Nobody is going to buy Tesla — the company is on its own

Tesla CEO Elon Musk.

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Tesla CEO Elon Musk.
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David McNew/AFP/Getty Images

A persistent dream of Tesla boosters has been that a technology giant with piles of cash will swoop in and rescue Tesla from doom, should the carmaker’s finances become so tattered that bankruptcy threatens.

CEO Elon Musk in the past is said to have talked to both Google and Apple about the possibility of a takeover. But Tesla remains independent.

It’s also in the midst of a severe stock swoon that has knocked shares down 40% this year, to about $190. Is the bottom in sight? Who knows, but the Silicon Valley-to-the-rescue narrative is back in vogue, this time from the New York University professor Scott Galloway, who predicted Amazon’s buyout of Whole Foods.

Galloway doesn’t think a major automaker would buy Tesla, but he seems to think a tech firm may take a shot, or so he suggested on Kara Swisher’s Recode podcast.

Read more: Tesla’s tanking stock price is actually the best thing that’s happened to the company recently

The problem with this prediction is that nobody wants to buy Tesla anymore – except for maybe investors, who recently gobbled up a nearly $3 billion stock offering. Tesla looked better as an acquisition target a few years back, before it became a 250,000-vehicle-a-year carmaker and revealed that it wasn’t immune to the economics of the auto industry.

It may be relatively cheaper, but it’s now a huge execution risk, as the company’s ambitions collide headlong with the capital-intensive nature of making hundreds of thousands of cars.

A Tesla buyer would be acquiring a lot of baggage

The New York University professor Scott Galloway.

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The New York University professor Scott Galloway.
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Hubert Burda Media

This doesn’t mean Tesla has a worthless business; quite the contrary – it could eventually post some enviable profit margins, if it dials back its ambitions to flood the market with vehicles.

But technology companies that might have once viewed the multitrillion-dollar global auto industry as a ripe opportunity have now sampled the market and decided the actual building and selling cars probably isn’t the way to go. Better to do as Waymo has done, developing a hardware-and-software self-driving system that can be installed in vehicles manufactured by partners such as Chrysler and Land Rover.

Or to do as General Motors has done, integrating a self-driving startup – Cruise – with existing, well-establishing manufacturing processes.

For the sake of argument, however, what would Apple get if it bought Tesla?

It would get a pile of debt and extensive production obligations, not to mention immense future capital demands and a volatile CEO in Musk. All so it could make Tesla into the Apple Car. Not worth it.

Tesla’s real value was in absorbing risk

The Tesla Model 3.

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The Tesla Model 3.
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Hollis Johnson/Business Insider

Apart from its beloved brand and some technical innovations, Tesla isn’t unique. It was a few years back, and most major automakers knew it. That’s why they watched and waited as Tesla essentially created a market for electric cars, soaking up all the early risk.

The automakers that want to take the EV plunge have now dived in. Those that haven’t could plausibly partner with Tesla without having to acquire the California company. In fact, that’s what happened when Tesla was much smaller and Daimler and Toyota took equity stakes that led to lucrative exists when Tesla’s stock price surged.

So with apologies to Galloway, nobody is going to buy Tesla – not a traditional automaker nor a big tech firm that might bafflingly want to obliterate billions.

Tesla, for better or worse, is on its own from here on out.