A big headache for Tesla is that all big automakers are want to cash in on its success by launching their own electric cars
Over the past few years, there have been intense speculations that Tesla could become a takeover target. In late 2013, Yra Harris of Praxis Trading predicted that one of the Detroit Big Three would acquire Tesla. Last year, rumors surfaced that Apple was interested in buying the Palo Alto-based electric vehicle maker. But the Elon Musk-led company is unlikely to become an acquisition target, says Douglas McIntyre of 24/7 Wall Street.
Tesla’s $27 billion market value a barrier to its takeover
Tesla makes the best electric cars in the world. The company’s premium brand value and technology could attract large global automobile manufacturers. But, says Douglas, its $27 billion market value is what would keep potential buyers at bay. Of course, its market value may come down amid concerns over weakening sales in China and potential competition from Chevy Bolt, but that is unlikely to happen anytime soon.
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During the third-quarter, the Palo Alto-based company sold only 7,785 cars, and lowered its full-year sales guidance to 33,000 units. Tesla has released Model S P85D that goes from zero to 60mph in just 3.2 seconds. But with a starting price of $105,000, it’s unclear whether P85D can significantly boost Tesla’s total sales volume.
The biggest headache for Tesla
The EV maker has promised to release a mass-market Model III that will be priced at around $40,000. However, it is unlikely to hit the stores before 2017. Tesla has a history of delaying its new vehicle launches. While the company works on its mass market car, rivals will have plenty of room to release competing products. BMW’s i3 costs only about $45,000, but it has a big disadvantage. The car has a range of only 100 miles and needs a gas engine to go beyond that.
Tesla’s mass market car is likely to face stiff competition from General Motors’ Chevy Bolt, which is set to enter production in October 2016. It can go up to 200 miles in one charge. A big headache for Tesla is that all big automakers are want to cash in on its success. They are bringing their own electric cars to the market. By 2020, the market is expected to get crowded. To thrive in a crowded market, Tesla will need to have deep pockets or a deep-pocket parent, says Douglas.
Tesla shares fell 1.54% to $214.01 at 12:02 PM EST on Monday.