By on December 29, 2013

Tesla Model S

While one analyst implored Apple to go into the automotive industry by purchasing Tesla Motors to the bemusement of all, another analyst is suggesting that General Motors may be the one to pull the trigger in the coming year.

Yra Harris, a veteran trader with Praxis Trading, told CNBC earlier this week that Tesla’s brand of luxury EVs would be a perfect fit with GM overall, especially in terms of technology and service.

The key to purchasing Tesla comes down to valuation, an issue CEO Elon Musk has warned about for months on end. Currently, the EV automaker holds a market capitalization of over $18 billion, with shares trading at 100-plus times forward earnings. Still, should a market correction occur — and should Musk decide he’d rather make a Lotus Esprit into a functional submarine now than build an electric truck in 2017; he has said he wouldn’t sell Tesla until the third-generation models were produced — then perhaps Harris’ prediction will come to pass in the new year.

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118 Comments on “Analyst: GM to Own Tesla in 2014...”


  • avatar
    mark06902

    …..ya great idea — just what GM needs — more brands again. How’d that work out last time?

    • 0 avatar
      jz78817

      Who says the brand would survive?

      (not that I think this kind of deal will happen, mind.)

    • 0 avatar
      blowfish

      is a totally bad thing for Gm to own tesla!

      I see more E charging stations in vancouver bc area, never saw an EV took advantage of the free juice though, but so far its not as popular as it cracked up to be. Saw a few teslas driving around.
      Should there be a line up on these free E stn then they may put a fee for the hook up.
      Then if U only charge 30 mins , how far can u really go?

    • 0 avatar
      Driver123

      Pay $50B and then kill it as then did with EV1. Except Musk is no idiot and has money already so there is absolutely no reason for him to sell anything.

  • avatar
    Lie2me

    Yeah, slap “Buick” on it and call it a day

  • avatar

    Between GM’s poor history of management, GM’s inability to treat the TESLA customers as personally as TESLA does and the fact that Mary Bara is a woman and thus CAN’T POSSIBLY UNDERSTAND PERFORMANCE CARS or man’s connection to them – since women DON’T/CAN’T UNDERSTAND MEN)…

    I’d say the future of Internal combustion engines is looking brighter and brighter.

    I must admit, I’d like the Model S more if it had the XTS’ interior quality.

    I’d like it even more if it had gasoline/diesel/natural gas generator options in the “frunk” to extend range.

    The most ironic thing about all this to me is the fact that the typical anti-American car haters who decry the bailouts and are quick to throw Chrysler’s troubled history in my face are the same ones who are oddly pro-Tesla.

    Tesla is an AMERICAN CAR COMPANY right?

    Despite my few criticisms on the car’s shortcomings, the mere fact I’m a share holder means I WANT them to succeed.

    • 0 avatar
      chuckrs

      Not that it matters, if you don’t like GM to buy them, who would you like? There are economies of scale in design of reliable mundane bits and pieces of vehicles – the sort of unsexy parts that are essential. The major players can put acres of engineers/designers on that stuff, or cause it to be done by their suppliers. Can Tesla?

      I got it, GM for management, VW for electrical…..

      Can you palletize the trunk genset for longer trips? Just what every garage needs – its own shop crane.

      • 0 avatar

        There’s no law saying a car company has to make all its minor components. There is some Mercedes-Benz switchgear in Teslas and they seem none the worse for it.

        More to the point, Tesla’s platform design should make it pretty easy to share parts between vehicles – so the various models are the same sausage with different lengths and bodies.

        I would hate it if Tesla was taken over, because I love the scrappy independent car companies … I’d be less likely to buy a Tesla if GM owned it.

        D

    • 0 avatar
      Kyree S. Williams

      “…and the fact that Mary Bara [sic] is a woman and thus CAN’T POSSIBLY UNDERSTAND PERFORMANCE CARS or man’s connection to them – since women DON’T/CAN’T UNDERSTAND MEN)…”

      What, do you take testosterone pills or something…?

    • 0 avatar
      Onus

      Sir, you must have bad luck with Women.

