Daimler could be the perfect old-fashioned company for Tesla | Opinion



Electric carmaker Tesla is worth a whopping $ 540 billion despite a meager 0.8% global market share. It’s an opportunity for boss Elon Musk to use the company’s stock to merge with an old-fashioned company, much like AOL did 20 years ago with media titan Time Warner, in the midst of the internet bubble. Mercedes-Benz manufacturer Daimler is the best fit.

According to JP Morgan, analysts’ earnings forecasts for Tesla are down nearly a fifth in 2021 from their peak in August 2018. The company’s stock has increased nearly sevenfold this year alone, boosted recently by the upcoming addition to the S&P 500 -index.
Musk’s company is worth more than the world’s four most valuable automakers combined, led by Toyota Motor, while producing only about 500,000 vehicles per year, compared to more than 10 million in 2019 by Toyota and Volkswagen.

At a Tuesday conference, Musk himself appeared to be open to the idea of ​​a deal with another automaker. Tesla’s current customer base may be the best fit for a luxury brand. And one with a strategy for low-voltage electric vehicles could allow Musk to add more value.

Its American rivals Ford Motor and General Motors barely passed the first criterion. In the meantime, Volkswagen in Europe is focusing everything on electricity. BMW may be Tesla’s most obvious counterpart when it comes to fossil fuels, but its family ownership likely rules out a takeover.

History shows how difficult it is to buy a large Japanese company, while a supercar maker like Lamborghini, which VW could soon get rid of, would be too niche. One name remains: Daimler, the world’s best-selling luxury car manufacturer, whose shares have lagged the benchmark Stoxx Europe 600 Auto for the past five years.

Establishing mainly combustion engines would dilute Tesla’s reputation as a manufacturer of electric vehicles. And Musk would face the constraints of the German governance structure. But by adding Daimler, Tesla’s global car production would be about four times that. And the German group’s deep foundations in Europe and China, the two largest battery vehicle markets, would bolster Musk’s electric offensive. Daimler even had a small stake in Tesla for a while.

There is also an unexpected turn. Under U.S. Stock Exchange regulations, Tesla would only need shareholder approval if it increased its outstanding shares by 20%. At the stock’s current value, Musk could theoretically hit a target worth $ 100 billion or more. Daimler is worth € 61 billion. For a 40% luxury premium, he was able to buy the Benz Empire without even asking for permission.

The authors are columnists for Reuters Breakingviews. Opinions are yours. The translation of Carlos Gomez down, it is the responsibility of Five days


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