With the news Tesla has surpassed both Ford and General Motors as the most valuable U.S. car company, the aforementioned title seems like a no-brainer. Although Tesla’s value has largely been inflated on promises and ideas, there’s no denying it works.
Tesla houses brand cache Chevrolet only dreams of, and it’s likely one reason why the Chevrolet Volt isn’t the coolest, eco-friendly product on the block. Road and Track thinks it’s Tesla time for General Motors, and it’s not that crazy of an idea.
General Motors houses more production capacity than Tesla will likely ever warrant in the foreseeable future, and there’s no getting around the fact Tesla must eventually turn a profit and step out of its low-volume production business. It’s simply not sustainable. GM can help with that.
GM can also help with a vast network of dealers and service centers, too. Right now, it’s not exactly easy to get a Tesla serviced, though, it can be argued General Motors has had some sway in undermining Tesla’s expansion. It seems like it couldn’t work, but really, Tesla offers GM the mojo it needs for electric vehicles, and GM offers Tesla space to really help it succeed.
Will it ever happen? Who knows, but there’s no denying the basic business case laid out for a GM-Tesla merger.
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For Tesla to keep its brand equity, it would have to be a merger where Tesla still keeps a fair amount of autonomy from GM, similar to how Cadillac has separated it’s management team to NYC. If anything, Tesla and Cadillac would be a good fit to be housed in the same dealerships and service centers, as they both appeal to more affluent markets. Tesla faces a very tough road scaling this business to be profitable. If merged, Tesla could focus on the battery production and increase their capacity, then use GM networks for actual car production. I could see it being great for both companies.
It would kill Tesla’s mojo. Also, I don’t Musk wants to be the General.
I do support all GM divisions being independent, which this article touches on.
GM brands are still very damaged hence why Volt and Bolt will be often passed over. Tesla still needs to prove itself with Lucid entering the game.
The Chevy Bolt EV has sold more in its first month than the Nissan Leaf and the Chevy Volt did in their first month. By next year the Chevy Bolt EV will sell in such a large volume (add the Opel Ampera-E in Europe) that TM will be lagging behind with the Model 3, which will NEVER sell below $35,000.
People who buy Teslas don’t want to be associated with traditional auto companies. And a company who went bankrupt only 8 years ago doesn’t fit the image of being modern and up and coming like Tesla owners.
It wouldn’t work financially and would kill the Tesla brand.
GM has the tech and needs to build competitive vehicles.
Why does Tesla Motors value be higher than General Motors if they are in debt? TM loses millions each year while GM makes billions. Is this all a ploy by stock brokers to sell more and fool investors in giving TM more money?
Simply because Tesla is valued as a tech company and not a car company. And Tesla is growing rapidly. The Bolt production is limited to around 30,000 cars per year which is insignificant in the grand scheme of things. Tesla’s target is 500,000 in 2018 and 1,000,000 in 2020. Capiche?
is tesla going to make money off those 500K cars?
Tesla’s goal may be to build that many cars, but it is completely unrealistic.
Firstly, they don’t have the ability to manufacture that many vehicles. Neither in terms of space or working staff.
And where are the half million buyers going to come from at a minimum of $35,000 a pop?
GM has their finger on the pulse of the auto industry, and when sales of electric vehicles climb significantly, GM will be there ready to go.
Have you seen the latest reports? The Bolt has fallen behind the old Nissan Leaf in sales and dealers are discounting the Bolt heavily.
On the other hand, Tesla has over 375,000 advanced sales of the Model 3 with deposit at full list price without advertising or incentives.
That could in large part explain the skyrocketing stock price.
Do you really want to bet against the guy who builds rockets. If so, short Tesla stock right now. Put your money where your mouth is.
They have burned through the money paid down already on these cars and have yet to build the first one.
Yet it will take them years to build these cars. Where will the operating capital come from?
Some share holders are already asking for a change in how leadership is done.
hell no
gm killed lotus, geo, oldsmobile, pontiac, hummer, saturn, saab, terex, delphi, Alpheon, Passport, Daewoo, Cleveland Diesel , Bedford , LaSalle and …
i think if this happening, gm will kill tesla like other companies they bought.
gm is devil
Don’t worry, GM doesn’t have the resources to buy Tesla. But another year or two and it could be the other way around.
Most of those marquees were created by GM itself. Some of them are even still around and not in bad shape. GM “killed” them because they had to. Their business models were unsustainable which is why they were “killed”. With the exception of Saab, GM is not sole reason why those companies failed. But even so without GM, Saab and lotus would have gone under in the 90s due financial trouble.
No, Lotus is not dead.
Lotus is a 100% subsidiary of Proton, the Malaysian automobile company.
