Daimler hedges its bet on Tesla


German automaker Daimler (DDAIF) says it has hedged itself against a drop in the share price of Tesla Motors (TSLA) after watching its 4.3% stake in the EV juggernaut have an adventuresome year.

Currently, Tesla provides electric motors and batteries for Mercedes-Benz EVs. Execs with Daimler signaled further cooperation between the two companies in their remarks.

What to watch: Sales for the Mercedes-Benz B-Class electric vehicle are forecast to be relatively light in the U.S. It's Tesla's development deal with Toyota (TM) that provides the most revenue upside.

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Comments (38)
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    Quick questions

     

    How much money in terms of profit did Daimler make this year?

     

    How much profit did they make from holding 4.3% of Tesla stock YTD?
    21 Dec 2013, 11:44 AM Reply Like
  • chickensevil
    , contributor
    Comments (743) | Send Message
     
    I would say A LOT. They were bought into Tesla before they went public. Their first purchase was less than 10% stake for 50 million and then sold half of that to another company. They then bought in on another round of funding to maintain their percentage of ownership. I couldn't find anything else on further purchases, so I assume share dilution is what has pushed them down to 4.3% ownership.

     

    a 4.3% ownership of 122.53 million shares outstanding, at 143$ share price puts their stake at $755 Million. So assume around a 30$ Million buy in, in total, even at the current valuation they have made off like a bandit if they were to sell right now. Compare that with their high of 198$ which would make their value at $1.04Bn I can see why they would want to hedge against further drops.
    23 Dec 2013, 09:03 AM Reply Like
  • evjohn
    , contributor
    Comments (1880) | Send Message
     
    Does anyone know what they bought the stock at? My guess would be way under $20 making them a extremely large profit.
    21 Dec 2013, 11:56 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11460) | Send Message
     
    A cheaper Tesla: http://seekingalpha.co...
    21 Dec 2013, 12:05 PM Reply Like
  • surferbroadband
    , contributor
    Comments (5265) | Send Message
     
    Daimler probably made more money owning Tesla Stock than by other sales.

     

    Problem is that Tesla is a threat to Daimler. EV market will take over the ICE market in 25-30 years. I may be wrong and it ends up being 12-15 years.

     

    What this signals is that Daimler feels that Tesla has some good ideas on what to do with cars. By getting powertrains from Tesla they might also get some good ideas on how to improve other aspects of their vehicles.
    21 Dec 2013, 12:06 PM Reply Like
  • chickensevil
    , contributor
    Comments (743) | Send Message
     
    This is why they are trying to at least "get in the ground floor". They at least realize that it is worth investing in and then buying their product. Even Sony buys/bought LED screens from Samsung for their TVs, yet still sold plenty of TV's. It isn't just the internals, it is the full package, and there are people that love the Mercedes package and I don't think that would ever go away.
    23 Dec 2013, 09:08 AM Reply Like
  • drive-by poster
    , contributor
    Comments (81) | Send Message
     
    I don't think they're backing away from TSLA by any means... "Execs with Daimler signaled further cooperation between the two companies in their remarks." But the recent volatility after the three vehicle fires must have been quite unsettling.
    21 Dec 2013, 12:07 PM Reply Like
  • nwdiver
    , contributor
    Comments (452) | Send Message
     
    Yes, according to the NFPA the odds of a Daimler catching fire ~1:1500; odds of a Tesla catching fire ~1:6000... I can certainly understand why Daimler would find this "unsettling".... their cars are 4x more likely to burst into flames.

     

    http://bit.ly/1cINl7Y
    21 Dec 2013, 12:33 PM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Re: "their cars are 4x more likely to burst into flames."

     

    And the link is to a 2010 DRAFT study. A year BEFORE the Tesla Model S is sold.

     

    And yes, we've all seen at least one Mercedes "burst into flames". Its quite common. NOT.

     

    FUD anyone?
    21 Dec 2013, 12:46 PM Reply Like
  • chfp
    , contributor
    Comments (720) | Send Message
     
    Yes it's FUD that EVs are somehow more dangerous than gassers.

     

    Gassers going up in flames ---
    http://bit.ly/18eulwA
    http://bit.ly/1bDqe3q
    http://yhoo.it/1kq68ZK

     

    And overall unsafety of gassers
    http://bit.ly/1gBr4gl
    http://onforb.es/18orAJb
    21 Dec 2013, 01:10 PM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    chfp,

     

    FUD is saying "their cars are 4x more likely to burst into flames."

