Daimler Exits Tesla Investment, Banks $780 Million

3 years ago by Jay Cole 29

Daimler CEO Zetsche at the 2013 Frankfurt Motor Show

Daimler CEO Zetsche at the 2013 Frankfurt Motor Show

Lots of investors have made money in Tesla Motors.  Few more than Daimler, as the company announced it had exited its position today.

Check Out Mercedez-Benz Mantra From Auto China This Year - Guess They Are Going With Nothing For Now

Check Out Mercedez-Benz Mantra From Auto China This Year – Guess They Are Going With Nothing For Now

In total, Daimler nets a cool “cash inflow” of $780 million (about $1.26 billion net before deductions) for the remaining balance of its stake taken pre-IPO in 2009.

At one time the German company owned as much as 9.1% of Tesla, but (unwisely) offloaded about 40% of that to Aabar Investments not too long after.  Earlier this year, Daimler still owned a reported 4.3% of the company.

This transaction does not affect the working relationship between the two companies, as Tesla will continue to manufacture the electric drivetrain found in the Mercedes B-Class Electric Drive.

“We are extremely satisfied with the development of our investment in Tesla, but it is not necessary for our partnership and cooperation. For this reason, we have decided to divest of our shares. This will also allow Tesla to broaden its investor base.” – Bodo Uebber, a member of the Daimler’s board of management. (via WSJ)

“Our partnership with Tesla is very successful and will be continued,” Daimler Chief Executive Officer Dieter Zetsche added.  The CEO also noted earlier this year that the company’s position in Tesla was “…one of the best investments we have ever made.”

Naturally the question to analysts and stock owners alike after the announcement was “What does Daimler know that we don’t?”, especially as the company had announced plans at the start of the year to retain their stake in Tesla for “at least three years”,  but we will leave that up to the Wall Street chaps to decide.

Just to make sure no one misunderstood Daimler’s plug-in intentions, Mr. Zetsche added:

”We pursue our strategy for emission-free driving consequently. Electric vehicles are one component of this roadmap. In Tesla we do have a bold partner.”

The stock traded down about 3 percent on the news after hours, but had rebounded slightly by Tuesday night (real-time quote can be found here).  Daimler says it plans to put that money in a sock use the proceeds to strengthen Daimler’s operational business.

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29 responses to "Daimler Exits Tesla Investment, Banks $780 Million"

  1. David Murray says:

    They should take some of that money to develop their own EV.

    1. Big Solar says:

      For sure, and make them so they are worth buying rather than leasing.

    2. They certainly are David. Look for it sometime around 2017.

      1. Just about the time a Mercedes hydrogen car joins Toyota, Honda, Hyundai, and ???? for model year 2018.

    3. SIvad says:

      I don’t know how accurate this source is but it seems that is what they are planning.

      “Sources inside the company confirmed Mercedes will work on an E-Class or S-Class electric version, which will require a complete redesign of the existing models because of the size of the battery. The sale from the Tesla stake could be used for the required capital investments. Because of the complicated development, the car won’t be on the market until 2021.”

      http://www.theepochtimes.com/n3/column/1035942-germanys-car-elite-to-go-after-tesla/

  2. Alonso Perez says:

    I’m guessing they wanted the money.

    They may have decided that at the current valuation they would not increase their stake to one where they could get a seat on the board. They probably also decided that the stock price was not going to rise significantly in the short term.

    So at that point it’s an asset just sitting there, generating no revenue. They certainly don’t need it in order to buy drivetrains from Tesla. From an accounting point of view booking such a gain must have been tempting.

    Or maybe they know something nobody else does. But I doubt that. They already showed poor judgement exiting their other half of the investment.

    It could also mean they now view Tesla more as a competitor, and less a partner. If so, the B class might be the end of the line. They may now believe that they’ve been feeding the lion cub that will grow up to eat their lunch.

    1. Bill Howland says:

      Yes, if memory serves this makes up about HALF the money they lost on “Diamler-Chrysler”.

      Of course, now that Fiat was basically given the bankrupt company, they changed the name to “FCA”, currently calling it, for American audiences no doubt, Fiat-Chrysler-Automobiles, but probably soon to be Fiat-Cute-Automobiles.

      1. Goaterguy says:

        Which is still better than Chrysler Dead/Bankrupt/Non-existent Automobiles

        1. James says:

          Fiat Grand Cherokee just doesn’t have a ring to it. 🙂

        2. Priusmaniac says:

          Not realy sure of that since it doesn’t make any single difference for what electric vehicles are concerned.

          1. Bill Howland says:

            Well, it does in the sense that Diamler has the cash now, and they’ve also closed another Hedge….

            Sergio goes out of his way to moan about how batteries are so expensive that he hated making a 500e and also the upcoming phev.

            So yes, agreed other auto manufacturers will get on board.

            Dieter Z may have had it dawn on him that Tesla’s sales are currently .05% of the worldwide auto market, and any economic downturn would cost Diamler in share cost. (The current low crude oil price is meant to punish Putin, but instead is hurting Germany more – it backfired). Blowing it with Chrysler, he at least recooped his money here, although constantly repeating his partnership with Tesla so as not to appear the bad guy.

