BMW To Buy Stake In Tesla?

3 years ago by Inside EVs Staff 26

Tesla Model S & BMW i8

Tesla Model S & BMW i8

Forbes published an article last week hinting at the fact that BMW might be interested to purchase a stake in Tesla as well. The two companies have been in talks recently and visited each other to discuss future collaborations and the state of electric cars.

Earlier this year, Tesla said it would allow competitor car companies to share its patents, in the hope this would stimulate the overall market for electric cars.

Tesla could be interested in partnering with BMW to gain access to the carbon fiber production and technology, an essential lightweight material in construction of light electric cars. In exchange, BMW would benefit from Tesla’s battery technology and its future production at the Nevada plant.

*Editor’s Note: This post appears on BMWBLOG.  Check it out here.

While these are simply rumors and speculations at the time, things could change in the future, considering how much BMW and Tesla could benefit from each other, at least for now when they don’t compete head-to-head in the electric car segment.

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26 responses to "BMW To Buy Stake In Tesla?"

  1. Mark B. Spiegel says:

    Why would incredibly profitable BMW pay 10x revenue for Tesla when its own stock sells for 1.5 revenue and it has carbon fiber, electronics and chassis technology that Tesla doesn’t while Tesla has open-sourced its patents so BMW could enjoy at no cost anything at Tesla that might be meaningfully proprietary? Mercedes and Toyota bought their stakes when Tesla’s valuation was a small fraction of what it is today– they understand gross over valuation and that’s why they sold. BMW is at least as smart as they are.

    This was a “wake up now, you were dreaming” kind of story that not even our bubbly stock market believed.

    1. Mark B. Spiegel says:

      Oh yeah, I forgot to point out that I’m short the stock, and no, it’s not because I “love oil companies and hate electric cars” but simply because I think it’s grotesquely overvalued and Musk is a stock-promoting liar.

      1. Anon says:

        *Sings*

        “Short people got, no reason…” 😉

        1. ffbj says:

          Thus have I heard:

    2. Alonso Perez says:

      You are confusing patents with technology. A patent is a document that protects certain elements from being copied. It is far, far from being a complete set of engineering documents, not to mention facilities, test data, etc., required to mass produce a given item.

      Tesla is simply saying that they will not attempt to pursue those who copy elements of their patents, unless the company doing the copying is itself moving against Tesla for real or perceived patent violations.

      Tesla is not saying they will give away free blueprints, factories, and engineers. To go ahead and copy Tesla will still take people, capital, and time. A deal with BMW makes sense if Tesla has something BMW wants and BMW has something Tesla wants. Tesla has at least two things BMW could want: batteries and UI software. BMW has at least one thing Tesla could want: carbon fiber.

      Tesla and BMW are competitors and will be more so. On the other hand, BMW might conclude that an alliance with Tesla would help both beat up on Mercedes and Audi, which BMW fights on a daily basis, while Tesla is years away from having a complete portfolio of vehicles.

      I’m not saying a deal will happen but of course it is plausible, and you should account for that in your risk estimation.

      1. YanMing_sv says:

        Good analysis.

    3. Mike says:

      BMW has access to the current “released” portfolio. They may want access to future patents, and purchase of Tesla electric motors, and batteries. They may want to share R&D expense with the most advanced company in the EV field. And then there’s the gigafactory output.

  2. Lindsay Patten says:

    I would speculate that BMW would be most interested in the super-charger network and Tesla in carbon fiber based weight reduction.

    As Daimler said after selling its stake, owning Tesla stock isn’t necessarily required in order to cooperate.

    I would also guess that it would be more productive for shorts to post on financial sites than EV enthusiast sites.

    1. Bonaire says:

      The story is from Forbes, which is kind of money-specific. It smooths the financial “anxiety” when TSLA shareholders read both Daimler and Toyota sold all or some of their shares by speculating BMW “may” be buying some stake. The term “may” applies to many financial stories and implies “hey we know something you don’t – trust us”. It simply is a word that does not belong in media print. It belongs in advertising and marketing.

      Chevy may sell 50,000 Volts next year with the new Gen-II Volt design.
      Nissan may sell 20,000 e-NV200 mini-vans in the USA per year once they bring it on-shore.
      The new Nissan Leaf may sell 100,000 per year in the USA if they can make it a 150 mile BEV with a base cost of $20K.
      Tesla may sell 500,000 cars per year because CNBC and even the company says that the factory “could” produce that many if the stars align and macro-economic conditions are good enough.

      Since there are really no editors in media anymore – anything goes. Everyone is on their own to believe what they want.

      1. Mike says:

        Exactly.

        Exxon for example, may consider Firing Tillerson, move to CA, and hire Musk to Save it from a PE of 12!!!, because it’s absolutely got NO Plan B, no response to a carbon tax, and Nothing invested in Wind and Solar.

        GE, mean while, has a PE of 19.7, reflecting it’s DIVERSIFIED position in the Energy Market.

        Or, Exxon could be managed into Bankruptcy.

  3. ffbj says:

    Maybe some deal on the battery factory. Tesla is looking for cash and Bmw has some. The article said invest, which does not necessarily mean stock per say.
    No sure, though there is a lot of activity surrounding Tesla these does in the financial spheres.
    I think shorting Tesla is a bad idea, certainly on the flimsy basis you use.
    Musk is a liar? Anyway I think the stock is rather pricey, shorting it has been death.

  4. jmac says:

    Shorting stock is like betting the No Pass Line on a hot craps table in Vegas. You can do it, but everybody at the table thinks your an ass.

