Daimler is planning to unplug from Tesla - at least in terms of its 4% equity stake.
Already hammered by a slump in its stock price, Tesla Motors has been hit by two more setbacks.
The maker’s long-time German partner, Daimler AG, has decided to sell off its stake in the California start-up while Michigan has become the latest in a growing list of states to bar Tesla’s plan to sell directly to consumers through company-owned, rather than franchised, showrooms.
Daimler, the parent of the Mercedes-Benz and Smart brands, had held a 4% stake in the battery-car company, and had been rumored to be considering a full acquisition of Tesla at one point.
While Daimler is pulling the plug on its equity stake, it remains charged up about the options Tesla can offer it longer-term. The California company played lead in developing the electric drivetrain for a battery version of the Mercedes B-Class model and is reportedly working on other joint projects.
Calling Tesla a “bold partner,” Zetsche emphasized in a statement released by Daimler on Wednesday morning that, “Our partnership with Tesla is very successful and will be continued.”
The statement stresses that the sale of Daimler’s equity stake will not impact the relationship between the two companies. It did not indicate why the German maker shoes to act now, at a time when Tesla’s stock price has been stuttering after reaching an all-time peak of $291.42 a share a few months ago.
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Daimler will keep working with Tesla on projects like the one that yielded the B-Class Electric Drive.
There have been hints that, at least at one point, Daimler had considered a full acquisition of its smaller partner. But the huge run-up in Tesla shares made that difficult to justify, CEO Dieter Zetsche said during a Paris Motor Show interview earlier this month.
“This would be very costly, and I don’t see it,” he said. While he declined to say whether he thought Tesla shares were overvalued, Zetsche cautiously said, “There is more potential of upside than downside.”
The sale of Tesla stock should bring about $780 million for Daimler, noted Daimler’s board member for finance, Bodo Uebber who put a positive spin on the sale, suggesting, “This will also allow Tesla to broaden its investor base.”
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Tesla has not yet publicly responded to Daimler’s announcement. But it has expressed disappointment to the news that Michigan lawmakers have banned the battery-carmaker from opening any factory-owned stores, as it has in New York, California, and a number of other states.
The measure won wide backing from dealer groups worried about the potential impact on the century-old automotive franchise system. Michigan Governor Rick Snyder, meanwhile, approved the bill after General Motors also weighed in against Tesla.
A Tesla-owned showroom service bay.
A number of major automakers have, over the years, tried to revise the dealer franchise system but, under pressure, all have eventually sold out company-owned showrooms. Tesla, however, has insisted that approach is necessary to its business plans and to have a more direct relationship with its customers.
It’s distribution plan has won approval in some states, including California and New York, while New Jersey made a specific exemption in its franchise rules for Tesla. Nevada’s decision to approve the Tesla sales model was one of the factors – along with a $1.25 billion incentive package – that the company decided to build its Gigafactory in the state. Texas, also considered a finalist for the battery plant, blocked Tesla’s direct sales plan.
Earlier this month, CEO Elon Musk said he was considering a hybrid model that would eventually add some franchise dealers to the Tesla sales network to help handle the anticipated increase in sales in the coming years and, apparently, to cover states that have blocked his factory showroom strategy.
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It should be interesting to see just how long Tesla can continue their operations.
Telsa has a tremendous technology expertise in electric propulsion but I do not think it can last long by itself. For any automaker you need a vehicle that the masses will buy to keep the cash flowing and Telsa does not have one. Their business model should be to sell and licences the technology such as what seems to be the set up with Mercedes-Benz.
at some point they will have to deal with having more cars on the road. You can’t sustain service efficiency if every car in need of repair has to be shipped to California
Tesla, you cannot be surprised that Diamler divested itself right? The main reason that competitors might have been interested in investing/acquiring you was the cutting edge proprietary technology you’re developing. Open sourcing, giving it away for free is a great idea. It serves advancing the idea/likelihood of the electric car, and is a great PR tool to show corporate citizenship. Bad for business. The one thing that made you of “Value” i.e. a worthy investment and the possibility of coveting that technology has been lost. That’s just good business sense.