            So is Tesla ‘fairly priced’? Not for me to say…. But little voices may have been whispering in Dieter’s ear just the same.

            1. Brian says:

              Hi Bill. This is a little off topic, but since you brought it up I’m curious. I understand the idea that lower gas prices are hurting Putin – that one is obvious. But could you elaborate on how it is hurting Germany?

              1. Bill Howland says:

                Surely.. Everything America’s vassal states are doing are shooting themselves in the foot while doing what Washington wants.

                Our assistant secretary of state, Victora Nuland, was overheard (by the russians who released the recording) telling the head of Slovakia that Washington has ‘invested’ $5 billion over the past decade, and now (with the Coup d’etat implemented feb 2014) that “our man” is in charge of the Ukraine.

                Europe depends on Russian Gazprom’s methane to keep them warm, or run gas fired power plants to keep their electric heaters running. Except Gazprom cut off Ukraine’s gas for non-payment. Europe was encouraged to send their stockpiled methane back to the Ukraine. But most of those guys are just like the Ukrainian Nazi’s from WWII. Since then, the Ukraine has gotten $15 Billion in loans from the IMF, and, finally, has decided to pay Gazprom $385/cu mtr for any new gas, and to pay their $2 billion in arrears.

                So what does Germany, and the rest of Europe get by being America’s Sycophant? Well, lets get ready to bomb Syria to ‘teach Balshir Assad a lesson’ for using chemical weapens which he didn’t do.

                Putin (the great chess master), goes to Syria with the head of the Russian Orthodox Church, and says, even if you haven’t used them yourself, “get rid of all the chemical weapons you find (which in actuality Americans had paid for – a similiar set up to when Donald Rumsfeld (I think he was head of Serle at the time) sold Saddam Hussein gas for the kurds), then since they are useless to you anyway, you’ll take away any excuse for the Americans to bomb you.

                So he did just that, and thereby pulled the rug out from American and European warmongers.

                So then this illegitimate gov’t in Kiev starts banning Russian speech, and knocking down all the ww2 russian war heros statues all over eastern Ukraine. The eastern provinces which are 90% Russian speaking decide that if they want to live they better distance themselves from that imposed gov’t. So Crimea votes, one week to become independent of Ukraine,, and then the next week, asks the Russian Duma for permission to be annexed by Russia. Observers from 11 neutral countries observe the vote to make sure everything is above board like it was.

                SO now Putin gets the Crimea back, and their warm water port, Sovestopol, which they had been paying rent to Ukraine for, is now part of russia so they don’t have to pay rent anymore! Incidentally Crimea had been part of Russia for longer than California has been part of the US.
                (Catherinethe Great got it in the 17th century).

                So, Washington is fuming at all of this since everything they’ve tried and all the $Billions they’ve spent are backfiring. Our president’s approval rating is in the 30% range, mea
                while Putin’s is in the 90% range.
                Companies like Siemens do about 40% of their overall business with Russia and so economic sanctions are hurting Germans, especially since Russia is now implementing Counter Sanctions and prohibiting European Food-stuffs. This hurts Europena farmers also. Look lately at Europe’s ‘performance’ over the past several months. All these sanctions are just putting Europe in a worse Depression than they would have already in, and now Putin is making deals right and left with China.

                So when will Europe do what is in the best interest for Europeans and stand up to the USA? I don’t think it will be too much longer. Its certainly not worth a Nuclear Exchange, since European Capitals would be the first hit (Russias cruise missiles are within range of all of them).

    2. ItsNotAboutTheMoney says:

      Daimler had previously hedged their position so they really couldn’t make much money whichever way the price moved.

  3. Ocean Railroader says:

    I would say they did a good thing in that the price of Tesla Stock is at the highest I think it will get for the time being unless some type of super 600 mile range EV that is $15,000 dollars comes out.

  4. Just_Chris says:

    This is quite an interesting turn of events. MB makes money out of developing and selling cars not trading in the stock exchange so I am sure that the investment in Tesla was always strategic. I am not saying that the earnings aren’t welcome but IMO making money was probably not the main driver for investment.

    They invested in Tesla to develop new technologies and build a partnership. I wonder if this is going to go like Land Rover / BMW where BMW sold land rover as soon as it had a decent competitor to the land rover product range (the X5 and X3). I don’t think MB are there yet with the smart car and the B-class (hardly Model S and X competitors) but I wonder if there was a clause in the original contract limiting what MB could develop and sell whilst they had shares in Tesla. MB certainly have the capability to design and produce a Model S competitor, hopefully this will lead to an AMG SLS electric drive priced around the $100k mark, maybe not the AMG version but certainly a standard SLS electric drive for that price would be interesting.

  5. Ryan says:

    Funny that Telsa’s stock takes the brunt of this… perhaps Daimler is just in need of cash? The major automanufacturers have given us more of a reason to be concerned about their books than Tesla.

  6. Any chance Daimler would invest in Tesla’s Gigafactory for batteries?

  7. Bloggin says:

    Dumping Tesla stock right before the launch of the much anticipated X and E, and after breaking ground on the first Gigafactory and Chinese build out of the Supercharger stations makes no sense.