     

    Just as your links don't say the Mercedes "burst" into flames, neither did nvdivers. You guys made it up because of a bias toward EVs and Tesla. That's FUD
    21 Dec 2013, 02:24 PM Reply Like
  • nwdiver
    , contributor
    Comments (452) | Send Message
     
    You're right Tom... I retract my "burst into flames" comment. They simply catch on fire; and every once in a while that fire spreads too quickly for the occupant to escape and they are burned alive. Batteries burn... but not nearly as fast as gasoline. The NFPA doesn't distinguish between "gas vapor explosions" and "fires" ICE cars are 4x more likely to "catch fire" than a Tesla.... Happy?
    21 Dec 2013, 05:22 PM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Cars don't "catch on fire" unless there is an accident, lack of maintenance, or some other external event.

     

    Its FUD to imply gasoline cars "catch on fire" just sitting there.

     

    We've been over this so many times.
    21 Dec 2013, 05:57 PM Reply Like
  • marshgre
    , contributor
    Comments (989) | Send Message
     
    Tom,

     

    I've seen, first hand, a new (less than a month old) Ford truck catch fire and suffer serious damage while parked. I repeat it caught fire while "just sitting there".

     

    There was no accident or "lack of maintenance" nor was there "some other external event"

     

    If you'd care to take the time to check you'll find many cases of cars from many manufacturers being recalled for spontaneous fires. To date there have been no spontaneous fires reported that involved a Tesla Model S.

     

    The only FUD I'm seeing is coming from shorts who are once again piling on to TSLA.
    21 Dec 2013, 10:11 PM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Re: "If you'd care to take the time to check you'll find many cases of cars from many manufacturers being recalled for spontaneous fires. To date there have been no spontaneous fires reported that involved a Tesla Model S."

     

    This exactly how FUD is spread. Poster gives an example of something but posts no links to back up his claim. Brand new truck, bursts into flame, happens all the time, don't you know that?

     

    No I don't know. And I shouldn't have to do the search to prove YOUR claim.

     

    I've been around cars my whole life. Never, ever saw or heard of a car catching fire unless an accident or bad maintenance. But, if there is a data source, I'm always willing to change my opinion to match fact.
    21 Dec 2013, 11:13 PM Reply Like
  • Rik1381
    , contributor
    Comments (1402) | Send Message
     
    tom, I suggest you Google
    recall car fire risk
    and have a look at the search results.
    There have been many recalls by automakers to correct design flaws that create a fire risk. No accident or bad maintenance required.
    22 Dec 2013, 12:05 AM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Rik,
    No report of a spontaneous fire! Do you have any other evidence of an ICE car bursting into flame for no reason?
    22 Dec 2013, 02:43 AM Reply Like
  • Energysystems
    , contributor
    Comments (2127) | Send Message
     
    Let's be honest....140K Leafs/Volts without a single fire. 18K Model S's with 3 fires.

     

    There's a reason why the NHTSA launched a formal investigation, and it wasn't because of a request by Musk.
    22 Dec 2013, 08:01 AM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    Tom,
    There were numerous accounts of fires for the 2012 Ford Escape recall.
    http://bit.ly/1jwlSiI

     

    I also read somewhere that there was one that was sitting parked, unused and it caught fire. (Ford originally disputed the claim due to the person not getting the notice due to a mail forwarding ).

     

    When I was in high school, there was a kid whose car burnt up. Nothing he did, the car was a few years old, in great shape. His just randomly caught fire when he was sleeping. Electrical short in his drivers door panel if I remember correctly.

     

    I had a firebird, my car caught fire, the root cause was a line that ruptured. Was it lack of maintenance, mechanic incompetance? Nope, it was replaced with OEM recommened part 3 years prior, because the original looked dry rotted (original lasted much, much longer). The OEM replacement part just had a flaw in it. A 3 yr old, correct part, with 12,000 miles should not rupture and cause an engine compartment fire.
    22 Dec 2013, 08:31 AM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    Here's quite a number of F150 fires I found in consumer affairs, most old, some new. It shows that fires happen all the time under normal, benign operating conditions of the car. It does not take crashing into a cement wall going 100 mph, or running over a large chunk of metal, but in these cases as simple as letting the car sit over night unattended with no one even being in proximity of the car for it to catch fire.

     

    http://bit.ly/1c0sagy

     

    Hitting an object-somewhat avoidable, not everyone will run over large debris.
    Leaving you car unattended and keys out of the ignition as you sleep- common, almost everyone does it.
    22 Dec 2013, 10:40 AM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Dan,
    Thanks for the information. I wonder if we're talking about the same thing? My issue was with the implication that all ICE cars burst into flame while just sitting there, with the underlying reason being the fuel source - gasoline.

     

    And yes, some models of some ICE cars do have that problem! But that's not the same as saying the use of gasoline leads to spontaneous fires in ALL ICE cars.

     

    To explain, look at this wikipedia page. http://bit.ly/18p8uo1
    Its a list of spontaneous fires in EV. Might I add these fires were related to lithium batteries.

     

    Now, does the fact that some models of some EV cars have spontaneous fires mean ALL EVs can burst into flame simply due to the use of lithium batteries?

