BMW insiders: Tesla CEO Elon Musk “is using us for PR purposes.”
It has been tough for Tesla recently. It normally excels like few other companies in pumping up its stock while losing money hand over fist and building so few cars that they’re not even a rounding error in the global production of 72 million passenger vehicles this year.
The biggest hits came when Daimler – its lineup includes Mercedes-Benz cars, all kinds of commercial vehicles, and as it says, the industry’s “biggest portfolio of electric vehicles” – announced in October that it had sold its entire 4% stake in Tesla for a pre-tax profit of $780 million. A couple of days later, Toyota disclosed that it too had sold part of its 2.4% state in Tesla. But why the heck did they turn a supposedly strategic, long-term investment, and one of the hottest stocks, into cash? What do they know that we don’t? [Read… Daimler Closes Tesla Hedge, Dumps Shares, Grabs Cash, Runs].
So a month after this debacle, Tesla CEO Elon Musk was back at it, trying to repair the damage these two exits had done. In an interview published last Sunday in the German magazine Spiegel (behind paywall), he said that Tesla was discussing with BMW a cooperation on battery technology – he wants to build a battery factory in Germany – charging stations, and BMW’s carbon-fiber production technology, which was “relatively cost efficient,” and “could be interesting” for the suppliers of Tesla’s car bodies, he said. And the fact that Daimler and Toyota had dumped their Tesla shares? Musk brushed it off: they just wanted to take profits, he said.
But Tesla began backpedalling immediately: “The conversation between Elon Musk and BMW has been a casual conversation, and not about a formal cooperation,” spokeswoman Kathrin Schira told Reuters afterwards.
A BMW spokesman could not be reached for comment at the time, so Musk’s words became part of the hype package in the US.
There was even talk of an “alliance”: “This round of news is interesting when you consider that Elon Musk previously said that there was room to improve on the [BMW] i3. He was quoted saying he did hope they improve it, so maybe Musk is the one who can.”
Ha, now the German magazine WirtschaftsWoche learned from “well-informed BMW sources” that Musk’s utterances had caused a bout of astonishment at BMW. There were no negotiations on concrete cooperation with Tesla, they said. And BMW told the WirtschaftsWoche directly that “BMW Group has no interest in acquiring shares of Tesla.”
Sure, there had been conversations, but these sources said that in the auto industry everyone is talking practically with everyone, and the “informal discussions” with Tesla mean little. Yes, BMW would be pleased to sell carbon-fiber body parts, but this applies “for Tesla as for any other automaker.”
Stung by the exit of Daimler and Toyota, Musk apparently wanted to “decorate” himself with the name BMW, these insiders suspected. “Musk is using us for PR purposes,” they said. BMW did not see how it could benefit, they said, because Tesla didn’t have a technological advantage over BMW in any area.
Even collaborating with BMW on a battery factory in Germany got smacked down. BMW does not think much of Musk’s assessment that battery factories would be required in Germany, and he could not count on BMW as a partner: “We do not need our own factory for battery cells,” the sources said. Battery cells are not a unique feature, and as other car parts, they can be purchased from suppliers, the said. “The joining of the cells into a battery and the control of the battery,” however, would be done by BMW, because that’s “the actual innovative performance.”
It’s a marvel how Musk can keep a small company like Tesla in the news and on Wall Street’s hype list. He has excelled in driving Tesla’s stock to an insane height, giving the company a market capitalization of $30 billion, compared to GM’s market cap of $54 billion. A mere tweet from him about an unspecified future announcement makes the stock jump. Few if any CEOs have this kind of talent. This has allowed the company to extract billions in new money from investors via a slew of equity and debt sales.
Tesla is now busy losing this money with its small-batch production of cool but expensive vehicles, each one of which – like other electric vehicles in the US and elsewhere – receives big taxpayer subsidies in order to be sold at all. But at least BMW didn’t want to be used for Musk’s hype purposes. And so they put a stop to it.
Global economic growth is in trouble, according to the very businesses that drive the economy forward. Their outlook for the next 12 months has plummeted to the worst level since crisis year 2009. Read… Global Business Outlook: “Darkest Picture since Financial Crisis.” US Deterioration “of Greatest Concern”