1. Failing companies; those that have no path to profitability are frequently the topic of speculation upon "fixing" their problems through merger with or acquisition by a company in the same industry that does a better job, i.e., makes a profit, doing essentially the same thing. Tesla (TSLA) has now become the object of glib assertions by the automotive pundit class and its armchair followers, because, it, Tesla is clearly failing.
I don't think any profitable OEM automotive company wants anything to do with Tesla. Its far too late for that.
The major problem is not Tesla's oft cited daunting short term debt. In the USA GM(GM) or Ford(F) could handle that. The problem is unfunded service, maintenance, and scrap disposal liabilities, which may be enormous.
General Motors Service Parts Operations, SPO, as a policy keeps 10 years of estimated repair parts for all of its vehicles. For some, such as the Corvette, it has and may still offer to find parts for repair of any model going back many decades in some cases. If there are now 300,000 Teslas on the road with most of them still under warranty and even if not, needing repair parts and replacement batteries ultimately then who ever owns Tesla right now may have an unfunded liability of as much as several billion dollars per annum just for servicing the units already on the road. As an example Ford spends today between 5 and 10 billion dollars a year on recalls (What about those?) and warranty service. Admittedly Ford has 10s of millions of cars on the road, but no single service part on any Ford product comes close to the cost of a replacement battery for a Tesla.
Moreover Tesla has an abysmal service system. Most of it is already farmed out to local contractors. The global OEMs are also doing this, because dealer pass through costs for body shops went through the roof a few years ago. However engine service is still done by authorized dealers, but Tesla doesn't even have a dealer network to organize routine service much less body repair. Tesla has also been stingy with ordering and stocking body panels and powertrain parts, so that stories of multi-month waits for repairs have become common, and at least two European taxi-fleets have dropped Tesla due to service waits becoming untenable. Mercedes vehicles by the way are the most common taxis on the continent, because although their initial cost is high their durability and excellent service make them the low cost vehicles for this type of sustained use.
I note here that stocking body parts for 30,000 vehicles (10% of production) as well as powertrain components is very expensive and requires not only long term relationships with suppliers but also the shouldering of tooling costs, which are enormous, but rarely mentioned by pundits. I well remember the times that GM's SPO showed me rusted stamping dies in their storage yards and asked how to remove the rust and repolish them for making a "run of service parts." This was far cheaper than the alternative of ordering new dies for short runs of service parts that had not been stocked or had simply run out.
The point here is that warranty and service costs are not trivial nor is the organization of them free.
2. Every OEM automaker has a pilot plant one of the functions of which is to tear down and analyze competitive products. It is no surprise at all to anyone familiar with the OEM automotive industry that BMW, for example, tore down a Tesla to examine it. Believe me when I tell you that everyone else did this also.
I remember visiting the Ford pilot plant in Dearborn, Michigan is the late 1980s when they were tearing down an Oldsmobile Toronado. An engineer friend of mine on the project told me that they could not figure out how GM was building such a fine car for the selling price and it it was beating the Lincoln "all too h*ll at that price. I went out and bought one, a Toronado, shortly after that.
The build and components of the Tesla are no secret among the other OEMs, but most of them have reservations about building such a car for the mass market when all costs present and future are factored in. In addition the testing of NCA batteries (the type Tesla uses exclusively) has raised questions of long term safety. GM, for example, had a laboratory accident, an explosion, while testing a lithium ion battery (not from Tesla or Panasonic) that killed two researchers.
I salute Hyundai, which along with Korean lithium ion battery manufacturers, has introduced a $20,000 long range EV. The US OEMs think that this vehicle, a true small "city car" will not sell well in an America obsessed with SUVs and pickups.
So why would anyone selling into the US market want a maker of 4-door sedans? Answer: They wouldn't. And they don't need Tesla to design and manufacture EV models of SUVs and pickups.
3. There doesn't seem to be any incentive for a profitable OEM automaker to merge with or acquire Tesla, which, I believe, should have remained a niche player at the high end. Note carefully that the trend away from mass market sedans and coupes is not recent. When Fiat "merged" with Chrysler to form FCA (FCA) it was going after the Jeep, Minivan, and Dodge brands for the US market. Once the detritus of Plymouth had been cleaned up Jeep became a star US brand again and today the Dodge Ram pickup is gaining on Ford and GM rapidly.
Does anyone think that the Tesla name on sedans is iconic enough to warrant picking up a 10 billion dollar upfront liability and probably the same again in unfunded liabilities to make a niche market sedan?
I predict that the OEMs will offer a choice of powertrains in their SUVs and pickups so as to rationally limit their potential losses in a politically driven, not market driven environment.
The Tesla killers are on the horizon. Not sedans, but SUVs and pickups as EVs. A Tesla pickup or "mass market" SUV cannot compete with a Silverado, F-100, or Ram or any of the vast number of SUV nameplates out there already with dedicated owners.
Such will have been Tesla as was DeLorean and before even that, Tucker. When comes such another? Probably never again. Do you remember Hudson, Desoto, Packard, Edsel, Plymouth, Pontiac, or Oldsmobile? I have lived through all of them but Tesla. If my health holds out. I will make it a perfect score.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.