Connect with us
tesla toyota tesla toyota

Investor's Corner

Is it time for Tesla to partner up with another automaker? I think so.

Tesla’s Elon Musk and Toyota’s Akio Toyoda shaking hands in Palo Alto, CA cir. 2010. [Credit: Associated Press]

Published

on

This is a free excerpt of our weekly member-only Newsletter. Each week, we give you our take on the biggest stories of the week, our favorite photos & videos and much more. Sign up for Teslarati’s newsletters to receive a preview of our membership program.

Tesla’s stock has continued to slide over the last month, and not for one particular reason. The company has, by far, the best electric vehicles in the world, with the Model S, Model X, and Model 3 leading their segments by miles. Despite this, investors believe that the company is under immense pressure.

Elon Musk hasn’t really gotten the message. He’s plowing ahead with the multi-billion dollar Gigafactory in China, aggressively expanding the Model 3 to new countries, and doubling down on commitments to the super-delayed (but incredible) solar roof. Most other executives would throttle back expansion, allowing the company to widen profits and make investors happy. Musk isn’t like most executives (if you didn’t know that already?). He ignores the idea of ‘corporate strategy,’ and is far more interested in pushing the limit on what is possible. But, with over 40,000 employees and annualized production nearing 400,000 units, the company is entering a period in time in which long-term strategic planning would add tremendous value.

Time to deploy some strategery.

Let’s start with the Model Y. Or I should say, let’s begin with Tesla’s most important vehicle. The SUV market is exploding, and it’s not showing any signs of slowing down. The global SUV market grew from 9.8M units in 2013 to an estimated 23.8M units in 2020. That’s nearly 14% annualized growth over the last seven years. While Tesla has the Model X, it’s priced well above the average consumer’s budget and targets the highest-end of the market.

Advertisement

On the other hand, the Model Y is poised to enter the hottest market in the world: mid-sized crossovers. With world-class technology and an affordable price, it is certainly going to be Tesla’s most popular vehicle. To meet demand, Tesla is going to need to scale production faster and more efficiently than ever before. The only problem? Tesla is already busting out of their massive Fremont facility, and their new facility in China will likely only feed the Asian market (remember the last Chinese-built car you saw on US or European roads? Me neither).

So what does the company do? Build a car in the Gigafactory? Expand Fremont further? Both options aren’t cheap or super fast. Well, let’s jump back to that point I made about long-term corporate strategy. Tesla is at a point where it can’t afford (without raising more cash) to start construction on another US or European factory, the company is already building a Chinese factory to meet existing demand is near cash-strapped. So what should they do? It’s time to partner up with another automaker, specifically Fiat Chrysler.

An Unlikely Marriage.

Fiat Chrysler (FCA) is one of the only automakers holding out on large investments into EV technology, GM is betting big and VW is betting even bigger. With Tesla’s cutting edge motor and battery technology, FCA could leap ahead of their rivals and electrify their fleet. First, the company could start by underpinning a vehicle -platform with Tesla’s powertrain, bringing more scale to Tesla battery operations and forgoing the multi-billion dollar expansion into the technology. Automakers have done these sort of partnerships for years. FCA already shares some diesel engines with GM, Daimler has borrowed VW engines, and most recently Toyota is borrowing a BMW engine for the iconic Supra.

(Photos: Tesla, Ram; Graphic: Christian Prenzler)

So what’s in it for Tesla? Let’s start with the main stage: cash. Musk isn’t interested in slowing down his global expansion, and he shouldn’t be. The company has tremendous demand and is on the cusp of launching several new products: Model Y, Semi, Roadster, and the Solar Roof. A large infusion of cash would allow the company to continue pushing the pedal to the metal. FCA has over $12B in cash, so the company could invest several billion dollars into Tesla. Outside of cash, FCA can lend some much-needed expertise in manufacturing and even some production capacity at one of the company’s two-dozen factories in North America.

I get it, teaming up with FCA doesn’t sound S3XY. But by teaming up with one of the largest automakers, Tesla gains a leg up in manufacturing and an infusion of cash that would allow Musk to continue investing heavily in expansion. What did you think of Tesla partnering with FCA?

Don’t miss this weekly column, our weekly commentary on the biggest stories, exclusive photos and much more. Become a member today for just $3/month.

Advertisement

Disclaimer: This column does not necessarily reflect the opinion of Teslarati and its owners. Christian Prenzler does not have a position in Tesla Inc. or any of its competitors and does not have plans to do so in the next 30 days.

Christian Prenzler is currently the VP of Business Development at Teslarati, leading strategic partnerships, content development, email newsletters, and subscription programs. Additionally, Christian thoroughly enjoys investigating pivotal moments in the emerging mobility sector and sharing these stories with Teslarati's readers. He has been closely following and writing on Tesla and disruptive technology for over seven years. You can contact Christian here: christian@teslarati.com

Elon Musk

Elon Musk affirms Tesla commitment and grueling work schedule: “Daddy is very much home”

The remarks came as Tesla shares crossed the $400 mark on the stock market.

Published

on

Tesla CEO Elon Musk reiterated his commitment to the electric vehicle maker and its future projects this week, responding to speculation following his $1 billion purchase of TSLA stock. 

The remarks came as Tesla shares crossed the $400 mark on the stock market, extending a rally fueled in part by Musk’s TSLA purchase.