    1. pjwood says:

      “Ten minutes after the Challenger explosion, he’s shorting NASA”

      My two cents are less long this (Q3 report) week. Tesla’s cost on convertables is ~2%. So, I don’t think it’s BMW’s cash that appeals. The two could form a barrier, with the SC network, and lever a lead they could possibly keep for years.

  5. The Forbes article was written by Neil Winton who is one of the most fierce anti-electric car writers out there. He doesn’t believe there is any future in plug in cars and he certainly doesn’t understand the electric vehicle landscape. This was a pure speculation piece and I believe Bonaire was correct about speculation after Daimler sold all of their Tesla stock and then Toyota sold most of theirs. I doubt there is anything to this.

    1. I don’t know if there’s anything to this or not, but the fact is that anybody who is serious about EV’s should strongly consider the Tesla Supercharger network.

      It is about 3 times faster than the current high speed “competition”, intelligently dispersed, and built and installed by the same company that is also 100% in electric cars.

  6. ffbj says:

    What he was saying, Bonaire, in essence was that Forbes fabricated the story to help Tesla stock. Which to my way of thinking was such complete BS that it required little or no rebuttal at all.
    Daimler and Toyota sales of stock had little to no effect on Tesla’s stock price. It is simply that people do not understand how stocks, and by extension markets work.
    I can’t tell you how many times people come to me and explain why a stock should have gone down or up and are so exasperated when it does not do what they expect.
    Just put you money in index funds and Foget about it.

    1. Mike says:

      Why would an author anti-EV, attempt to Save Tesla’s butt?

    2. Bonaire says:

      The article can be summed up as an expansion on the quotes paragraph….

      “In our view the ties between the two companies have loosened over time. From Tesla’s perspective it may be more interesting to work with BMW going forward, given BMW’s carbon fiber technology, than with Mercedes on the B-class,” Ellinghorst said.

      There, the speculation sounds like Tesla should consider investing with BmW for carbon fibre tech for its own benefit. BMW has trademarked the names i1 through i9 and i5 should be a very cool addition. Now, i would never buy their overpriced products here in the USA but for those who do go that route, keep an eye out for more from BMW. We know people buy both BMW and Tesla for the prestige and quality. If not for some level of elitism. Whatever floats your boat.

  7. vdiv says:

    They could benefit from each other without buying each other. If BMW is to buy into Tesla they can do so on the open market (expensive) or Tesla can issue stock diluting the value. Either way it is not the end of the world for either company.

    Daimler and Coyota sold their share to make money, but that means someone else bought the shares. Considering that TSLA’s price hasn’t moved much Tesla’s value proposition at least according to the market hasn’t changed. Also TSLA being a “cult stock” is still the case, many buy it not because they want to make money in the short term, but because they believe in the Tesla’s mission. The market types still have a hard time grappling with this.

    1. Mike says:

      “Cult Stock”, because most of the investors have a Long Term View?

      1. vdiv says:

        or because the investors care about things other than money and profit. Gasp!

  8. Jouni Valkonen says:

    BMW still has i5 in their sleeve, so taking share of gigafactory and supercharging network might be very good idea. With Tesla’s and Panasonic’s battery supply capacity, all electric i5 could make sense in 2016 or 2017.

    For Tesla collaboration of course is a nobrainer.

    1. Dr. Kenneth Noisewater says:

      Believe it when I see it.

      I wouldn’t put it past BMW to be so stupid as to think an ad-hoc and splintered CCS charger population would be competitive with Tesla’s Supercharging network. Even if CCS installed out at 100kW or more, I doubt BMW will build a vehicle that can charge that quickly before Tesla craps out their lunch.

      I think CCS chargers will be 50kW or less in almost all installations, probably doubling up with ChaDeMo, in a balkanized multi-service network, with various memberships, charging costs, etc., most of which being exorbitantly expensive. Meanwhile, Tesla will keep building out Superchargers as quickly as they can get permits, inspections, etc., all >100kW, all free to use. Legacy automakers just don’t get vertical integration, Tesla does.

  9. JR says:

    Have no idea about the stock or economic, or how they may work together, but if we could stay with the dream for a moment, The marriage between BMW and Tesla Technology would create a dream product, the BMW handling, it`s driver focused quality interior and lightweight body, combined with TESLA User interface, motor and battery-pack and charging infrastructure and a fresh approach to how future car can be utilized sounds very appealing!

  10. ItsNotAboutTheMoney says:

    This is the kind of journalistic “logic” I’d expect of a British soccer journalist.

    Take a few facts, and then make up, oh sorry, speculate on something to connect them.

  11. Bloggin says:

    “Ford’s CEO, Mark Fields, told Wall Street financial analysts Friday that the company had the product development staff and engineering ability to build an electric car like a Tesla.

    “While he didn’t say the company would do so, he did say that such a car would be “very consistent with our product strategy”.

    On top of that, behind-the-scenes efforts by Ford engineers to boost the power delivered by future generations of quick-charging stations may indicate that plans are more advanced than Ford is letting on.””

    It won’t be BMW but Ford that becomes one with Tesla.

    Not only is Ford planning on an ‘affordable C(Focus) and D(Taurus) segment EV’, and who have acknowledged that they are planning to build a car like the Tesla Model S. It’s expected these next gen EVs will share next gen Tesla MY2019/20 platforms and battery packs.

    And there is more…Ford is also pushing to increase the output of the Combo Chargers to 150kW, matching the Supercharger planned upgrade.

    Which indicates that Ford/Lincoln EV models with 300+ battery packs will be able to charge at Combo Chargers in the city and Tesla Superschargers for interstate travel and globally.

    It’s also expected that the new Model E platform will be spread with the new next gen MY2018 Fusion EV.

    It will be interesting to see how this all works out in the end.