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6 Potential M&A Targets For Tesla

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6 Potential M&A Targets For Tesla

The last few weeks, it seems like everyone has wanted to buy shares of Tesla Inc. (NASDAQ: TSLA), which has been on a run that's seen its share price rise by about 80% over the last month. But what if Tesla were looking to buy?

Cascend Securities Chief Investment Strategist Eric Ross had a look Wednesday at six potential M&A targets in the burgeoning electric vehicle market for Elon Musk and Tesla.

"If we worked for Tesla as M&A consultants, who would we recommend they buy?" the analyst said in a note. Many of the startup car makers might be targets of other buyers if Tesla doesn't buy, he suggested.

Here are Ross' thoughts on six potential targets.

Rivian

Ross' favorite pick, Rivian, is U.S.-based, has a pickup and SUV coming this year and a 400-mile range.

Amazon.com, Inc. (NASDAQ: AMZN), Ford Motor Company (NYSE: F) and Cox Automotive are investors. Rivian recently rolled out an electric delivery van for Amazon.

"Tesla batteries and economies of scale would add more" to Rivian, the analyst said, adding that Ford's investment and planned line of Lincoln SUVs based on Rivian design might be an issue.

Lucid Motors

This American EV maker "could be interesting" as a Tesla target as it prepares to finally start production in 2021 after funding delays. Its Lucid Air will have a 400-mile range and has been praised for a roomy interior.

Fisker

California-based Fisker Inc. would have to come at the right price considering difficulties the company has had in various incarnations getting traction in bringing a car to the road. But Ross said the EMotion sport sedan has good range and speed and a lower expected price than Tesla.

Fisker uses solid state batteries instead of the lithium ion ones used by Tesla, so that may not be a good match.

Faraday Future

Los Angeles-based Faraday Future "has struggled massively," Ross said, with its Chinese former CEO Jia Yuetling having declared bankruptcy last year and the company spending $2 billion without producing a car.

The analyst's best guess is the company needs to spend at least half that again to get a car on the road, but the company's planned SUV is supposed to be out in early 2021.

Chinese company Evergrande owns about a third of the company. While it could be cheap for Tesla to take control, "it's probably not interesting for Tesla as they already have superior tech," Ross said.

Lightyear

Lightyear is building a solar car, with expectations of starting production in 2023. This company "is probably not worth it for Tesla either," the Cascend analyst said, saying that its speed, range and other specs are below Tesla.

"Likely to remain a niche area, unless survivalists start buying them," Ross said.

Automobili Pininfarina

The German-Italian company that is a subsidiary of Indian conglomerate Mahindra & Mahindra is a niche car maker - its only model, the Battista PFO, will cost $2 million and only 150 will be made.

"Not the mass market investment which would interest Tesla, but if control was a low price it may be worth it for a real supercar," Ross said.

Related Links:

Tesla Analyst Lays Out The Case For An Equity Offering

Morgan Stanley Says Tesla Faces Strong Competition From Rivian, Others

Photo courtesy of Fisker.

Latest Ratings for TSLA

DateFirmActionFromTo
Feb 2020Cowen & Co.MaintainsUnderperform
Feb 2020Morgan StanleyMaintainsUnderweight
Feb 2020BernsteinMaintainsMarket Perform

View More Analyst Ratings for TSLA
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Posted-In: Cascend Securities Elon Musk Eric RossAnalyst Color M&A Startups Analyst Ratings Tech Best of Benzinga

 

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