Elon Musk’s nonstop work schedule

Amidst the reaction of TSLA stock to Musk’s $1 billion investment, Tesla owners such as @greggertruck noted that “Daddy’s home.” Musk replied, stating that “Daddy is very much home.” He then shared details of a packed weekend of work, which was definitely grueling but completely within character for a “wartime CEO.”

Musk did note, however, that he had lunch with his kids during the weekend despite his extremely busy schedule.

“Daddy is very much home. Am burning the midnight oil with Optimus engineering on Friday night, then redeye overnight to Austin arriving 5am, wake up to have lunch with my kids and then spend all Saturday afternoon in deep technical reviews for the Tesla AI5 chip design. 

Advertisement

“Fly to Colossus II on Monday to walk the whole datacenter floor, review transformers and power production (excellent progress), depart midnight. Then up to 12 hours of back-to-back meetings across all Tesla departments, but with a particular focus on AI/Autopilot, Optimus production plans, and vehicle production/delivery,” Musk wrote in his post

Wartime CEO

Wedbush analyst Dan Ives described Musk as operating in “wartime CEO mode,” highlighting autonomous driving and AI as a trillion-dollar market opportunity for Tesla. Musk reiterated this point late last month as well, when he outlined the several projects he is juggling among his numerous companies. At the time, Musk stated that he was busy with Starship 10, Grok 5, and Tesla V14. This was despite his notable presence on X. 

With Tesla Master Plan Part IV being partly released, the company is entering what could very well be its most ambitious stage to date. To usher in an era of sustainable abundance, Tesla would definitely require a “wartime CEO,” someone who could remain locked in and determined to push through any obstacles to ensure that the company achieves its goals.

Continue Reading

Elon Musk

Tesla analyst says Musk stock buy should send this signal to investors

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish.”

Published

on

(Credit: Tesla)

Tesla CEO Elon Musk purchased roughly $1 billion in Tesla shares on Friday, and analysts are now breaking down the move as the stock is headed upward.

One of them is William Blair analyst Jed Dorsheimer, who said in a new note to investors on Monday that Musk’s move should send a signal of confidence to stock buyers, especially considering the company’s numerous catalysts that currently exist.

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Dorsheimer said in the note:

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish. This purchase is Musk’s first buy since 2020. To us, this sends a strong signal of confidence in the most important part of Tesla’s future business, robotaxi.”

Musk putting an additional $1 billion back into the company in the form of more stock ownership is obviously a huge vote of confidence.

He knows more than anyone about the progress Tesla has made and is making on the Robotaxi platform, as well as the company’s ongoing efforts to solve vehicle autonomy. If he’s buying stock, it is more than likely a good sign.

Tesla has continued to expand its Robotaxi platform in a number of ways. The project has gotten bigger in terms of service area, vehicle fleet, and testing population. Tesla has also recently received a permit to test in Nevada, unlocking the potential to expand into a brand-new state for the company.

In the note, Dorsheimer also touched on Musk’s recent pay package, revealing that William Blair recently met with Tesla’s Board of Directors, who gave the firm some more color on the situation:

“We recently participated in a meeting with Tesla’s board of directors to discuss the details of Musk’s performance package. The board is confident of its position in the Delaware case and anticipates a verdict by end of year. It does not expect a similar situation to occur under new Texas jurisdiction. Musk has the board’s full support, and we expect he’ll get more than enough shareholder support for this to pass with flying colors.”

Tesla stock is up over 6 percent so far today, trading at $421.50 at the time of publication.

Continue Reading

Elon Musk

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Prior to this latest move, Musk’s most recent purchase was for about 200,000 shares worth $10 million in 2020.

Published

on

Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 , via Wikimedia Commons


Tesla (NASDAQ:TSLA) shares rose on Monday after CEO Elon Musk disclosed a rare insider purchase of company stock worth about $1 billion. 

A filing with the U.S. Securities and Exchange Commission (SEC) revealed that Musk acquired 2.57 million shares last Friday at various prices. The move represents Musk’s largest TSLA purchase ever by value, as per Verity data.

Elon Musk’s TSLA purchase

The disclosure sent Tesla shares up more than 8% in premarket trading Monday, as investors read the purchase as a notable vote of confidence, as stated in a CNBC report. Tesla stock had closed slightly lower Friday but remains more than 25% higher over the past three months. It should be noted that prior to this latest move, Musk’s most recent purchase was for about 200,000 shares worth $10 million in 2020.

Market watchers say the purchase could help shore up investor sentiment amid a volatile year for TSLA stock. Shares have faced pressure from a variety of factors, from year-over-year sales challenges due to the new Model Y changeover, political controversies tied to Musk, and reduced U.S. incentives for EVs under the Trump administration. Nevertheless, analysts such as Wedbush’s Dan Ives stated that Musk’s purchase was a “huge sign of confidence for Tesla bulls and shows Musk is doubling down on his Tesla A.I. bet.”

Tesla and Elon Musk

Musk already owns about 13% of Tesla, and his latest purchase comes as the company prepares for a key shareholder vote in November. Investors will decide whether to approve a compensation package for Musk that could ultimately be worth as much as $975 billion if ambitious market value milestones are achieved. The package has a long-term target of pushing Tesla’s market capitalization to $8.5 trillion, compared with about $1.3 trillion at Friday’s close.

Advertisement

Wall Street’s current consensus price target still implies a roughly 20% decline from current levels, though some Tesla bulls remain optimistic that the company could shift its focus toward autonomy, AI, and robotics. Musk has also asked shareholders to approve an investment into his latest venture, xAI.

Continue Reading

Trending