A 51% controlling stake in Proton is to be sold, and PSA and Geely are the only bidders.
If PSA gets it, Lotus will again be a sister company to Opel, and there might again be something like the Opel Speedster.
Or something near to the Opel GT Concept.
Let’s come back in 2018 and 2020 see if those number’s come true.
Sure, Tesla pushes the envelope. But, so what if they miss by 10%-15%?
What’s GM’s target for EVs? Do they even have one?
Apple should purchase Tesla. They are a lot a like in my mind.
But they have decided not to enter the car business as it is too low margin to be interesting. They do cater to the same type of customer.
i hope not. gm just got rid of money losing opel. money losing tesla has more panache though.
I wonder… if it is “just normal” to loose enormous amounts of money, just “because you are a tech stock”, how can people sleep at night knowing that someday they will have lost all their savings? Wouldn’t you rather have GM stock?
Even the guys at R&T seem to realize that Tesla needs urgent rescuing before the whole thing collapses…
GM lost money for 20 years with shrinking market share before it went bankrupt and everybody could see it was on a collision course.
Check this:
https://www.investing.com/analysis/tesla:-buy-rating;-%24400-price-target-200181113
**I wouldn’t bet against the guy who can land a rocket on a barge in the middle of the ocean.
Eric: that link you provided is nothing but more hype.
Yet somehow, they seem to think that Tesla can multiply their production by 20 times in less than one year. Does that honestly make any sense to you?
Where are the production facilities to pull this off? Perhaps you know something we don’t.
Now don’t get me wrong, I’m impressed with the cars that Tesla are producing, especially the ones they put on the drag strip. Very impressive times I must say. So impressive that they are almost hard to believe. But I have watched them for myself.
However, that doesn’t translate into any profits, which understandably are not yet forthcoming.
About all I can say from here on is “I’ll believe it when I see it”.
Keith,
You may call it hype but it is basically a “buy” rating by an analyst. If the analyst believes the stock will go up, obviously it will correspondingly be positive.
Are you aware that the Tesla factory is the old GM/Toyota Fremont NUMMI plant with a total capacity previously of 385,000 vehicles per year? With newer tech, it’s realistic that the plant can easily exceed over 500,000. Tesla are only using a small portion of the plant currently and have been expanding many of the facilities. Everything is in place for explosive growth.
https://en.wikipedia.org/wiki/Tesla_Factory
No Eric, I was unaware of that…thank you for enlightening me.
However, I still say that it will take a huge investment to be in a legitimate position to increase production by that amount.
You may be right Eric, and I’m willing to keep an open mind. However, as I said before, I’ll believe it when I see it.
And as for the “buy” rating by an analyst, please remember that he stands to make a lot of money from big buy orders. So anytime money comes in to the equation on a buy suggestion, I treat it very skeptically.
At one time, I did hold a legitimate securities licence in Canada, and we wouldn’t be allowed to mount what boils down to a sales pitch like that up in this country.
No, at this point your just getting tesla’s brand value. Almost every automaker is at a point were it’s r&d is close to matching tesla’s tech. A few years ago, sure it was cutting edge but now it’s at a point where in 5 years everyone’s gonna have an ev out. Tesla’s a bubble. Right now the stock is built on hype and promise. It’s all coming from brokers trying to get people or the idiots turned fanboys who just bought stock in the last few months.Tesla makes nice cars but I don’t see them being successful on their own, there’s been plenty innovative domestic challengers to the big three that have failed. If any car maker wanted to I think they would have tried taking tesla a while ago.
The idea Tesla is a high value company is based on the fact it is seen as a tech Silicone Valley company not an automaker. This can inflate the value of the stock as it is already over priced based on their performance. But with tech companies many investors will invest with hopes of striking the next Apple. If they live up to it they make money if not they lose money.
GM really has no need for Tesla other than their inflated stock that may be at risk long term if they do not start to make more money. When you pre sell a model to raise money to finish it you have already spent the money on the new model and you fall behind on profits for the next model to be build. Tesla unless they find a partner or investor risk falling behind on capital for future products even more. It is kind of like running up the credit card on money you don’t have and may never get.
GM on the other had could use the image of a tech company but they really have no need for a Musk.
If you note most automakers now are scrambling for Autonomous drive and artificial intelligence as they see these as paths at becoming a high tech company as much as an automaker. All of them are working hard to gain that image.
They also would like to leverage that tech out over more than just cars.
So while there is merit to such a merger there is a lot of baggage they fail to mention for both makers in such a deal too.
In other word at this point do not expect it to happen soon.
The real issue with Tesla is there is baggage with Musk and their lack of real income. Should GM buy in or partner and the stock price drops to where it should be then all is lost in the partnership.