    This would be like dumping Apple stock right before the planned launch of the first iPhone and iPad.

    There is more to the story, and I expect a similar announcement from Toyota divesting their investment in Tesla also. (Toyota has already cancelled the RAV4 EV with nothing new EV related new planned. Elon has already publicly voiced his negative opinion of Toyota’s decision which solidified the distance between the two companies. If you remember, Toyota used the same ‘open to future projects’ comment when Ford dumped Toyota to build Ford’s own RWD hybrid drivetrain for trucks last year.)

    Then there will be a splitting of Tesla Motors from Tesla Gigagactory and Supercharger businesses.

    Followed by the sale of Tesla Motors…….. to Ford(by 2016 at the latest), with Tesla battery packs and drivetrains making their way into the next gen Ford and Lincoln EVs.

    I know, that’s a lot to process….but just wait and watch what happens next.

    1. Bloggin says:

      “General Motors has issued a statement supporting bill that would ban Tesla from selling its cars directly to consumers in Michigan.”

      It looks like General Motors won’t be partnering with Tesla on battery packs or drivetrains anytime soon.

    2. Mint says:

      The first iPhone and iPad sold a small fraction of later generation sales. From that point of view, Tesla’s Model S is very much like them.

      But the expectation of growth built into TSLA’s price is far more than it ever was for AAPL. It’s trading at a price that would need at least $1.5B in annual profit to match the PE ratios AAPL ever had. That’s 300k sales/yr with $5k net profit each.

      That’s why your analogy falls flat. It’s entirely reasonable for anyone to sell TSLA right now, even if they believe their 3 and X will succeed.

  8. ffbj says:

    There could be many reasons to sell now. Two not mentioned that after 5 years you pay no capital gains tax on the investment, also holding Tesla thinking it’s patents would be valuable has gone by the boards as Tesla has opened their patent portfolio.

    1. pjwood says:

      “after 5 years you pay no capital gains tax on the investment”

      Can you, um, link to where IRS says this, or remark about perhaps German tax rules?

      1. ffbj says:

        Not sure about the specific tax status of that deal. I thought it was 0%, but that was a special deal when Buffet sold his stake in The Washington Post.
        http://www.foxbusiness.com/personal-finance/2011/03/04/look-cap-gains-rates/
        According to the about article it is around half, after 5 years, not sure about German tax law.

    2. Josh says:

      ” $780 million (about $1.26 billion net before deductions)”

      They definitely paid taxes on the profit.

  9. DaveMart says:

    The simple answer to:
    ‘What is going on?’
    Is that Daimler have said that they are confident that they will have more energy dense batteries available in a non-18650 format:

    ‘Oddly, the car will need to increase its electric range to 50km within two years so that it can meet China’s minimum range rules for plug-in hybrids.

    Dr Uwe Keller, Mercedes-Benz’s technical project manager for powertrain hybrids explained that the Magna Steyr-built battery pack had room for developments, which were coming thick and fast.

    “We don’t just want an electric car, but the best real hybrid. Its role is to deliver a car that is everything, not just an electric car.

    “We will have to fit a larger battery for the Chinese market in two years, approximately, because of their laws so we will look at larger capacity in the same power packet and space,” he explained.’

    http://www.motoring.com.au/news/prestige-and-luxury/mercedes-benz/s500/benz-s500-hybrid-plug-in-to-be-wireless-44657

    Tesla’s unique area of expertise is in sticking together 18650 batteries in to a pack for BEVs.

    Reasonably high energy density batteries in other formats avoid the need for that, and in any case the batteries in a PHEV which Daimler is perhaps more interested in are very different to those for a BEV.

  10. pjwood says:

    I think it is safe to say the lux manufacturers, from Bentley and Aston, to Daimler, know electric drive has it on the merits.

    -Do we have another LG Chem customer in the making?
    -In house large-cell format?

    RE: stock
    -Daimler “exited”, therefore no more technical sell pressure on TSLA

    If anything, that tells me downside pressure was recently inflated because of stock market execution, to get out of 4.3% of Tesla’s shares. I seriously believe Q4 unit sales will be challenged by order rotation into Q1 ’15 deliveries of AWD. Apart from that, I was listening to Bloomberg radio on the way in, noting that Brent might fall into the $70-80 range. It made me wonder what demand sensitivity Tesla uses, in-house, to changes in gas prices. We’ve seen it before, and Tesla is a different animal, but gas prices and electric drive demeand are inversely related. It’s a factor, within a multi-factor model, that can’t be ignored.

    It is the reality that electric drive functions better, and luxury buyers will seek it out, that makes me feel the auto analysts don’t have it over many of the rest of us. Who’s to say the rate consumers ultimately switch?

    I love noodling what could happen to TSLA, just as much as anyone else.

    1. Brian says:

      “gas prices and electric drive demeand are inversely related” (sic)

      I think you have this mixed up. Gas prices and electric drive demand are DIRECTLY related. That is, when gas prices go up, so does electric drive demand.