  • avatar
    mark06902

    The only ones that would be happy with this acquisition would be MB, BMW, Lexus, etc who have seen some sales siphoned off by a cool, clean company that will then be associated with an uncool, dirty, mismanaged American turd of a company. RIP Tesla

  • avatar
    Loser

    So what does Miss Cleo have to say on this subject?

  • avatar
    Astigmatism

    This is nothing but cheap publicity for the analyst – about as likely to happen as Sears buying Amazon. GM is too old-school, too entrenched in its corporate culture, and has neither the cash nor the valuation multiples to pay what Musk would demand.

    • 0 avatar
      Lie2me

      Sears buying Amazon?… What have you heard?

    • 0 avatar

      GM has plenty enough cash to buy Tesla even now, although it would make no sense. A market correction could change that. Tesla’s current stock value is not supported by rational fundamentals. Musk can only control his own stock, not the stock of other shareholders. Toyota and MB would be potential blockers of such a deal, but as it is, this is only wild speculation and isn’t likely to happen.

      As far as turds go, GM is profitable, Tesla isn’t.

      RE: “GM’s inability to treat the TESLA customers as personally as TESLA.”

      Since GM will sell about 9 million units world wide, and Tesla about 25K, why would GM or anyone be concerned with what Tesla customers want or don’t want? They’ve already made their purchase. Were they ever promised a service network larger than a handful of factory outlets? Imagine an instant sales and service network. I’m sure that would disappoint them. At some point, Elon Musk will be between a rock and a hard place. It is unlikely the Model S will be worth as much in the market place as the values he has guaranteed. He has already embarked on traditional OEM subvention to maintain smooth production, but the birds are waiting to come home to roost. The fact is, in 3 years a new Tesla is a MUCH better buy than a used one. Why? Because the new ones carry all sorts of government incentives that don’t apply to used ones. That makes the monthly payment significantly higher on the new than the pre-owned unless real values drop well below what Tesla has guaranteed. Read KBB’s Eric Ibara’s comments in USA Today on the issue. This isn’t anything new. Incentives on new vehicles kill the resale on pre-owned, whether or not they come from the OEM or the government.

      • 0 avatar
        Big Al from Oz

        @ruggles
        I would think BMW would be a better bet than Toyota.

        BMW has been in a ‘technology transfer’ with Toyota chasing down EV and hybrid tech. Toyota has been after useful diesel tech. Sort of a mutual gain for both sides.

        Who ever buys into Telsa would wait until it valued at a realistic level. It’s value is ridiculous.

        But, a time will come. A future buyer would have to consider, how long and what form of protection will the US government offer Telsa in the future?

        Will handouts continue to be given for these feel good products, that the average American taxpayer subsidises, but yet can’t afford.

        Will these styles of vehicles eventually receive the same protection as the pickup market? All of these types of senarios must be taken into consideration.

        But, like I stated if someone wants to ‘raid’ Telsa’s technology they will wait until when it is priced right, as Telsa doesn’t have much to offer for it’s value.

      • 0 avatar
        highdesertcat

        I agree that it would make no sense for GM to buy Tesla, now or ever. But stranger things have happened.

        Analysts also forecast that GM would go belly up. That was in 2007, at GM’s peak, and the roar from the peanut gallery was that such a forecast was blasphemy.

      • 0 avatar
        Ron

        You have a typo. Government incentives on new cars reduce the monthly payment.

    • 0 avatar
      bunkie

      What makes you think they need that much cash to buy Tesla? Have you missed the last three decades of American finance? It’s a history of using other peoples money to make deals happen.

      And, as others have pointed out, this is one analyst who is, most likely, trying to make a name for himself. And the entire press does its usual lemming thing and follows right along.

    • 0 avatar
      Astigmatism

      @Ruggles: Sounds to me like you’re arguing with what should be, rather than what is. I’m no GM hater, but as a simple matter of reality, until Tesla has a market price correction, GM won’t be in a position to buy it.

      @bunkie: You buy out undervalued companies, not overvalued companies. Who would lend money to buy out Tesla? What revenue stream or assets would you lend against?

