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Comment by glitchc | Hacker News Reader

Can't argue that Tesla's smaller than Mercedes when Tesla's market cap is so much larger. In 2021, at it's peak Tesla's market cap crossed $1.2 Trillion. Daimler at it's peak this year only reached $81 Billion (although climbing). Why couldn't Tesla just buy out Daimler? Even now Tesla sitting at a valuation of $372 Billion. It could happen tomorrow.

Tell me Elon's the savvy businessman you claim him to be. If Gates were running the company, he would have acquired half the auto industry by now.

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As an owner who experiences the “joy” of dealing with a tesla on a daily basis it’s simple: Tesla is over-valued. There’s so many little gotchas and shortcuts taken that I find it impossible to believe this company is worth what people claim it is on paper. The theoretical wealth of this company stems from consumer/investor ignorance in my opinion. That’s why he hasn’t acquired more of his competitors, the value can’t be realized, it needs to stay bottled up as “potential” for lack of better words.

Umm that's not how mergers and takeovers work. He bought Twitter on a bully offer, half of which was paid with Tesla stock. If anything, this is the best way to convert overhyped stock into real value.

Real value to the people that sold Twitter, certainly.

> If Gates were running the company, he would have acquired half the auto industry by now.

I love this. I haven’t heard it put this way before. I’m tempted to agree with you. Gates was one of the most aggressive, cutthroat, successful empire builders of this century.

Falsehoods HN believes about market cap...

Market cap has little to do with actual size of a company (employees, manufacturing capacity, ...), nor can a company with a larger market cap automatically buy a smaller one. Especially the latter completely ignores how markets work.

These mistakes are particularly egregious when you bring meme stocks like Tesla into it.

Especially egregious when the HN posters could take a second to look up financials on Yahoo Finance.

Revenues: Tesla $75B. Mercedes $144B.

Op Income: Tesla $12B. Mercedes $18B.

Assets: Tesla $62B. Mercedes $260B.

But according to this guy, "it could happen tomorrow".

Market cap does not equate to cash on hand. Let's say I give you a banana for $1. You bring that banana to a marathon where someone will pay you $5 for it. That does not mean I now have $5.

Tesla could dilute their stock and sell more, but that is quite the dilution. Further, the sell price might not be just the market cap value, particularly for a profitable company. Though, exactly those kind of take overs do happen (and with tesla's numbers, not too hard to imagine)

Buying a major car company is buying a whole heap of liabilities and depreciating assets. The major value drivers (contributors to market cap) are brand, patent portfolio, and future revenues from existing capex.

Tesla doesn't want to support the supply chain of new and used parts for a legacy car company, they can barely keep up with their own (and they only make 4 models!).

Well, you know, you also get an established luxury brand, a cadre of brand-loyal customers, a significant increase in the manufacturing base and tons of proprietary tech. Are you telling me Mr. Musk would have bothered to create his own brand if he had enough capital to buy an existing brand to start with? The latter is a much safer strategy in bringing a car to market. He took big risks creating his own brand because he lacked the initial capital to buy one outright.

you inherit all the politics that comes with an existing company as well.

owners and CEOs are powerful but not infallible; Carlos Ghosn got thrown in jail when he got too big for his britches as CEO of Nissan (in Japan Inc.'s view, at least).

Well, technically Musk bought an ownership stake in Tesla

> legacy car company

Let's drop the BS, please.

Mercedes is a car company. They are not legacy anything. They're the inventor of the car and a myriad other innovations.

They're making a ton of EVs and will sell a ton more next year and the year after that.

They have AR navigation and now are close to L3 self driving.

Also, unlike the well-publicized issues re: Tesla repair difficulties, you can take a Mercedes in anywhere and get it fixed by authorized mechanics.

“Legacy” is not a pejorative term, it’s descriptive. They have a dealer network. They have a parts counter. Their operations are the result of a 120 year legacy. Their valuation is based on longstanding economics of the automobile industry.

I’m saying all this to draw a comparison against Tesla. Tesla doesn’t want a dealer network, or a parts counter, or a typical car company valuation. Buying a legacy car company is not in Tesla’s interest, because they don’t want to play by the rules (unwritten or written) that every other auto manufacturer plays by.

> “Legacy” is not a pejorative term, it’s descriptive.

99% of the time I see "legacy" used for established car companies is when it's an article or comment about Tesla.

And it is meant as a pejorative.

Maybe you're the exception:-)

Does nobody remember that Daimler was an early investor in Tesla? They sold their 10% share a few years ago.

https://ir.tesla.com/press-release/strategic-partnership-dai...

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