     

    I still think its FUD to say ICE cars, or EV cars, burst into flames because of the underlying fuel source.
    22 Dec 2013, 01:46 PM Reply Like
  • Rik1381
    , contributor
    Comments (1402) | Send Message
     
    tom, I addressed these statements that you made:

     

    "I've been around cars my whole life. Never, ever saw or heard of a car catching fire unless an accident or bad maintenance. But, if there is a data source, I'm always willing to change my opinion to match fact."

     

    The point is there are many documented cases of ICE cars catching fire that had nothing to do with an accident or bad maintenance. Tens of thousands of ICE cars have been recalled in the last few years due to design defects that could cause or did cause fires.

     

    An example is the 2013 Ford Escape, which has been recalled seven times, including five times to address fire risks. The most recent recall came after 13 of these new Escapes caught fire when there hadn't been any accident or lack of maintenance
    http://nbcnews.to/1hs2LV5

     

    Another noteworthy case was the Ferrari 458, five of which burst into flames less than a year after the car went on sale, when there had been no accident or bad maintenance. This is a $233K+ sports car. Ferrari determined that a wheel arch heat shield adhesive was defective, which could cause the wheel arch to overheat from hot exhaust, and catch fire. All 1248 Ferrari 458s produced were recalled in 2010 to fix this design defect.
    http://dailym.ai/1a28zwG
    22 Dec 2013, 04:19 PM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Rik,
    Please notice I'm not saying ICE cars NEVER catch fire. Several of you have pointed out examples of an individual car or model of car that have experienced spontaneous fires. And the actions of manufacturers as a result.

     

    I've pointed out the Wikipedia page that documents individual EVs or models of EV that have also experienced spontaneous fires. They also list actions of manufacturers as a result.

     

    It seems the Tesla boosters are trying their best to prove that all ICE are inherently prone to bursting into flames. Due to gasoline.

     

    Can't we say the same about EVs, using that same logic? Except its not gasoline, but rather lithium ion batteries.

     

    I still think its FUD to say either ICE cars OR EVs are dangerous because they "burst into flames". I use the same reason for both.

     

    And YES there are tons more fires in ICE cars than EVs. That's because there are tons more ICE cars than EVs.
    22 Dec 2013, 04:45 PM Reply Like
  • nwdiver
    , contributor
    Comments (452) | Send Message
     
    "My issue was with the implication that all ICE cars burst into flame while just sitting there, with the underlying reason being the fuel source - gasoline."

     

    Most people that die in car fires aren't killed by the faulty wiring or whatever actually caused the fire... they're killed when the small fire finds the gasoline and becomes a very large fire; Carrying liquid fuels like gasoline is a risk factor best avoided.
    23 Dec 2013, 12:48 AM Reply Like
  • chfp
    , contributor
    Comments (720) | Send Message
     
    tomfrompv "I've been around cars my whole life. Never, ever saw or heard of a car catching fire unless an accident or bad maintenance."

     

    Anecdotal evidence is always the best proof.
    23 Dec 2013, 01:25 AM Reply Like
  • Say What?
    , contributor
    Comments (271) | Send Message
     
    Your statement is ridiculous
    23 Dec 2013, 07:00 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
     
    Tom
    Your exact quote was
    "Cars don't "catch on fire" unless there is an accident, lack of maintenance, or some other external event."

     

    Those of us who have commented showed that that statement was incorrect and that cars do catch fire spontaneously for no apparent reason.
    27 Dec 2013, 02:51 AM Reply Like
  • tomfrompv
    , contributor
    Comments (7314) | Send Message
     
    Re: "Those of us who have commented showed that that statement was incorrect and that cars do catch fire spontaneously for no apparent reason."

     

    The semantics are critical. What can be truthfully stated is that SOME models of SOME cars catch fire without being in an accident or poorly maintained. We have facts and evidence for that.

     

    It is NOT truthful to say ALL models of ALL cars catch fire ..... . That is FUD.

     

    Please note the importance of semantics. Electric cars also catch fire just sitting there. But it would equally be FUD to say "EVs catch fire". The truthful statement is SOME model EVs from SOME manufacturers caught fire just sitting there.
    27 Dec 2013, 03:07 AM Reply Like
  • Energysystems
    , contributor
    Comments (2127) | Send Message
     
    Daimler bought into TSLA well before it went public(2009 I believe), and originally owned a near 10% stake. A Daimler VP also has a seat on the Tesla board of directors.
    21 Dec 2013, 12:32 PM Reply Like
  • Joe E Coyotee
    , contributor
    Comments (267) | Send Message
     
    Daimler and Toyota was very smart in Partnering up with Tesla early on, why fight the tide when you can swim with it.
    21 Dec 2013, 12:57 PM Reply Like
  • 3D Investing
    , contributor
    Comments (1552) | Send Message
     
    Daimler is hedging to protect its own financial statements. Because Tesla stocks is obviously volatile, Daimler's balance sheet will be volatile too. This can cause their stocks to be volatile because it can cause significant delta in their investment value on their assets. Or basically, they do not want it to significantly affect their quarterly/annual reports.