      • 0 avatar
        bunkie

        Well, of course, you’re right. But no one is going to acquire Tesla at its current valuation, period. My point was that it doesn’t matter how much cash GM has, for a decent acquisition, they can raise what is needed if they can make a business case.

  • avatar
    mark06902

    …and maybe before GM considers buying ANYTHING else (including coffee for the office) they should start paying back the American taxpayers the $39 Billion dollars they still owe us.

    • 0 avatar
      jz78817

      that chip on your shoulder has a chip on its shoulder.

      • 0 avatar
        Da Coyote

        Add my chips to the current ones. GM might survive if they manage to hire their second engineer and fire a few thousand MBAs.

        • 0 avatar
          AlternateReality

          Now now, GM has plenty of engineers… plenty of ex-Daewoo engineers in South Korea, I mean.

        • 0 avatar
          Luke42

          Better yet, take an engineer and put them through business school. Then you have someone who has a clue AND an MBA.

          An MBA is a survey degree that gives you a lot of confidence. But it’s all meta skills If you take a kid with a business degree (or whatever) who doesn’t know anything about anything and out them through an MBA program, then they know nothing and have a lot of confidence and a big credential.

          On the other hand, if you take an engineer (or someone else who already knows the car business), and teach them to think about management and analytics the MBA way, you end up with a grownup who has a pre-existing clue and a way to make their case in a way that matters to the rest of the organization.

          Just sayin’.

          (I’m computer systems engineer who went through an MBA program as a grownup recently. Someone who went straight through school and into an MBA scares the snot out of me, because I know what they know – and so much more.)

          • 0 avatar
            Pch101

            “Someone who went straight through school and into an MBA scares the snot out of me”

            Then you have nothing to fear, as it’s next to impossible to get into a top MBA program straight out of undergrad. Work experience is an important component of the application process.

          • 0 avatar
            RobertRyan

            “Work experience is an important component of the application process.”

            Still scary, what type of work experience is the problem. I have had to “break in” MBA’s who have have had some work experience in their relevant field and they still knew little.

    • 0 avatar

      GM doesn’t owe the taxpayers $39 billion. In fact, they don’t us anything. If you think Old Corp owes you something, lodge a claim in BK court. In case you didn’t know it, they liquidated…. but the time to file has probably run out.

      It isn’t new GM’s fault the government sold its stock prematurely.

      • 0 avatar
        mark06902

        Well, the government says it lost 10.5 billion + a ton more, so I’m gonna go with them on this one.

        http://nypost.com/2013/12/16/general-motors-bailout-vs-taxpayers-loss/

        • 0 avatar
          jz78817

          yeah, and the gov’t burns 8-10 times that amount each year in Iraq and A-Stan. You going to demand that money back too?

        • 0 avatar
          Pch101

          If you want to maintain a grasp on reality, then relying on the New York Post is not ideal.

          Yes, the feds lost about $10 billion on the GM stock sale, but GM doesn’t owe anything for that. Buying stock high and selling it low doesn’t entitle you to a refund.

          • 0 avatar
            mark06902

            I’m aware of how the stock market works, I guess I just don’t like the fact that they were bailed out to begin with. Someone steals a $5 t-shirt from their employer at a retail store and they are fired and arrested. A major US corporation is painfully mismanaged for decades, billions wasted, incompetence to the highest extent, all while upper management takes home millions. Instead of any real consequences, (or at the very least allowing market forces to do their thing) the government steps in and gives them our money…And profitable now or not, they still make crap, rental grade cars that have superiors in every class, from several manufacturers. They know how to make trucks, and trucks they should focus on. Close up shop on the rest. The next economic downturn is only going to see GM fall hard and fast again.

          • 0 avatar
            mike978

            There were real consequences – new contracts, brands shed, dealerships closed, factories closed, thousands fired. It was not a painless process.

          • 0 avatar
            jz78817

            “I’m aware of how the stock market works, I guess I just don’t like the fact that they were bailed out to begin with.”

            well then don’t buy cars from anybody. Tesla would have had a far harder time getting off the ground w/o nearly half a billion in loans from the .gov. And wouldn’t have been able to repay that without the State of California allowing them to sell their carbon credits.

