Analyst predicts GM will buy Tesla in 2014

Mon, 30 Dec 2013

There's little question that Tesla has come at the automotive industry as an outsider. But will it last as an outsider for much longer? Not if you ask Yra Harris of Praxis Trading. According to USA Today, the veteran financial analyst recently predicted on CNBC that General Motors will try to buy Tesla in 2014.

It certainly wouldn't be the first time that GM acquired another automaker. It did just that when it purchased the rights to the Hummer brand from AM General in 1999 and completed its takeover of Saab the year after. But, of course, The General has since divested from both, shutting down its Pontiac and Saturn brands in the process. Daewoo and Oldsmobile are gone too, as is Geo. Chevrolet is to be withdrawn from Europe, and over the past few years, GM has sold its minority stake in Isuzu, Subaru, Suzuki and PSA Peugeot-Citroën as well.

Of course, none of these are dedicated electric carmakers like Tesla is, and the Volt may not be doing as well as Detroit had initially hoped. But does that mean it's ready to start expanding its brand portfolio again? With all due respect to Mr. Harris, somehow we doubt it – especially with Tesla currently enjoying sky-high market valuation. The company's market capitalization stands at over $18 billion – more than 100-plus times its earnings. That would make mounting a Tesla takeover a hugely risky and costly endeavor unless Wall Street tempers its stock value greatly.

By Noah Joseph