     

    The main point out of this is that they are planning on holding the 4.3% stake in Tesla instead of walking away. They are hoping further cooperation will increase their investment value along with advancing their own company. Tesla already made it clear they do not want to dominate the industry but to make EV the new transportation mainstream. If they wanted to dominate the industry, they would be looking at mergers or buyout from a larger automaker to boost production.
    21 Dec 2013, 01:39 PM Reply Like
  • PChan444
    , contributor
    Comments (514) | Send Message
     
    is TSLA a good buy here?
    21 Dec 2013, 03:36 PM Reply Like
  • jstack6
    , contributor
    Comments (111) | Send Message
     
    TM Toyota could be a potential up side buy so far TM doesn't have a big interest in 100% Electric as their Hybrids are very popular. They also seemed to miss the Lithium trend and that is why FORD surpassed them in ratings on their hybrids.

     

    The big upside for Tesla is their batteries now being sold with Solar systems and their own future Model E in late 2015 not to mention their X coming in 2014.

     

    Tesla also has sales in Europe where their Super Charger network is now in and growing and China which is now the biggest vehicle market in the world.
    21 Dec 2013, 04:56 PM Reply Like
  • Energysystems
    , contributor
    Comments (2127) | Send Message
     
    Toyota had a very large investment in ni-cad tech; I recall a car&driver mag probably 3-4 years ago that outlined why Toyota was pushing that old technology.

     

    For me, I won't buy $TSLA, much too rich for an automaker.
    21 Dec 2013, 05:24 PM Reply Like
  • 3D Investing
    , contributor
    Comments (1552) | Send Message
     
    Actually, NiCd was was funded by the US government for the research. Toyota's hybrid was funded by the Japanese government. Toyota is simply making the best of their R&D. Why go lithium when their technology is still working well. They are probably waiting for prices to fall before entering.
    21 Dec 2013, 08:11 PM Reply Like
  • Energysystems
    , contributor
    Comments (2127) | Send Message
     
    Toyota motor itself made a large investment in NiCd, which is why they continued to push that old technology. They invested in battery factories in the late 2000's that weren't lithium-ion. Hell, before the announcement in May 2013 that TM was planning to increase it's lithium-ion battery production by 6x, it's output was under 35K lithium-ion batteries a year.

     

    This isn't about public funding from the US or Japanese gov't.

     

    BTW, In February 2010, the U.S. government gave more than $150 million to help build a lithium ion battery factory owned by a unit of Korea's LG Group, LG Chem Ltd
    22 Dec 2013, 08:12 AM Reply Like
  • John Bingham
    , contributor
    Comments (1304) | Send Message
     
    Energysystems,

     

    I think you'll find that the battery tech TM invested in was NiMH, and not NiCd.

     

    NiCd was a much older chemistry that rapidly disappeared when better chemistries came along. Its biggest drawbacks were "memory effect" and poor energy density. But for a few years it was the only rechargeable cell you could get in the popular household sizes.

     

    NiMH is the forgotten man of EV batteries thanks to a concerted effort by Chevron (trading as Cobasys) and a sell-out by GM. The original batteries were developed by Stanford Ovshinsky and marketed by Panasonic as the EV-95 and EV-28 (95 Ah cells for pure EVs and 28 Ah cells for hybrids) back in the 1990s and early 2000s.

     

    The arm of Panasonic responsible for marketing the batteries was PEVE (Panasonic EV Energy), now Primearth EVE. I believe that Toyota is now the majority stock holder in PEVE and the company has switched to Lithium battery production for TM's hybrids.
    22 Dec 2013, 10:49 AM Reply Like
  • manfredthree
    , contributor
    Comments (3158) | Send Message
     
    To grasp Toyota's culture, vision and strategy, begin with a mindset that is neither Japan- nor US- centric. They are world centric in diverse markets. Whereas GM/Ford are always adapting a US solution to non US conditions, Toyota strategizes to design and build for the particular market.

     

    You must read Toyota's corporate history to see how their dynamic focus produces constant change.
    So, how does TSLA fit TM's dynamic focus ? Whereas GM and Ford will always adapt the "kill it' attitude to competition, TM said "Where would this (TSLA EV) be an advantage". So rather than a one size fits all" approach, TM will deploy EV tech as and when it is advantageous to both a marketplace and to TM. And they will soon find many markets with the sunlight to make EV's highly advantageous.
    And TM feels no stake whatever in the "win-lose" mentalities that dominate the North American EV debate.
    21 Dec 2013, 09:02 PM Reply Like
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