            Looking to the overseas competition, I think you’ll find many of them are at least partly-owned by one or more governments, or are heavily influenced by such.

      • 0 avatar
        mike978

        True, and the Government only sold so quickly to stop the ditto heads from saying Government owner (even when it was a minority stake, like in VW’s case). So now they move onto something else to complain about.

    • 0 avatar
      mike978

      The final figure was $10 billion, not $39B

  • avatar

    As far as Mary Barra is concerned: Women make the majority of decisions on family auto purchases. We’ve known that for two decades.

    • 0 avatar
      Vulpine

      Maybe that will mean GM’s trucks will quit being so ugly and bloated. GM really NEEDS a turnaround in its design policies.

      • 0 avatar
        highdesertcat

        There’s a lot more wrong with GM trucks than just being ugly and bloated.

        I may consider GM trucks again IF they put Tundra’s magnificent 5.7L under the hood, coupled with the sublime Lexus 8-speed automatic, and finished of the works with Tundra brakes, 10.5″ differential and bearings.

        OTOH, it may be simpler to just buy a Tundra and avoid the whole UAW assembly process altogether.

        • 0 avatar
          jz78817

          you mean the Tundra’s “magnificent” 32V DOHC engine which has less hp and torque than the “antiquated” pushrod engine in the Ram? Or the “sublime” Lexus 8-speed which is at best equal to the ZF box in the Ram?

          “OTOH, it may be simpler to just buy a Tundra and avoid the whole UAW assembly process altogether.”

          You’re still left with a Tundra whose frame is made from bubblegum.

          stop being a sycophant.

          • 0 avatar
            ajla

            “You’re still left with a Tundra whose frame is made from bubblegum.

            stop being a sycophant.”

            Is this ironic?

            It is cool that you like to grab life by the horns, but GM does not build the RAM, so I am not sure how it has anything to do with the desirability of the Silverado/Sierra.

          • 0 avatar
            jz78817

            “Is this ironic?

            It is cool that you like to grab life by the horns, but GM does not build the RAM, so I am not sure how it has anything to do with the desirability of the Silverado/Sierra.”

            his entire post was dumb. he calls GM trucks “ugly and bloated,” then acts like they won’t be “ugly and bloated” if they put a Toyota drivetrain in it (as if that will ever happen.) Whether or not you care for the GM pickups, nobody who lives in reality believes their powertrains are deficient.

            and I just like needling him about how his “magnificent” Tundra V8 is outclassed by a stone-age pushrod engine.

          • 0 avatar
            highdesertcat

            “and I just like needling him about how his “magnificent” Tundra V8 is outclassed by a stone-age pushrod engine.”

            jz78817, you’re not needling me. I don’t sell Toyota. But I’ve already had the rest. Now I drive the best!

            Hell, my 2011 Tundra is ugly and bloated but I’ll take that magnificent Tundra 5.7 over anything else out there.

            youtube.com/watch?v=xMoy5q0S1f8

            …is a nice video on how the Tundra differs from your favorite trucks and why the 2015 F150 will have many of Tundra’s standards incorporated in them, including the frame.

    • 0 avatar
      Beerboy12

      Good point, I like it.

  • avatar
    Loser

    There is a reason why analyst starts with the word “anal”. As in things pulled from…..

  • avatar
    Pch101

    Tesla’s current market cap is over $18 billion.

    There is no way that Tesla is worth anything close to $18 billion, and that amount is far greater than what auto companies typically invest into a single acquisition. Unless Tesla can be purchased for a fraction of that price, this ain’t gonna happen.

    The financial media rarely confronts its interview subjects with their mistakes and bad calls. So when this trader makes this comment to CNBC, he knows that it will have been forgotten once it has failed to materialize.

    • 0 avatar
      Driver123

      You think Facebook is worth #130B? As compared to $103B Boeing? Valuation has absolutely nothing to do with reality.

