"shpuker" (shpuker)
06/04/2019 at 18:00 • Filed to: None
2
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"shpuker" (shpuker)
06/04/2019 at 18:00 • Filed to: None | 2
| 16 |
With Tesla down nearly 40% on the quarter, Model 3 sales & deliveries slowing dramatically, & a slowing of the economy as a whole Tesla has to be looking to make moves. The only question is what play is up next?
Disclaimer: I happen to work in the EV industry (no not for Tesla, that’d be only a lot frowned upon) & have a soft spot in my heart for everyone really pushing the envelope in the automotive world. That said, times are changing (again) & shit is going to get weird.
As competition heats up in the EV market (see the Polestar 2, Hyundai Kona/Kia Niro, VW MEB platform, etc...), Tesla’s sales slow, & Tesla losses what remains of it’s federal tax credit offerings, Tesla is going to have increased problems managing it’s cash reserves. Given this they’d be foolish not to begin entertaining merger discussion (alongside partial-buyout options from larger tech companies, but that’s a whole other can of worms) with many of the big name OEMs. Couple this with movement from FCA in pursuing a deal with Renault/Renault-Nissan, reports on alleged Ford-GM discussions (whether JV or merger), & the technology gaps of Toyota/Honda/Mazda & you have a recipe for meme worthy action. And that’s exactly what we’re going to try and sort out here... Who’s the most likely to make moves w/ Tesla, & who would produce the most meme filled action?
OK-OK-OK, I hear your eyes rolling now. First let me lay out who I believe to be the top contenders for the stupid prizes, then we can dig more into the stupid games.
Ford
Ford is actually my least likely prospect in this hypothetical, & really only for one, relatively irrelevant, reason: Rivian. Yes, Rivian is a relative nobody in this discussion; not only have they never produced a production ready vehicle, !!!error: Indecipherable SUB-paragraph formatting!!! What Rivian does bring though is a wealth of knowledge from previous EV startup ventures. In complementing contrast however, Ford brings relative stability to a pool of engineers used to living off month-to-month lease agreements & a constant questioning on how many of their inflated pay-checks will continue to clear.
Given Ford’s recent struggles of their own, what puts them in position to make a move of this magnitude anyways? Three words: consolidation, liquidation, & simplification. Now I could do a bit on this alone & it would take up {insertNumberOfWordsTheyWouldntRead} itself, but really this manifests itself in one critical financial figure: Cash (You were expecting something fancy here weren’t you?). Right here you can’t see Ford preparing to make moves with Q4 2018 cash reserves of a !!!error: Indecipherable SUB-paragraph formatting!!! That’s a casual near 25% increase in cash reserves for a company that’s been fending off catastrophic valuation deflation for the past 5 years... Not something you see often, and certainly indication that Ford is about to make a big play.
General Motors
While a lot of industry insiders are currently pushing Ford as the biggest OEM on the edge of the recession chopping block, I see it as (once again) GM. You see, GM has invested a ton of time & money into shifting it’s focus from a US centered global brand to an Asian one. Now that statement might infuriate quite a few people, but given GM’s withdraw from the European market entirely & it’s continued dis-investment in the US market, coupled with new plans of expansion in Asia (primarily China).... What other conclusion am I supposed to draw?
Similar to Ford, GM has also dramatically increased it’s cash reserves !!!error: Indecipherable SUB-paragraph formatting!!! & similar to Tesla, !!!error: Indecipherable SUB-paragraph formatting!!! (especially with EVs). Now given an apparent rejection from Rivian & and “surprising” slowing of the EV market in China (if calculable market saturation can be considered surprising), GM is very much in the market for teaming up.
Toyota
In terms of cash on hand (well, cash & short-term investments), Toyota blows Ford & GM into orbit with a staggering $52.6B (Ford’s C&ST is $37.7B, GM’s is $23.2B). Toyota also has ongoing joint-venture discussions ongoing with Panasonic, talks which could theoretically stabilize the tense relationship between Tesla & Panasonic.
Now given Toyota’s dramatically larger scale of operation/value a merger is laughable. Thus action like a majority buyout or straight acquisition would seem a more likely outcome. Toyota really does have huge strides to make up in the EV market & they’ve been known to make deals to advance their technology before (see the Tesla developed RAV4 EV).
!!! UNKNOWN HEADER TYPE (MULTI-LINE BREAK?) !!!
On their own, neither currently presents a huge threat on the world market, nor as a potential mergee with/acquirer of Tesla. However together you would see the 3rd largest automotive conglomerate in the world & a C&ST total of over $32.0B to go along with that status.
To slow down a bit, a merger of this magnitude would shock the automotive world & would take years to fully close out. If Tesla is still on the block though in 12-18 months at a continually dropping valuation then a major acquisition wouldn’t be the most unrealistic way for the new auto-giant to flex its muscles.
At the end of the day this gives what I would point to as two realistic market transition opportunities for Tesla; merge or be acquired. At this point it would be easy to point to Musk’s ego & conclude that he would never let an acquisition happen, so a merger is the only way. I don’t believe this to be true though. I only see acquisition as being a likely outcome here & really only one automotive company is capable of such a move in the short-term: Toyota.
Enough of my speculation, what do you think Oppo? Is Tesla merger/acquisition bound or is it still in the clear?
jimz
> shpuker
06/03/2019 at 09:07 |
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anecdotally, I’ve kind of thought all of those little potshots Elon’s taken at Ford had kind of a “please go out with me” vibe, kind of like the 12-year-old boy who hasn’t yet learned that teasing the girl you like isn’t “flirting.”
