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GM to Buy Tesla?

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On: Mon, Dec 30, 2013 at 12:31PM | By: Karen Cook


GM to Buy Tesla?

With all the recent hoopla over Tesla’s Model S (if you haven’t heard, Google it) things could be looking up for the electric car company. The share prices dropped 20% since September when all the trouble began and investors weren’t too optimistic. The National Highway Safety Administration didn’t budge on its 5-star rating for the Model S and the faith of the government helped calm the waters. Now General Motors is rumored to be interested in buying the luxury electric vehicle company.

Electric cars have not been overly successful in the mainstream. The Ford Focus EVs sell less than 200 per month. GM’s own Chevy Volt has seen a 3% drop in sales from last year, coming in at less than 19,000 so far this year. The Volt has also had the same sort of engine fire problems as the Model S. Both companies advertise extensively to create interest in these cars and offer huge incentives and discounts to potential buyers, but to no avail. Contrast this with Tesla’s 2013 record production, rising gross margin, expanded stores, service centers, and charging stations. It should also be noted that Tesla sold 5500 Model S vehicles in its third quarter and is unable to keep its supply ahead of the demand. All this with absolutely no advertising!

This merger is still just a rumor, although GM did admit to having a special task force to monitor Tesla. It would be difficult not to like what they see. The biggest questions are whether Tesla CEO Elon Musk wants to sell, and, if so, can GM afford the price. Rumor also has it that Apple may be interested, but it's likely Tesla would benefit more from GM’s established market. So far Mr. Musk has not weighed in on the matter. He has stated that he has other interests he’d like to pursue and that he has more to do with Tesla, so it seems that all interested parties will just have to wait and see.




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