nonsense for nonsense's sake.
Ford (or GM) shareholders will never agree to buy a company for $20 Billion and hand it over to a management team with a competency in growing a business by only 4% annually.
Without the dedicated elite management team with competence in disruptive technology and ultra-rapid growth, Tesla is just a brand name whose value would be lost in the hands of Ford or GM.
Elon Musk. Is it really so hard to see into the mind of this man? If so he has not made the salient points a secret. Elon has made it categorically clear in numerous interviews that his goal is to see 50% of all new car production electric and for Tesla to function as a catalyst to move the industry much more rapidly in that direction than would otherwise be the case. He has also made a character trait abundantly clear: If something needs to be done (electrification of transport, transit link to Mars) it's fine if someone else is doing it but if they are not doing it it still needs to be done, therefore I will do it. After 2017 the only way for an Auto manufacturer to sell a car at a profit will be to make something competitive to the Tesla Gen III. By the looks of it it will take another 5 years at least after the launch of the Gen III for anything to come to market to answer that description and Tesla will have the world at its feet to pick and choose how to handle the enormous wait lists of former Ford, GM (+Toyota, BMW etc etc) customers on its books. Most likely when that day comes (2016~2018) Ford GM will beg Tesla for the rights to become its contract manufacturers.
Elon Musk has enough voting stock to veto a buyout. Tesla is not subject to hostile takeover against Elon's will (quite apart from the fact that the majority of shareholders would not vote for a Tesla without Musk). The fact is that the nobody could realistically expect to take over the assets of Tesla and make more of them than the current team - lol - and the good will is not easily transferable. Nobody spends $20+ bn for nothing - i.e. to shut down a company.
Ford has a market cap of only $60 bn that is very unlikely to grow as new technologies encroach on it market. In 10 years time Musk himself could quite likely afford to buy a controlling interest in Ford personally and mostly in cash. How? His >50% controlling interest in SpaceX. Rough calculation: 2 years time SpaceX runs fully operational reusable space launch program with $30 million profit per launch. $15 million cash per launch to Musk (personally) x 250 launches annually = $3.75 Bn per year income = $30bn cash over 8 years.
If Musk can look forward to conceivably buying out Ford personally, Musk can certainly look forward to calling the shots with Tesla.
If Musk can manage a team (SpaceX) that is rapidly proving capable of eating Boeing and Lockheed Martin's lunch, given the talent-magnet represented by Tesla why would anybody waste time speculating that Musk would have any need of Ford or GM (or Apple or Google) to buy out Tesla. It is a real nonsense for nonsense's sake.
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Absolutely agree with this, Julian, "this nonsense needs to stop".
One question: why do you think about contract manufacturing as a likely relationship with Ford, GM? It seems to me that the best way to leverage Tesla's technology and speed-up the Transition, without wasting Tesla's resources, would be to do licensing agreements with the manufacturers that would like to have "Tesla inside" of their cars.
One question: why do you think about contract manufacturing as a likely relationship with Ford, GM? It seems to me that the best way to leverage Tesla's technology and speed-up the Transition, without wasting Tesla's resources, would be to do licensing agreements with the manufacturers that would like to have "Tesla inside" of their cars.
As a student of the Innovator's Dilemma I would make the outrageously offensive (but probably true) statement that Ford and GM will likely end up in Chapter 11 before the transition to electric is more than a few % underway.
Under those circumstances Tesla will have access to anything it wants in terms of US manufacturing capacity and labor on whatever terms it likes.
Just as an insight share. Over the past twenty years I have always and exclusively bought large powerful vehicles circa 350hp, typically V8s be it sedans or grand tourers. With the advent of the Model S, I will never again buy a car of this type with an "old technology" engine any more than I am likely to rush out and buy a fax machine. (Like why would I do that?). I do not own a Model S. I still have a perfectly good BMW 7 Series, my second in a row. I just won't buy a 3rd. I am already vaguely aware that my existing car is obsolete and now things like visiting the gas station and wasting ridiculous amounts of cash to fill the tank as a precondition of the "freedom" of travel starts to bother me. I have always kidded myself that I was willing to spend on premium vehicles because of command of road position, better braking acceleration and handling than most vehicles, enhanced comfort and safety, but I have to be honest and say that the X-Factor has perceptibly just fallen off my car. No longer is it the same object of pride that it once was, now it is a large powerful slightly offensive object of pollution in a world where a far more attractive replacement exists.
So that's it for Mercedes, Porsche, Jaguar, Maserati, BMW no matter what they come up with so long as it is based on an ICE vehicle - I am not in the slightest bit interested - send me the brochure and I'll donate it to a museum some day. To me as a customer these products are wholly obsolete.
Right now Ford is piling funds into new models of ICE vehicles ahead of the same affect broadening to the vast majority of customers for sedans of $20K upwards. It matters not if Tesla can conceivably produce enough cars to satisfy one and all. Some will buy, some will save, some will wait as long as it takes. What they won't do is keep desiring to buy ICE vehicles and I think this effect will rock the industry to its roots in only 2~3 years time.
