Elon Musk: Tesla Open to Merger Discussions
By Edward A. Sanchez – Dec. 10, 2020
In response to a reporter question at the Axel Springer award ceremony in Berlin, Germany, Tesla and SpaceX CEO Elon Musk said he would be open to merger discussions if approached by another automaker. His specific reply, according to Reuters, was:
“We are definitely not going to launch a hostile takeover. If somebody said it would be a good idea to merge with Tesla, we would have this conversation.”
A few years ago, even the idea of Tesla acquiring another automaker, either legacy or startup, would have been laughable, as many believed the company was on the precipice of collapse itself. However, with a current market capitalization of more than $500 billion, more than twice that of Toyota, the next largest, the prospect of a Tesla takeover is no longer so far-fetched.
Tesla has been on a roll with a variety of unique offerings. So should Tesla merge with another company, the question is, what would be in it for Tesla?
However, if Tesla were to be the acquirer, it’s a fairly safe bet that Elon and the board would insist that any future R&D efforts would be fully electric. Based on their public statements, in terms of the large legacy automakers, that would put Volkswagen and General Motors at the forefront. However, I have a hard time seeing either of those companies to get their boards and shareholders to agree to a wholesale takeover by Tesla.
As far-fetched as it seems on some levels, I actually see Stellantis as potentially the most interested in a merger/takeover with Tesla. On the surface, this may seem like an incredulous stretch, considering FCA’s production of gas-guzzling supercharged Hemis and general indifference to electrification. However, considering Chrysler’s recent history of serial ownership, it wouldn’t be far-fetched. However, I wonder if Musk would have the patience for dealing with the notoriously demanding and stubborn French government, which holds at least one seat on the company’s board of directors.
And although it seems Elon Musk and VW’s Herbert Diess have had a bromance going lately, Diess himself is facing increasing pressure and blowback from the VW board and rank-and-file employees for his aggressive restructuring initiatives within the company in his efforts to double down on electrification. Although there is definitely some admiration for Musk and Tesla in Germany, the company is also seen by some as a threat to Germany’s historic industrial and engineering might, even as the company is investing billions in a factory outside Berlin.
Tesla could easily pocket any number of the smaller EV startups, but the rationale is rather thin. What could the smaller companies possibly bring to Tesla that it’s not already a leader in?
In all honesty, it’s anyone’s guess who could approach Tesla about a takeover. Although the company’s current market capitalization makes the prospect of a merger or takeover fertile headline fodder, the fact is, it would be a distraction to the company’s current initiatives and trajectory. I think Tesla is better off staying the course for the time being.
(Images courtesy Tesla)
Follow us on Google News and like us on Facebook
