Tesla Motors Inc (TSLA): Why A Takeover Is Unlikely

Tesla stockBlomst / Pixabay

It’s been speculated that Tesla Motors Inc (NASDAQ:TSLA) would be a possible takeover target, but as Bloomberg’s Tara Lachapelle and Alan Ohnsman report, that’s probably pretty unlikely. Of course it seems pretty clear that CEO Elon Musk would be unlikely to sell the automaker, but the reasons we probably won’t see a sell-out anytime soon go even further than that.

Tesla Motors Inc (TSLA): Why A Takeover Is Unlikely

Tesla’s DOE Loan

One of the barriers that had existed to the company being taken over was its loan from the Department of Energy. However, Tesla paid that off nine years early, paving the way for a takeover, or so it might seem to some. The loan had contained language which made it difficult for the EV automaker to sell itself. But there are other reasons Tesla Motors Inc (NASDAQ:TSLA) probably isn’t a takeover target.

Tesla’s Skyrocketing Numbers

The biggest issue most investors see with Tesla Motors Inc (NASDAQ:TSLA) is its skyrocketing value. Bloomberg data indicates that the automaker’s stock trades for more than 800 times its estimated 2013 earnings. That’s the highest level among automakers valued at more than $5 billion.

Possible Suitors For Tesla

If Tesla Motors Inc (NASDAQ:TSLA) does raise its vehicle sales, it does have the potential to attract buyers like Google Inc (NASDAQ:GOOG) however, according to Bloomberg. The search giant has plenty of cash to spare and is working on auto-piloting technology, as Musk calls it.

Also there have been rumors that Musk was talking with Google Inc (NASDAQ:GOOG) about including its auto-piloting technology in future Tesla vehicles, although Musk has discounted those rumors or at least pushed them off into the distant future.

Conventional automakers may also be interested in buying out Tesla Motors Inc (NASDAQ:TSLA), possible to get the company’s technology for themselves. Former Chrysler Group deputy CEO Jim Press said the company might be an attractive takeover target if it can prove that its success is sustainable and that it’s based on “a solid financial foundation.”

Musk On The Possibility Of A Tesla Takeover

Musk did say earlier this year that a takeover might be possible, but he said he wouldn’t consider it until the company had built its Generation III mass market vehicle.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at [email protected]

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