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The talks of a potential partnership between Tesla and Daimler dates back to a decade ago when Tesla announced that Daimler will be taking up a 10% stake in the company worth $50 million.
The media focus on the potential collaboration between US-based electric vehicle maker Tesla Inc (NASDAQ: TSLA) and Germany-based Daimler AG (ETR: DAI) is resurfacing again. According to Reuters BreakingViews, the acquisition of Daimler AG may turn out to be an AOL-Time Warner deal for Tesla CEO Elon Musk.
Tesla currently ranks as the most valuable automotive company in the world by market capitalization currently at about $562 billion. With many auto brands out there including Daimler AG, Bayerische Motoren Werke AG (ETR: BMW), Toyota Motor Corporation (TYO: 7203), and Volkswagen Group (ETR: VOW3) to mention a few, Tesla controls just about 0.8% of the total global auto market share, according to Reuters.
It is apparent that a lower share does not connote the maximum value for any car brand as evident in Tesla. The Palo Alto California Headquartered electric vehicle giant comes off as a luxury car brand as not everyone has the financial backing to purchase its products whose lowest price starts from about $37,990. While the firm is undoubtedly enjoying its run-up to profitability evident with the readiness of its stock to be added to the S&P 500 index, the potential of a global and ubiquitous reach will only help to complement the company’s desire to bring value to more people.
Should Tesla decide to make a move to acquire another auto brand to advance this particular cause, Toyota appears unattracted owing to the reported difficulty in making attempt to acquire a Japanese unicorn of such. According to Reuters, BMW is one fossil-fuel car producer that Tesla could subsume but the family ownership of the company can complicate the potentials of any acquisitions.
This leaves Daimler AG as the company with the right positioning for Tesla and owing to the overall market capitalization of the company, coughing out about $100 billion to take up the company could come easy even for Elon Musk.
Tesla and Daimler Have a Long-Standing Relationship
The talks of a potential partnership between Tesla and Daimler dates back to a decade ago when Tesla announced that Daimler will be taking up a 10% stake in the company worth $50 million. Although Daimler sold its Tesla shares back in 2014, but not after the stocks have risen in value to about $780 million according to a CNBC report.
Speaking of the investment made by Daimler at the time, Elon Musk noted that “Daimler has set the benchmark for engineering excellence and vehicle quality for more than a century. It is an honor and a powerful endorsement of our technology that Daimler would choose to invest in and partner with Tesla.” The possibility for this partnership may be rekindled seeing the historical link of both companies.
Tesla shares are up 0.36% to $593.38 in the pre-market while Daimler stock is up 0.81% at the time of writing with each shares trading at 57.23 Euros.