      • 0 avatar
        Pch101

        Valuation should have something to do with reality, i.e. earnings.

        When it doesn’t, as is the case with Tesla, then the market cap is suspect, and the only buyers will be speculators, day/swing traders, and the dumb money.

        • 0 avatar
          Vulpine

          … except that it appears that the people who own Tesla stock on average are in it for the long run, not day-trading. People who bought Apple back in 1995 have achieved over 1,000% profit, but only if they held onto it for a lot more than a mere 10 years.

          • 0 avatar
            Pch101

            On a given day, about 10% of Tesla’s shares are traded. That is the mark of a high volume stock, which suggests that it is speculative.

            The fact that the stock has jumped in value by several times, even though there are no earnings, is also a mark of a speculative stock. That its current value is 24% below its 52-week high and the difference between its 52-week low and 52-week high is about a multiple of 6 is yet another indication that this stock is highly speculative.

            By definition, a stock that carries a high price on a business with zero earnings is speculative. I know that you’re not a fan of number crunching, but if you performed some basic fundamental analysis of the shares, then it would become obvious to you that there is no possible scenario in which the company is worth $150+ per share on the fundamentals. The only ways to make money on this are to hope that some sucker pays more for the lack of profit than you did, or that a tech company such as Google decides for whatever reason that it wants to pay a ridiculous price for a manufacturing business.

          • 0 avatar
            Vulpine

            I would almost accept your argument, except that we all know the stock USED to be overvalued and is now more in line with reality–Musk himself complained of the overvalue months ago.

            Meanwhile, other stocks see similar volumes and are hardly called ‘speculative’. Yes, I do agree there are day traders. In fact, I believe the business of day trading should be shut down; it’s been proven to cause much of the short-term chaos in the general stock market. Meanwhile, I’d bet that more than 80% of Tesla’s stocks haven’t changed hands more than once every few months and that some 30% haven’t changed hands more than once or twice since issued.

          • 0 avatar
            Pch101

            I’ll tell you what — provide some numbers here that support your position that the stock price bears any possible resemblance to reality. Start with a reasonable P/E ratio, and go from there.

    • 0 avatar
      Beerboy12

      At a guess, the valuation is reflecting potential. Given the ups and downs of the last few months, that potential is not all hot air. The recovery from the ridicules fire issue is… resilient.

      • 0 avatar
        Pch101

        The valuation is not based upon any achievable earnings multiplier. It’s priced as a highly speculative, dumb money bubble stock.

      • 0 avatar
        jz78817

        two of the three fires were not “ridiculous.”

        • 0 avatar
          Vulpine

          No? What kind of damage would a Corvette… a Cadillac… heck, a bloomin’ Mercedes have taken under the exact same circumstances?

          • 0 avatar
            jz78817

            a big dent or a hole in the floor. or a cracked oil pan.

          • 0 avatar
            Vulpine

            How about bent or broken drive shafts? How about a cracked block (aluminum block)? How about not just a hole in the floor, but a hole in YOU, or your passenger? Don’t be so sure any other vehicle would get past those objects in better shape. Even WITH those two fires, the NHTSA is confirming that the Tesla Model S is still the safest vehicle on the road and requires no additional protections against the type of damage those two encountered.

            Conversely, hundreds if not thousands of ICE vehicles have burned since those two–and from far less cause. In my own state I’ve read of dozens of car fires from just three fire companies reporting.

        • 0 avatar
          Beerboy12

          All the fire crashes were very high speed events. This is not something I need to prove, it is fact and easily confirmed. So yes, they where all ridiculous, over media hyped nonsense. The type of media fodder designed for the likes of yourself who want Tesla to fail more than their ability to reason…

  • avatar
    mor2bz

    go to aintgonnahappen.com. Although car companies are dumb enough to buy
    unprofitable unpopular smaller car companies, GM has all of the technology that Tesla does already, and anytime they wanted to make a
    car that does not make money, they could do so now.

    Musk has some pride, and a pretty good ability to stand on his own two feet, win or lose. This is not just a car to him, but a mission. Despite some teething problems, he appears to be building a car up to a quality level, rather than down to a pricepoint. GM and Tesla should not even be mentioned together in the same sentence.

