Why is everyone so obsessed with thinking Tesla Motors Inc (NASDAQ:TSLA) will become an acquisition target? First some speculated that Google Inc (NASDAQ:GOOG) would buy it, which admittedly more sense makes sense than the other suggestions I’ve seen because of the self-driving car connection and also the business relationship between Google and Tesla management. However, I still don’t see that as being likely. Then someone said Apple Inc. (NASDAQ:AAPL) should buy Tesla, which just sounds crazy.
Then last week Yra Harris of Praxis Trading said he thinks General Motors Company (NYSE:GM) will buy Tesla this year. But I just don’t see that happening, this year, or possibly even ever. I refrained last week from saying why I disagree with Harris, but here’s my list now.
There’s more to Tesla than cars
First, what many forget about Tesla Motors Inc (NASDAQ:TSLA) is that there’s more to it than just cars. The company also has a Supercharger network which is growing by the month. It might not be monetizing that network now (other than charging for battery swaps), but this network presents a very real possibility for another future revenue stream. A creative mind like CEO Elon Musk could certainly come up with some ideas to make money from this network after drivers have become accustomed to using it.
In addition to the Supercharger network, Tesla also sells its power trains and other parts of its EV technology. It has a partnership with Toyota Motor Corp (ADR) (NYSE:TM) (TYO:7203), and there could be other possibilities for licensing its technology in the future. I would see more partnerships like this one as being more likely than a buyout by General Motors Company (NYSE:GM) or any other major automaker.
GM can’t afford Tesla, probably doesn’t want it
And then there’s the financial aspect of a buyout. GM really can’t afford to buy Tesla right now. Sure, the auto market is looking up, but GM has just begun to dig out of a precarious situation after the government bailout. Would it jeopardize its future with a major acquisition like Tesla would be? I don’t think so, at least not right now.
And besides, GM is known for making vehicles with internal combustion engines and is practically the antithesis of Tesla. It could do something dirty like buy Tesla and shut it down in order to eliminate a competitor at some point in the future, but even this is unlikely, particularly because of what a bad name doing that would give it. People love Tesla’s Model S, so shutting the company down would be a bad move for any company which wanted to acquire it.
Tesla isn’t for sale
Some would say that any company can be an acquisition target, but I don’t see Tesla Motors Inc (NASDAQ:TSLA) as being interested in being acquired. Musk himself said he would stay with the automaker at least through the creation of the Generation III vehicle, which suggests that he will stay there until at least 2016 or 2017. If the PayPal sale is anything to go by, Musk probably won’t stay with Tesla if he sells it. At this point, he’s the main driver of innovation there, so the automaker probably isn’t worth nearly as much as it is with Musk at the wheel.
In addition, Musk has a large chunk of his own cash in Tesla Motors Inc (NASDAQ:TSLA) right now. He threw his own money in to save the company, which turned out to be a wise decision. But does that sound like the action of a man who plans to walk away very soon? I think not.