Tesla Motors Inc (TSLA) Challenged By New Fisker Owner

Tesla Motors Inc (TSLA) Challenged By New Fisker Owner
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Tesla Motors Inc (NASDAQ:TSLA) has been a phenomenon that has taken the electric vehicle market by storm with its luxurious, high quality Model S. First Tesla faced the potential of competition from BYD Company Limited (HKG:1211) after its founder Wang Chuanfu vowed to make an electric car following the widespread success of his electric buses. Now Tesla faces competition of a bit more personal nature, as Chinese billionaire Lu Guanqiu has bought the bankrupt Fisker brand and vowed to disrupt the electric vehicle market, taking on Tesla on its home soil.

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Bloomberg TV reporter Matt Miller compared Lu with Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk, who has been grabbing headlines for more than a year. Musk’s fame has increased not only because of Tesla’s success, but also with the other companies he works with: SpaceX and SolarCity Corp (NASDAQ:SCTY).

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Lu no stranger to the automotive business

According to Miller, Lu’s net worth is $3.1 billion, and he owns Wanxiang Group, an auto parts business in China. He made his fortune with that company. Miller said the 69-year-old has “vowed to burn every last dollar” and that if he dies, his son will then take over Fisker brand. If his son dies, then his grandson will take it over.

Musk, on the other hand, was born in South Africa and now is worth $9.2 billion. Unlike Lu, who made his fortune in the automotive industry, Musk’s fortune came from a different industry—the  sale of PayPal to eBay Inc (NASDAQ:EBAY). Miller notes that Musk might not be as “laser-focused” on Tesla Motors Inc (NASDAQ:TSLA) because of his involvement with SpaceX and SolarCity Corp (NASDAQ:SCTY). However, there’s no denying that Tesla’s cars are of the highest quality and performance.

Why Lu could be dangerous for Tesla

Miller believes that if Lu is able to take the Fisker brand and make quality cars that perform well, he will be successful. He sees a handful of advantages Lu may have over Tesla Motors Inc (NASDAQ:TSLA). For example, Miller said Lu can already make cars in China and rely on help from the Chinese government, which tends to back Chinese companies more often than foreign ones.

However, it should be noted that Tesla has already taken help from the U.S. federal and state governments, which helped the automaker get started. Tesla took part in a loan program from the U.S. Department of Energy early in its life and then paying that loan back years early. Also Tesla has benefited from selling zero emission tax credits, although that source of revenue has since been brought to an end by state governments.

The reporter notes that Musk does want to bring production for Tesla Motors Inc (NASDAQ:TSLA)’s cars into China, which would cut the price of the cars there because they wouldn’t have to pay the high import taxes.

What Fisker brings to Lu

Lu’s purchase of the bankrupt Fisker brand brings him a number of advantages as well. With that purchase, he gets an abandoned General Motors Company (NYSE:GM) factory located in Wilmington, Del. This means Lu will already have a U.S.-based facility, which does put his operations ahead of Tesla Motors Inc (NASDAQ:TSLA)’s in terms of already having a factory located in the other’s home country.

Miller believes Lu could become the first Chinese automaker to produce cars successfully in the U.S. It should be noted that BYD Company Limited (HKG:1211) is already successfully producing electric buses in the U.S., however. This means that Lu would not be the first Chinese vehicle maker to successfully make vehicles in the U.S. BYD’s founder has said he has plans to make affordable electric cars as well as buses, so it’s probably only a matter of time until that Chinese automaker also makes electric cars in the U.S.

Another big advantage Lu has over Tesla Motors Inc (NASDAQ:TSLA) is that he bought dozens of patents as part of the Fisker deal. He’s already got a head start on making an electric car, as it typically takes around five years to do that. His time could be dramatically reduced because Fisker already had a car, and he simply needs to improve on it and make it better.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she 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. Email her at Mjones@valuewalk.com.
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  1. I was an investor in A123 Systems, and to this day still believe that the Obama Administration’s DoE was responsible for the company’s bankruptcy. Obama, picking winners even among the EV.

    Why prospect on a Tesla Motors Inc. ‘gigafactory’ when A123 Systems is already up and running? Obama must have the investor preference answer. Politics and big campaign donors driving TSLA higher.

    Fisker Karma is still the better designed Plug In Hybrid ~ Electric Vehicle.

    Lu Guanqiu – Best of Luck!

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