Elon Musk Floats Idea of Tesla Merger With Another Automaker

Tesla is currently the highest valued automaker in the United States, with its stock’s market cap at $584 million. This is despite issues like recalls to fix faulty roofs and steering units and a possible class action lawsuit alleging cover-ups of safety issues. However, investors seem willing to bet that Tesla can fix these issues and continue strong sales of electric vehicles.

Now Elon Musk seems willing to consider the idea of a possible merger with another automaker. When asked about the possibility of buying a rival at an event in Germany, Musk had this to say:

“We are definitely not going to launch a hostile takeover. If somebody said it would be a good idea to merge with Tesla, we would have this conversation.”

Although automakers like Daimler, which owns Mercedes-Benz, and Toyota did once have stakes in Tesla, they have since sold theirs. General Motors was rumored to be interested in buying Tesla and its innovative technologies for a while, though nothing ever came of it.

Musk noticeably didn’t go into any details about any possible deal that he might make with another company. This might lead to some speculation among board members of long-standing automakers who have watched Tesla and would like access to the new battery technologies that it is developing.

Tesla would likely have very little trouble buying at least a minority stake in another company at this point. This is quite a reversal from the days when it was nearly bankrupt, primarily due to the Model 3 being such a severe drain on its resources at first, which may have been a major factor in Toyota’s and Daimler’s decisions to sell their stakes.

Tesla has made a remarkable recovery since then, possibly due to factors like improved battery technology and tax credits available for buyers of new electric vehicles in states like California. It continues to build Gigafactories, snap up battery manufacturers, and discuss expansions into new markets.

However, it will need to clear up the issues that have caused recalls, investigations from consumer safety regulators, and class action lawsuits. Its decision to expand the warranty to include the onboard computers of the Model S and Model X may help some, but the ongoing suspension issues that caused recalls of Model X and Model Y vehicles sold in China and is a major complaint in the class action lawsuit may not reassure either investors or consumers.

If these issues can be fixed, however, rival automakers may be eager to make a merger deal with Tesla and take advantage of new technologies and practices like the more efficient battery making process that Elon Musk announced at Tesla’s Battery Day event. Elon Musk seems quite disinterested in a “hostile takeover” of a weaker rival, but may be interested in discussing a merger deal with other established automakers.