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I agree with Jerry33's assessment but would like to add that in most cases that EV's are being built as compliance vehicles. Since those builds are not something that a company is trying to mass produce the major manufacturers are going to smaller companies to have them do all the work. This includes Tesla with the Rav4 EV and the Smart ED. The exceptions are the Leaf and the Volt. Tesla will continue to get more of that business until the majors decide to go "all in" like Nissan has done.
And thanks, Julian, for your clear and concise assessment. Also +1.
I find it funny how people talk about how Tesla will be bought out. By who? Yra Harris thinks GM and Tesla are a perfect fit for 2014?! A fat company that lacks any sort of innovation, saddled by UAW, and destroyed the EV1 buying a company that is so entirely dissimilar (other than they both sell cars)?? If so..., then there goes Tesla's goals of "compelling cars" and "sustainable transportation".
I personally think Elon would find someone he truly trusts, shares his vision and business acumen to take his place as a last resort. He's smart enough not to let some other big, bureaucratic car manufacturer trample all the blood, sweat, tears, and money he put in to making Tesla what it is today. Him selling out to GM (or Ford) means he threw in the towel. Why the heck would he give up now when he's winning and there's so many opportunities yet to be seen? He did tweet this a few months ago: "Forgot to say one thing at Tesla annual shareholders meeting: just as my money was the first in, it will be the last out." He wants to see Tesla survive, not destroyed.
All this comedic talk about a buyout just makes me LOL.
I personally think Elon would find someone he truly trusts, shares his vision and business acumen to take his place as a last resort. He's smart enough not to let some other big, bureaucratic car manufacturer trample all the blood, sweat, tears, and money he put in to making Tesla what it is today. Him selling out to GM (or Ford) means he threw in the towel. Why the heck would he give up now when he's winning and there's so many opportunities yet to be seen? He did tweet this a few months ago: "Forgot to say one thing at Tesla annual shareholders meeting: just as my money was the first in, it will be the last out." He wants to see Tesla survive, not destroyed.
All this comedic talk about a buyout just makes me LOL.
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DuncanWatson
Member
Most Analysts are con-men. The entire idea is stupid, Elon and other founders won't sell to an ICE manufacturer and they won't sell before the Model E has launched. But since Telsa is hot now, analysts will say stupid crap. It is the way of the industry, there is nothing here but sound and fury.
I do understand what you are saying, but they will have to swallow pride to remain relevant. The longer they resist the Tesla approach of taking integrated system approach and designing the EV from the ground up, the further behind they will find themselves. I actually think that the big automobile companies will resist licensing till one of them eventually will come to the obvious decision, which will open a flood gate, because all the other competitors will have to follow to remain in the game.
YoungStranger
Member
I did chuckle over the reason given in the cnbc clip - to utilise the dealerships! As if Tesla (or even GM) care about saving the dealerships.
Musk is no fool. Alienating car dealers to electric vehicles and alienating vehicle customers to car dealers is check mate from the first move on the chess board.
How the heck are GM and Ford supposed to get a competing vehicle to market when they can't get rid of dealers and dealers are pushing for new models of ICE vehicles and refusing to support electrics?
Here we have a 4% growth curve competing with a 100% growth curve. The lines will inevitably cross.
How the heck are GM and Ford supposed to get a competing vehicle to market when they can't get rid of dealers and dealers are pushing for new models of ICE vehicles and refusing to support electrics?
Here we have a 4% growth curve competing with a 100% growth curve. The lines will inevitably cross.
DuncanWatson
Member
Here is what Santelli said on 2013 MAR 15 in mocking response to a group of college students who were recommending purchase of TSLA when it was priced in the thirties: http://video.cnbc.com/gallery/?video=3000154791
This wont happen any time soon. Tesla is way too expensive for how many cars they sell. Telsa sells 1 percent of the volume of GM, but has a market cap of 1/3 of GM. Taking advantage of GM's manufacturing capacity is pointless if cell production is your limiting factor. GM doesnt make their own batteries and would still have to rely on the same sources that Tesla is using today.
Also the reason Tesla has been so successful is their willingness to stand behind their product thick and thin by trying capitalize on their cars strength (safety, performance, low operating cost) and find solutions to their weakness (over the air updates, superchargers). Tesla has to stand behind their product because if it fails they do to. If GM purchased Tesla they would do their normal marketing blitz at the start then ignore the product if it isn't doing great. Tesla would just be another brand like Saturn or Pontiac.
Also the reason Tesla has been so successful is their willingness to stand behind their product thick and thin by trying capitalize on their cars strength (safety, performance, low operating cost) and find solutions to their weakness (over the air updates, superchargers). Tesla has to stand behind their product because if it fails they do to. If GM purchased Tesla they would do their normal marketing blitz at the start then ignore the product if it isn't doing great. Tesla would just be another brand like Saturn or Pontiac.
I think that is a pretty astute commentary. The prospect of a share swap is equally unappealing on both sides - which is another reason it will never happen.
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