Will Toyota Marry Tesla?

So let me get this straight: First, Toyota (NYSE: TM  ) invites Tesla (Nasdaq: TSLA  ) to its old NUMMI factory in California, and invests $50 million in the electric car pioneer. Then, it hires Tesla to build it an electric RAV4. Now, it appears Toyota is introducing Tesla to all its friends, and playing matchmaker with the upstart. It gets a Fool to wondering: Will Toyota marry Tesla itself?

On Wednesday, Panasonic (NYSE: PC  ) announced it's joining Toyota in making equity investments in Tesla. It's $30 million, to be precise, enough cash to snap up an introductory 2% stake in the electric operator. Panasonic, as you are probably aware, is the company that builds battery packs for Toyotas including the Prius gas-electric hybrid (and for Ford (NYSE: F  ) and Honda (NYSE: HMC  ) hybrids, as well). What you may not be aware of is the fact that Panasonic also makes Tesla's batteries.

This being the case, a Fool can wonder: Why did yesterday's news send Panasonic shares up 3.7%? I mean, it's not as if Panasonic secured a new customer by buying into Tesla. It already "had 'em at konnichiwa."

And an even more curious development: Tesla shares popped more than 14% on the news, ending the day just shy of $25. This despite the fact that Panasonic clearly stated it's only paying $21.15 apiece for its stake. I can hear Tesla investors now: "What? I have a chance to buy shares for a mere 18% markup over what somebody else paid for them yesterday? Sign me up!"

Where's the bargain?
Call me crazy, but that just doesn't sound like a great deal to me. Fools, the plain fact of the matter is that nothing has really changed here. Tesla had a good source of batteries before; it still does. Panasonic had a happy customer; and it still does.

As for Toyota, I'm sure it's happy to see its two friends getting along so well, and maybe we're seeing another example of the Japanese concept of keiretsu -- but in practice, the concept rarely works as advertised. What's more, the longer these folks run around buying bits and pieces of each other's companies, the less likely it becomes that anyone's going to upset the apple cart and just out-and-out buy Tesla at a premium.

Or am I missing something? Do you see a good reason for Panasonic's buy-in driving Tesla shares up 14%? For Panasonic's own 4% bump? Tell us about it below.

Ford Motor is a Motley Fool Stock Advisor pick, but Fool contributor Rich Smith does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 05, 2010, at 11:35 PM, mottledtool wrote:

    I think that many potential investors were concerned that Tesla would just get bypassed by the momentum of the transportation giants once they overcome their inertia and get rolling. The fact that Toyota and Panasonic are buying into Tesla makes it appear that Tesla actually does have some unique insights into electric powered transportation. It seems that Tesla can hope to be the electric drive equivalent of Lotus, the company that Tesla buys it's roadster chassis from. Lotus does sell their own cars but also pays the bills by doing chassis and suspension consulting for the Big Guys.

    The market seems to like this business model for Tesla.

  • Report this Comment On November 06, 2010, at 5:59 AM, elliotriley wrote:

    I think Toyota will use Telsa the same way Ford used it's stake in Mazda. People say that Toyota isn't looking to the future with it's current cars, but maybe they are with this situation. As the commenter above stated, maybe there's something in their technology that Toyota wants...

  • Report this Comment On November 06, 2010, at 6:58 AM, haid1 wrote:

    The promise of Tesla is well understood, but the risk is high. Anything that suggests a lower risk profile is addressing the caveat. Apple uses its money to lock up supplies of FLASH ram. Tesla has no such war chest, so it uses what it has and locks up supply equivalent to 30 million dollars. That lowers one form of risk.

  • Report this Comment On November 06, 2010, at 12:26 PM, safefool1 wrote:

    You guys just don't get the truth. It is the Market Maker who is jacking up the price to sell to naive retailer investor. The short-term fluctuation of the stock price has absolute no relationship with the health of the company.

    While Tesla is selling more cars, it's model is absolutely broken. There are too many competitors. It's price is absolutely too high. That's one company that will never turn a dime, except fattening Elon Musk's wallet and the Market Maker.

    The stock is just like any other merchandise. If there is no new issue or repurchase. The price should theoretically never change. The fluctuation of the price is completely due to the Market Maker adjusting the price to maximize his/her return-on-investment. All the retail investors are just like cattles and sheeps, ready to be slaughtered.

    Ha ha ha. You guys are the fooooooooooools.

    By the Motley Fool is also a business. It is paid by the investment bankers and market makers to fool the retail investors.

  • Report this Comment On November 07, 2010, at 8:48 AM, mwomer wrote:

    I'm sorry the Fool is being very foolish and personally I am tired of them bad mouthing an amazing product. TSLA has great market potential and should be trading at $30 in February. I can't wait to buy my electric RAV4 (with 4 wheel drive?). And with the added confidence of Toyota and Panasonic its a no-brainer to buy at less than $30.

    This is the next great auto company, buy now because in 2012 it will be too late.

    Just wait till they start selling 45 minute charging stations to 7-eleven. I can't wait to drink a slurpee while my car is getting charged up.

    The fool is just worried about another bubble and I can't blame them, but this is not it.

    Buy now before its too late.

  • Report this Comment On November 08, 2010, at 5:06 PM, fljkto wrote:

    Telsa is a money losing company who's stock will be between $8-$10 in the near future. Safefool1 knows what he is talking about regarding the market makers. And mwomer probably doesn't know anything about maket makers or earnings!

  • Report this Comment On November 09, 2010, at 11:49 AM, lagunagreg wrote:

    I agreed with your article until Tesla opened a dealership a few miles from my house; I've visited a few times since the opening. They sell every car they get in within a couple of weeks; they can't keep more than 4 of them on the floor at one time because they keep selling out. The roadster has the best designed battery pack in the industry. It actually gets over 200 miles on a charge in efficiency mode, which nobody else can get within 100 actual miles of. I live in Orange County, and I could actually drive it to see clients in LA. And this is the company's opener.

    You guys haven't sat in the car. It is multiple orgasms on wheels at less than half the price of an Italian equivalent. If there's going to be any innovation in car design, it isn't going to come from the big guys- never does. It's going to come from here. And it seems to me that the marketing has been done correctly, or they wouldn't be selling even a hubcap. Maybe all they'll sell is technology to other companies, but that's still a good business to be in.

    I could be wrong, but I bought TSLA at 19.

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