The last few weeks, it seems like everyone has wanted to buy shares ofÂ Tesla, which has been on a run thatâ€™s seen its share price rise by about 80% over the last month. But what if Tesla were looking to buy?
Cascend Securities Chief Investment StrategistÂ Eric RossÂ had a look Wednesday at six potential M&A targets in the burgeoning electric vehicle market for Elon Musk and Tesla.
â€śIf we worked for Tesla as M&A consultants, who would we recommend they buy?â€ť the analyst said in a note. Many of the startup carmakers might be targets of other buyers if Tesla doesnâ€™t buy, he suggested.
Here are Rossâ€™ thoughts on six potential targets.
Rossâ€™ favorite pick, Rivian, is U.S.-based, has a pickup and sport utility vehicle coming this year and a 400-mile range.
Amazon.com, Ford Motor,Â and Cox Automotive are investors. Rivian recently rolled out an electric delivery van for Amazon.
â€śTesla batteries and economies of scale would add moreâ€ť to Rivian, the analyst said, adding that Fordâ€™s investment and planned line of Lincoln SUVs based on Rivian design might be an issue.
This American electric vehicle maker â€ścould be interestingâ€ť as a Tesla target as it prepares to finally start production in 2021 after funding delays. ItsÂ Lucid AirÂ will have a 400-mile range and has been praised for a roomy interior.
California-based Fisker would have to come at the right price considering difficulties the company has had in various incarnations getting traction in bringing a car to the road. But Ross saidÂ the EMotionÂ sport sedan has good range and speed and a lower expected price than Tesla.
Fisker uses solid-state batteries instead of the lithium-ion ones used by Tesla, so that may not be a good match.
Los Angeles-based Faraday Future â€śhasÂ struggled massively,â€ť Ross said, with its Chinese former CEO Jia Yuetling having declared bankruptcy last year and the company spending $2 billion without producing a car.
The analystâ€™s best guess is the company needs to spend at least half that again to get a car on the road, but the companyâ€™s planned SUV is supposed to be out in early 2021.
Chinese company Evergrande owns about a third of the company. While it could be cheap for Tesla to take control, â€śitâ€™s probably not interesting for Tesla as they already have superior tech,â€ť Ross said.
Lightyear isÂ building a solar car, with expectations of starting production in 2023. This company â€śis probably not worth it for Tesla either,â€ť the Cascend analyst said, saying that its speed, range, and other specs are below Teslaâ€™s.
â€śLikely to remain a niche area, unless survivalists start buying them,â€ť Ross said.
The German-Italian company that is a subsidiary of Indian conglomerate Mahindra & Mahindra is a niche carmaker â€” its only model, the Battista PFO, will cost $2 million and only 150 will be made.
â€śNot the mass market investment which would interest Tesla, but if control was a low price it may be worth it for a real supercar,â€ť Ross said.
ThisÂ storyÂ originally appeared on Benzinga.
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