  • avatar
    Vulpine

    Biggest mistake in the world if Musk lets GM buy him out; they’d just shut the car down the way they did their EV1.

    Musk needs to make the Tesla too big to just shut down. He’s already on the right track and I simply don’t think he’s so stupid as to let supposed analysts run his business. Analysts were saying the same thing about Apple back in ’96; look where Apple is now. Maybe not the most popular, but certainly the most watched–and the most copied.

    • 0 avatar
      jz78817

      “Biggest mistake in the world if Musk lets GM buy him out; they’d just shut the car down the way they did their EV1.”

      If what you know about the EV1 came from “Who Killed the Electric Car?” then stop talking about the EV1. GM couldn’t transfer ownership of any EV1s without spending the substantial amount of money updating the cars to meet FMVSS standards. It would have been a money sink for them.

      • 0 avatar
        Vulpine

        “If what you know about the EV1 came from “Who Killed the Electric Car?”, then maybe you would be right. Good thing I know more than that, isn’t it?

        Still, why DID GM literally steal so many of those cars when those who were driving them supposedly owned those cars outright?

        For that matter, what ever happened to Chrysler’s Turbine Car of 1964? The technology managed to prove itself pretty thoroughly for about 3 years, then Chrysler took them all back and destroyed the majority of them. Rumors on rumors on rumors–with almost no paper trail to really follow any more.

        • 0 avatar
          Ron

          Vulpine — the turbine car ate gas and was very expensive to build.

          • 0 avatar
            Vulpine

            You have documentation to verify that statement? Turbines in general can be very economical to build as they contain far fewer moving parts. Sure, building a limited run drives the cost up, but had it gone into full production the cost would have been far lower. Remember, they only built some 55 of them. You might even remember that a movie came out where they put one of those engines in a production body for a rally about the same time to garner interest.

            On the other hand, just as with today’s electrics, there was a lot of vocal argument against it trying to say “It will never work”. As i understand it, the Turbine Car’s drivers loved it just as much as the EV1′s drivers loved their car. It seems rather than “… ate gas and was very expensive to build” it was simply too good, and somebody went out of their way ti kill it.

        • 0 avatar
          jz78817

          “Still, why DID GM literally steal so many of those cars when those who were driving them supposedly owned those cars outright?”

          The only entity which ever owned those cars outright was GM. they leased EV1s to carefully selected people, and the terms of the lease said that GM would take them back at the end.

          You can’t steal something you already own, dickfish.

          “For that matter, what ever happened to Chrysler’s Turbine Car of 1964? The technology managed to prove itself pretty thoroughly for about 3 years, then Chrysler took them all back and destroyed the majority of them. Rumors on rumors on rumors–with almost no paper trail to really follow any more.”

          Horsecrap. it was another financial deal. #1, the Chrysler turbine worked, but it was a relative slug and guzzled fuel like most gas turbines do. #2, the cars were built by Carrozzeria Ghia and Chrysler didn’t pay duty on them when imported, so at the end of the exercise they could either pay duty or destroy the bodies. Since it was clear by then the gas turbine was a dead end, they junked all but a few.

          • 0 avatar
            Vulpine

            While in general you are correct, your final statement is somewhat in error; the gas turbine was NOT a “dead end” and became the prime motivator for the M1 Abrams tank. It probably wouldn’t take too much to see Chrysler’s turbine concept hit the roads again–especially now that we use unleaded fuels.

            For that matter, that was one of the drawbacks in the ’60s–the leaded gas put deposits on the turbines which reduced efficiency.

          • 0 avatar
            jz78817

            a battle tank is not a consumer automobile.

            let me amend my statement- “the gas turbine was a dead-end as a prime mover in cars.”

