Why doesn't TESLA (TSLA) just buy Honda, Ford or GM?

This, Tesla is not interested in building Honda Civics. THey are valued on advancement of technology. GM and other companies are building around The combustion engine. Tesla wants to build around a battery.

If I were a big time investor, GM would never get my money. They are slowly building Dinasours.

tesla has a high stock because its not a common car. there aren't enough voices that can voice out their problems with their tesla cars. ask any new trendy teenager/college student and they will like it because it checks all the boxes: techy, eco friendly (even though the electricity comes from the grid which doesn't all use eco friendly means of producing electricity), trendy ceo (posts memes and connects with the youth), and different from all other cars. when you see a tesla you dont look over it because everyone thinks its the future, its like the same equivalent of seeing a lamborghini on the street and being "wow look at that lambo!". i'm another billionare like bezos or gates could come along and start their own all-electric car company with only a touch-screen interface and some self driving technology and they will have a really high stock too.

Here are your Tesla shareholders.

https://money.cnn.com/quote/shareholders/shareholders.html?symb=TSLA&subView=institutional

Bob schul country wrote:

Sharkz Jamp wrote:

why doesn't FloSports just buy Letsrun?

THis is a quality post

I'd call it $99 level

Buying Tesla stock now is just a gamble that you can make a profit and get out before it crashes. Tesla is absurdly over valued. Tesla would be bankrupt if not for government assistance. I think it will probably remain as the government won't let it fail at this point. In a fair market it would almost certainly go under in the next 5 years. No way it reaches its absurd valuation. At the very best the stock will crash to a fraction of what it is worth now over the next two years. This has been a repeated trend with these innovative tech companies. Tesla is not Amazon where there was a solid business model to have significant earnings increases that justified its 50+ P/E ratios of a few years back, although Amazon is also overvalued now but nowhere to the same extent as Tesla. Tesla is fighting to be profitable. Amazon is profitable and sitting on a pile of cash.

Rojo, here is the answer for you that no one seems to understand:

Tesla does not have the money.

Yes, they may not even need to buy out one of the big manufacturers. Tesla probably would not benefit from buying GM or Ford. However, it would just not be wise for them to buy out an big manufacturer. They do not have the cash.

Of course, they could sell off 100 billion dollars worth of shares, but this would cause their stock to crash. They are not profitable, so they do not have hoards of cash like Apple does. Maybe they could get a loan, but this would cause them to take on billions of dollars of low quality debt.

They cannot afford to buy a big manufacturer. Plus, it simply does not make sense for them.

I don't know much about electric cars, but is it the body of the cars that is slowing production down, or is it the computer/battery/electric components. If the former I can see the value in buying a combustion engine car company to speed up production, but if its the latter I don't see how buying one of these companies would help.

rojo wrote:

So a few years ago, I expressed shock in this forum that Tesla was worth more than say a Ford or GM. Since then, Tesla's value has only skyrocketed. It's now worth $347 billion.

...

But even though it's the most valued car company in the world, they still have manufacturing problems. Tesla leads the world in temrs of complaints and they are often using hacks from Home Depot to get cars out of the factory.

The question I have is why doesn't Tesla use some of it's overvalued stock to buy out someone who knows how to make cars at scale like Honda (45b market cap), Ford (27 b market cap) or GM ( 43b market cap)?

...

You could ask yourself, why didn't Ford buy up all the horse buggy and whip makers when they could have?

The problem with the "major" automakers is that they are trapped with stranded costs of specific styles of manufacturing. The cost of what it took to build gasoline auto manufacturing systems and material streams is huge. It costs billions for a new line of gasoline automobiles to be developed, and that is why you see the same model reappear, year after year, with only slight tweaks. When "new" models are developed you see what is for the most part the same car, or a variation of another existing car. Exactly the same car parts reappear on several different car models.

Tesla is not trying to force fit their cars into a vey old manufacturing system that is trapped in the past. The only reason Tesla would buy Ford or GM would be kill the companies. That would decrease supply and increase prices.

Did you buy a Tesla?

Sharkz Jamp wrote:

why doesn't FloSports just buy Letsrun?

Interesting

thedub wrote:

Rojo, here is the answer for you that no one seems to understand:

Tesla does not have the money.

Yes, they may not even need to buy out one of the big manufacturers. Tesla probably would not benefit from buying GM or Ford. However, it would just not be wise for them to buy out an big manufacturer. They do not have the cash.