SilentButNotReallyDeadly...killed by G/O Media
> shpuker
06/03/2019 at 09:21 |
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GM isn’t really in Asia anymore. Just South Korea & China. Plus Oz & NZ. And none of it is going that well...
Ford has a hold on Rivian from what I understand plus (more importantly) they are tied up with VW in commercial vehicles...and EV.
Tesla is mostly a battery company that sells cars. And the brand has power in places other than the US...notably China.
Tesla will go...but it won’t be merged. I would expect it to be co- owned or more likely ...allied. It can’t continue to develop platforms on its own but it has the software, in vehicle systems and above all battery pack manufacturing capacity to be a significant player or even OEM supplier.
But I don’t believe any of the current mob are ready or willing at the moment to take a punt on buying or merging with Tesla.
If Tata could off load JLR perhaps. Or even SAIC could buy in...but that'd also have to wait for another US administration.
HammerheadFistpunch
> shpuker
06/03/2019 at 09:32 |
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stuff like this is why I’m finding it harder and harder to care about jalopnik.com
these days. all the good stuff is in here.
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jimz
> SilentButNotReallyDeadly...killed by G/O Media
06/03/2019 at 09:39 |
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Ford has a hold on Rivian from what I understand
I don’t think there’s exclusivity in that agreement. IIRC that’s what put GM off, they wanted an exclusive deal but Rivian wouldn’t agree to it.
My X-type is too a real Jaguar
> shpuker
06/03/2019 at 09:40 |
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I think most potential merger/partners are a
fraid of Elon Musk and Twitter account, he is too unpredictable
,
they will buy the technology from the bankruptcy judge but Tesla has to fail.
Shift24
> shpuker
06/03/2019 at 09:43 |
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The Hype for electric cars is over. Tesla has lost its mojo and why Tesla’s down turn .
Financially and logistically it makes the most sense for Ford. No more Sedans? Bring in Tesla which has 2 decent sedans that are fully electric.
One that in my book would be smart but would end in tragedy, Honda. Other that a couple failed attempts after the og insight, they havent been able to have a stable competitor to the prius.
They would instantly add another SUV and 2 more sedans. And Honda along with other Japanese manufacturers
have not yet given up on Sedans.
fintail
> shpuker
06/03/2019 at 09:46 |
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I’d like the FCA one just so all the local techbro dorks and bougie wannabe edgy virtue signalers would have to accept a less cool mantle.
nermal
> shpuker
06/03/2019 at 09:58 |
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Tesla needs to turn the corner to the next business phase, the investor anticipation of which has lead to their yuuuuuge over-valuation. They have the product, they have the demand, they have the manufacturing, distribution, charging network..... They now just need to start selling cars and basically printing $$$.
The problem is, that’s incredibly difficult to do. There’s a solution to every problem if you throw enough cash at it. However, excessive spending and poor cost control is generally the biggest detriment to profitability.
Tesla has their visionary product and sales guy in Musk. What they need is balance in the form of a cheap curmudgeonly old bastard as CFO that everybody in the company absolutely hates.
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shpuker
> HammerheadFistpunch
06/03/2019 at 18:00 |
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gmporschenut also a fan of hondas
> nermal
06/03/2019 at 21:29 |
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I think that was their whole plan with solar/home battery before that fizzled.
Grindintosecond
> My X-type is too a real Jaguar
06/04/2019 at 19:13 |
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agree with this. Why acquire now and not later for pennies on the dollar. Scoop up the tech for a bargain. But then I think many people are waiting for this moment so that will be an auction and could very well be bought by a chinese firm by then.
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jimz
> My X-type is too a real Jaguar
06/04/2019 at 19:14 |
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his Twitter feed is only a liability to Tesla because they- in SEC filings- explicitly said it is an official source of corporate information. That’s why the “Funding secured” thing was such a mess.
Nick Has an Exocet
> shpuker
06/04/2019 at 19:41 |
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I still think the Ford thing makes a lot of sense. I just kind of feel it in my bones. I don’t really care what Ford has said about Rivian - I think that was a “ cheap” hedge and would quickly pivot to the commercial vehicle space - box trucks, transits, cutaways, and eventually doing things like electric crate motors for forklifts and the like. Despite Rivian’s lofty plans, I’ve always felt like that’s a better market for that deal.
There are 4 scenarios that I see in order of feasibility :
1) Automaker merges with Tesla, sans Musk.
2) Tesla manages to get some air back under its wings and coasts for 4-5 years before we do this again.
3) Automaker takes a large stake in Tesla, Musk remains, automaker gets technology/drivetrain exclusivity.
4) Tesla freefall continues and an automaker pays just a little over what is probably a more true market price for a M uskless Tesla in an ugly deal or hostile takeover.
Of course, there’s always #5 where Musk finds a way to get the government to bail him out. That might actually be #0 since it’s the business model of most of his companies.
Distraxi's idea of perfection is a Jagroen
> My X-type is too a real Jaguar
06/04/2019 at 20:20 |
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Or they just kick him out (aka give him an excuse to declare victory, grab the money, and move on to playing full ti me with rockets) at which point he can tweet whatever BS he likes and nobody will care . Payp al’s proven he’s happy to exit a startup if the deal is right .
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gmporschenut also a fan of hondas
> shpuker
06/04/2019 at 20:40 |
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They’ re at what 35billion? they still have a long way to fall before someone is ready to buy them up. As far as i can tell their R&D is 1-1.5bill a year . I gues new development starts at a billion and can go up t 6 for a new platform.
I think it still will be cheaper to design inhouse or pick them up for their charging network, if they crash.
Just Jeepin'
> jimz
06/04/2019 at 20:45 |
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I had to explain that to a girl I had a crush on in high school. Of course she ended up dating the guy who had been teasing her.