Could Tesla Motors replace General Motors as the standard-bearer of American automaking? Yesterday evening, Tesla established its first small beachhead on GM's turf.
Tesla is many things: The brainchild of PayPal founder Elon Musk. One of his two hobbies since selling out to eBay
Step aside, GM. We can handle this.
Tesla confirmed yesterday that it will salvage the Toyota/GM Californian "NUMMI" joint venture, taking GM's place as Toyota's
Thus, in one fell swoop, Tesla addressed three of the concerns that my Foolish colleague John Rosevear raised when discussing the IPO's prospects earlier this year. First, Tesla secured an automotive partner to provide it with an array of conventional gasoline-powered car models into which Tesla can integrate all-electric technology. It's acquired a manufacturing partner with true scale in its operations, which could jumpstart Tesla's ability to reduce the sticker price of its flagship product. Last but not least, Tesla has purchased itself a major factory.
And how! While under GM/TM management, NUMMI regularly averaged 6,000 cars produced weekly. Right now, Tesla will be happy to produce just 20,000 of its new Model S electric sedans per year. So Tesla's got capacity aplenty to expand as its popularity takes off.
TM + TM = ?
Will Tesla succeed in replacing GM, not just at NUMMI, but nationwide?
No. Even at $50,000 a pop -- half the cost of its Roadster -- Tesla's Model S costs a pretty penny. It's roughly twice the price of Nissan's Leaf, and Ford's
With a limited market for its high-priced wares, Tesla's got a long road ahead of it before it overtakes GM and its $105 billion in annual sales. But it should be a fun ride.
Fool contributor Rich Smith owns shares of Google, which is also a Motley Fool Rule Breakers choice. eBay and Ford Motor are Motley Fool Stock Advisor selections. Motley Fool Options has recommended a bull call spread position on eBay. The Motley Fool has a disclosure policy.