Of course, they could sell off 100 billion dollars worth of shares, but this would cause their stock to crash. They are not profitable, so they do not have hoards of cash like Apple does. Maybe they could get a loan, but this would cause them to take on billions of dollars of low quality debt.

They cannot afford to buy a big manufacturer. Plus, it simply does not make sense for them.

I've been reading this thread and have been unable to understand why everyone seems to think that stock market value = cash in the bank, also. Very strange.

Also assets. Tesla has about 4/5 factories whilst Ford has 60-70 factories worldwide. Tesla doesn't have the cash to purchase all that physical stuff. Tesla just isn't as 'big' as GM or Ford, despite what the market thinks.

Tesla is a small motor vehicle producer. 250-400k vehicles a year. Those are like monthly sales for Ford.

The stock market is a game at the end of the day. Stocks go up and down. Brick buildings filled with thousands of employees are real.

Tesla probably would gain important manufacturing knowledge from working with a large car company, people underestimate the years of knowledge that Ford or Honda have in manufacturing. But they definitely couldn't buy one.

The other posters who say that Elon Musk has drummed up lots of excitement about Tesla are correct. That is what has lead to its high valuation.

Same reason Amazon didn’t buy Sears. Very small overlap in terms of overall long term strategy, and too much institutional baggage.

Clearly nobody here works on an Investment Banking coverage or M&A team.

If TSLA bought a traditional manufacturer, they run the risk of inheriting their stock multiples, since TSLA's current multiple on free cash flow is infinite and GM is 10 or so. Since TSLA burns cash, they are wise to raise capital the past few weeks ($5 billion). TSLA's valuation smells like 1999 -2000 all over again. It will not end well.

He has the stock split prices involved. When Musk tweeted that TSLA was overvalued it was trading in the $700s pre split, 150ish post split, so shut up you morans.

I bought Tesla shares when the market bottomed at the beginning of the pandemic. I've now quadrupled my money.

Apparently, most of you think I should sell. But I've been watching the company for a long time and I don't plan to ever sell these shares. I'm looking for a buying opportunity for more.

If you think Tesla is overvalued it is likely because you don't know much about EV's and have never driven one. I bought a Chevy Bolt EV three years ago before the Tesla Model 3 was available. Two things about that:

1. I absolutely love the Bolt and I wouldn't dream of going back to a clunky gas car.

2. I wish I had waited a few months to get the Tesla.

Worldwide demand for EV's is exploding and Tesla's technology is 10 years ahead. Plus, they are the only auto maker who can build them at a profit.

But that's just the expected growth in car sales. I suspect that in a few years, auto sales will only represent about a quarter of Tesla's revenue. Future growth is in:

* Grid level storage systems that replace natural gas peaker plants (Tesla Megapack)

* Home solar systems like the solar roof

* Home energy storage and management (Tesla Powerwall)

* Robo-taxis

* Tesla Insurance offerings

* Tesla finance offerings

* Software Licensing

Tesla is still way under-valued if you are a long term investor.

Mostly because they can’t afford it. It seems like just yesterday the investment world was in a panic over their cash burn, which seemed to be getting really bad about the same time that Elon was sort of losing it and acting like Tesla never needed to raise capital again.

They’re worth a lot by market value, but their financial strength is still garbage. Free cash flow is improving and they don’t look as scary as they did a year ago, but they are still junk rated and not out of the woods.

This would be similar to an MD getting her first job out of college and buying a Porsche and a mansion.

Nice that you made a good return but people keep comparing a small car company to the greatest retail story of all time AMZN. There is nothing really proprietary about Tesla.

The roofs are really cool but will not be affordable for the masses in the next 10 years, if ever.

The Lucid Air prototype has reportedly beat the fastest Tesla S in the 1/4 mile and in range.

The Porsche Taycan TurboS is also faster, much better looking, and the build quality is Germany’s finest. It does have the downside of shorter range and higher price tag.

But you Tesla bulls are crazy to think the likes of VW, Honda, and BMW are not going to match Tesla in the next few years.

Oh, and the Model S is now 8 years old. That means besides some badging and maybe some aero updates, you can buy a $100+K sedan that looks identical to an 8 year old car. Is anyone talking about the R&D for a complete redesign of their flagship?

I think it’s an extremely innovative company, but it would need over half of the auto market one day to justify that valuation and the others will adapt.