Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) has a problem. It says it is not a car company but a robotics and AI company. That pitch only goes so far. Almost all its revenue comes from car sales, and those sales are faltering. They are falling in the European Union, troubled in China, and battered in the United States. Tesla has a problem. People want to drive gasoline-powered cars. That could persist for years, particularly in parts of Europe and the U.S.
Tesla’s share of the U.S. electric vehicle (EV) market has fallen to less than 45%. It used to be 80%. EV sales from General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F), and Hyundai are damaging that share. None of these has 10% of the market. However, together, they pose a threat.
Even GM and Ford have been throttled in terms of their EV ambitions. GM just took a $1.6 billion write-off due to a slowdown in its EV operations. The GM message is simple. EV sales have cratered since the end of the federal government’s $7,500 tax credit. Ford’s EV sales were less than 5% of its total unit sales through the first three quarters of this year.
iSeeCars says that EV sales as a percentage of all new-car sales in the U.S. will drop from 8% to 4% due to the end of the tax credit. It forecasts a drop to 4% through 2027. Tesla is painted into a corner, no matter how much it improves its cars. Additionally, buyers are skeptical of its self-driving technology, and some believe it is dangerous following a string of accidents.
Tesla’s market cap is $1.43 trillion. GM’s is $54 billion. A buyout would capture 17% of the US auto market, well ahead of the second- and third-place companies, Toyota and Ford.
Why Would Tesla Buy GM?
Why would Tesla buy GM? On the one hand, it would be a defensive move. It would give Tesla a huge foot in a part of the market, combustion-engine cars, that will not decline sharply for years.
A second reason to buy GM is that Tesla’s new technologies could be offered to 17% of the U.S. market, rather than the 2% it currently reaches. It could not achieve that level of penetration for its AI-driven features, perhaps for as long as a decade.
The third reason for a buyout is not apparent, but important. GM has more than 7,000 dealers, which is the largest dealer footprint among U.S. car companies by far. These would finally give Tesla the platform to get its products to a network of dealers, which are almost universal in their proximity to Americans. It would also give Tesla a huge blanket of service operations.
The Harvard Business Review released an important paper in 2011 that was titled “Secure Your Flanks, Protect Your Business.” Tesla has a small footprint in the U.S. GM has a giant one. Gasoline-powered cars will rule the U.S. for years. Tesla’s U.S. dreams are far away.
Tesla Stock Price Prediction and Forecast 2025–2030
Top Gaining Stocks
Top Losing Stocks