            “For that matter, that was one of the drawbacks in the ’60s–the leaded gas put deposits on the turbines which reduced efficiency.”

            except the Chrysler turbine was generally meant to burn diesel fuel or kerosene. Gas turbines in general have horrifically poor efficiency at part load. far worse than a piston engine. We’re talking “makes a Wankel look efficient.” The Chrysler engines were no different. Fuel economy just puttering around town was dismal.

            gas turbines are great for things like large aircraft or baseline power generation where they run at or near full-output for most of their operating time with little variation in load.

          • 0 avatar
            Vulpine

            You really don’t know much about turbines, do you? Yes, I do agree that kerosene and diesel–or better jet JP-4 were the much better choices, but the engine was quite happy with any burnable liquid. As I stated, the only problem with leaded gas was the lead itself.

            And turbines have run efficiently in much smaller craft than “large aircraft”. While I agree they love operating at a fixed speed, that does not need to be full speed or even NEAR full speed! Even those big birds have to spend a fair amount of time at 20% on the ground and usually around 60% at cruise. And with over 1 million miles driven by those 55 Turbine Cars back in the ’60s, achieving a mere 4% down time at the time is remarkable.

  • avatar
    WhiskeyRiver

    Purchasing Tesla might be GM’s best hope for obtaining a battery that lasts more than 25 miles.

  • avatar
    xander18

    One of Tesla’s most revolutionary changes is breaking away from the dealer network and changing the automotive retail experience. GM is an example of a company that’s more than slightly beholden to their dealer network. Imagine if Chevy advertised a new Silverado as being “easy to work on and user friendly”. They would be stepping on the toes of dealer service and there would be massive friction between the OEM and the dealer network. Dealers also rely on model obsolescence to encourage the lease/trade-in economy of new car buyers. For a good historical example of dealer influence for an OEM, look at Max Hoffman representing various European brands through the ’50s and ’60s. He had his finger on the pulse of the American car buying public and fed valuable information back to Europe about what cars to produce (the BMW 507, for example, and countless other cars).

    Tesla has drawn blood from the established dealer network-OEM relationship. I don’t think the importance of this can be understated and you can see in the news how divisive this has turned out to be. Texas dealer networks have been very defensive, and Tesla is looking to cut large manufacturing deals in Ohio to earn the right to sell without dealers. There could be increased profits from forgoing a middle man but you can also look to the Apple Store retail experience as an example of the potential of Tesla controlling sales.

    Perhaps GM (under pressure from dealers) wants to buy Tesla and fold them into their dealer network to prevent a rogue OEM from selling without dealers. Or perhaps they would like to start marketing Tesla’s alongside Cadillacs at GM/Tesla owned retail locations and move their own sales away from independent dealers. I couldn’t say, but I am assuming that the future of the OEM-dealer relationship hinges on the future of Tesla to some degree.

    • 0 avatar
      pragmatist

      I don’t know how the S could be considered easy and user friendly to work on. Virtually anything (including towing with a dead battery) involves a tech.

      • 0 avatar
        xander18

        That’s not the point at all. GM doesn’t really even have the option to market their vehicles that way, the only line they’re allowed as far as service is take it to a dealer tech. Tesla isn’t focusing on that aspect but they have the freedom to do so without a dealer network breathing down their neck.

    • 0 avatar
      Pch101

      There’s a big world outside of America where company-owned dealerships are not unusual.

      As it turns out, they haven’t been particularly transformational for the industry. As Daimler knows firsthand, they can be a drag on profitability: http://www.bloomberg.com/news/2013-05-27/daimler-looks-at-streamlining-mercedes-german-dealerships.html

      If Tesla is to become a major automaker, then it will eventually need to have dealers in order to hit the necessary volume targets. Dealerships are costly to start, and it’s better for automakers to outsource much of their retail.

      As it stands now, Tesla has sold very few cars and it benefits from selling direct. But if EVs become popular, then that model will begin to fail. It’s fun to dislike car dealers, but let’s not allow wishful thinking to cloud our ability to understand the realities of auto industry economics.

      • 0 avatar
        Big Al from Oz

        @Pch101
        Dealers aren’t that expensive to start.

        All Telsa had to do is advertise for franchisee’s to setup their dealerships and the money will flow.

        There’s probably a $hitload of people willing to invest in Telsa.

