Which Traditional Automotive Manufacturer is the Target of Tesla’s Acquisition?

published: 2020-12-11 18:30 | editor: | category: Analysis

Tesla CEO Elon Musk has come up with yet another new idea in the face of the emerging ferocious era of electric vehicles, which comprises of how the company, currently ranked first in global market share, may acquire a traditional automotive manufacturer to elevate production capacity. Who will be the potential partner for Tesla?

Musk commented during an exclusive interview yesterday that the next step for Tesla may be an acquisition of an automotive manufacturer in order to increase the company’s production capacity and competitiveness.

 “We will definitely not initiate any aggressive acquisition behavior”, commented Musk, who also expressed that he is more than willing to sit down and talk if any traditional automotive manufacturers propose the idea of merging. “I do wish for a more friendly and peaceful process, instead of a malicious and hostile takeover”, said Musk.

Apart from being the automotive supplier with the highest global market share right now, Tesla has arrived at a market share of US$500 billion in the capital market, and the total market share combined from Toyota (US$200 billion), GM (US$64 billion), Ford (US$36 billion), and Fiat Chrysler (US$16 billion) is merely 61% of Tesla’s market share.

The stock market is not the real world, and market value and cash are two completely different things. However, such enormous amount of capital does provide Tesla leverages in doing something big, though Musk doesn’t intent to be the initiating party, and wishes the other end proposes something like “what do you think about us working with Tesla?”

The question is, which automotive manufacturer is still a friend of Tesla in this world? Tesla’s shareholders included Toyota and Daimler during the initial period of its venture, and Tesla had also produced power components for the two companies, though the two shareholders sold all of their Tesla shares in 2017 and 2014 respectively, and made a huge loss from it, where Tesla has also lost its potential allies from a competitor’s perspective.

Volkswagen, Ford, and GM have spent all of their investment in electric vehicles, and will not be willing to give up their resources and achievements in midway, whereas the merger between either one of the two German brands of BMW and Daimler may induce riots from the German, and a merger with the sales champion Toyota is almost guaranteed impossible.

An acquisition of a major manufacturer is unlikely and relatively difficult for Tesla based on the company’s financial status, and an acquisition of a small manufacturer will provide insignificant help to the production capacity. Regardless of which manufacturer to acquire, it all comes down to the essential question, and that is if such behavior is going to help Tesla in expediting the popularization of electric vehicles.

In other words, the real target for Tesla’s acquisition of traditional manufacturers lies in talents and technology, so it would make more sense if the company is to acquire luxury brands, or Mazda who was once a close partner, instead of the above-mentioned large-scale manufacturers. However, Tesla might be more interested in acquiring battery suppliers, rather than the demanding automotive leaders.

What’s interesting is that Musk had also commented that he had talked with Apple and Google about letting either of them buying Tesla, and maintain an independent operation from his end, though this was several years before the surging stock prices of Tesla.

 (Cover photo source: provided by Tesla)

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