        It’s all about marketing and selling. How hard would it be to sell Telsa franchises? So long Telsa has nutted out the numbers and has a good strategy in place.

  • avatar
    MrGreenMan

    The Model S with a waterfall grille, On Star, and Sirius XM radio will make an excellent Buick Special.

  • avatar
    Ron

    This guy is a trader, not an analyst. BIG difference. His expertise is trading futures (commodities), not analyzing acquisitions. A comment from a trader means, “I have too much of this sh!t. Please buy it from me.”

    Final comment, as long as Steve Girsky is Vice Chairman, GM won’t spend $18 billion buying another company. The number one rated analyst on Wall Street for years, he saw what happened when GM threw billions down the toilet with Fiat and PSA.

    • 0 avatar
      highdesertcat

      LOL! I wondered when someone would use Steve Girsky’s name in vain. Good show!

      • 0 avatar
        Ron

        highdesertcat — thank you. (Seriously, I’ve known Steve for more than 30 years. He is very sharp. Certainly far smarter than Rick Wagoner, Roger Smith, et al. The pity is that Rick was probably the best manager at GM. They had a woefully weak bench.)

        • 0 avatar
          highdesertcat

          You’re welcome.

          I only know of Steve by reputation since I had four brothers in the new car retail business which sold, among others, GMC and Buick products.

          I wonder how many of these self-proclaimed gurus commenting on all things GM even know who Steve Girsky is.

  • avatar
    Conslaw

    I don’t presume to be an “analyst” because I work for a living, but I don’t see GM buying Tesla now. Tesla’s market cap is 18 billion GM’s is around 56 billion. Generally the acquiring company pays an acquisition premium to the acquired company, So Tesla shareholders would likely end up with at least a quarter, and probably 1/3 of the shares of GM. That’s assuming it’s a stock deal. If GM pays cash, that would be nuts because GM doesn’t have that kind of money laying around. I don’t now what portion of Tesla Elon Musk currently holds, but defacto control of 1/3 of GM stock would put him in defacto control of the company. The GM board would only allow that to happen if they want it to happen. If they do, the board members better have their golden parachutes ready because most of them would be out on the street soon after the merger. It’s funny, when we discussed this possibility in May, (http://www.thetruthaboutcars.com/2013/05/qotd-should-elon-musk-run-the-show-at-gm/) the idea was considered crazy, now it’s getting serious consideration. Interesting.

  • avatar
    Kinosh

    This kills the Tesla.

  • avatar
    SCE to AUX

    Dear Tesla,

    Not that you care much, but as a happy Leaf driver you’re my go-to next brand for the presumptive Model E. If you sell out to GM, you’ll never get my business.

    Much of the “Tesla appeal” lies in the fact that you’re NOT like any other car company, and your first efforts have been marvelous. The fact that your dealer philosophy vexes entire state legislatures makes you a hero to many.

    Keep up the good work, stay independent, and you could earn my business some day. Keep the Space-X philosophy going at Tesla. Sell out, and you’ll just become somebody that I used to know.

    Sincerely,
    “E” wannabe

  • avatar
    Volt 230

    Doesn’t Caddy need a flagship sedan? Put an ICE in there and voila! instant flagship, but at what cost??

  • avatar

    Didn’t GM try to buy Peugeot? Or Ford and in a moment of desperation? GM can be very stupid, proven many times. They are also bad accountants capable to overpaying for brands they do not really need.

    • 0 avatar
      jz78817

      Wasn’t the PSA mash-up supposed to help save Opel or something?

      as for Ford, yes, they proposed a merger in order to try to save what was left of GM. Once Ford saw their books they said “Holy Shit” and backed away.

  • avatar
    JaySeis

    I’d buy a Tesla but not if GM owned it because it’d be a colossal FU beyond belief and buying tech/design is the worst guarantee that you can sustain.

  • avatar
    Beerboy12

    Sorry, did I miss the part were Tesla was for sale? I am trying to understand why this is even being discussed.
    Wake up and smell the ozone, this story is just nonsense, for more reasons I care to memtion.


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