Is Google interested in Tesla?

Author: Mario Schmidtgen
Date: 27.08.2018

Competition for Apple

Tesla’s situation is an up and down. Negative press, leadership problems and financial deficits. Many investors have doubts if Tesla can exist as an independent group at all. In addition to Apple, other large companies are named again and again within the search for a wealthy partner. A potential candidate: Techgiant Google.

Google is more than just a search engine

The competition in the field of Internet search is getting smaller. But today Google is far more than just a search engine. The foundation of the holding Alphabet in 2015 made clear that Google is rather a conglomerate that is divided into different areas.

For example, autonomous driving is also part of Google. With their subsidiary Waymo, Google has been testing self-driving cars on the streets of the United States for almost four years. However, the focus is not the car itself, but much more the associated technologies. The company does not plan to sell its own cars on the market and instead relies on a partnership with Fiat Chrysler. The car manufacturer provides the framework, which is equipped with the software for autonomous driving by Google. Probably the best solution for both sides, as Google can concentrate completely on the software and Fiat gains access to coveted innovations through the partnership.

But the target group of autonomous vehicles is limited. Although the companies presented a concept study of a Google mini-van in 2017, but it was never realized.

Partnership with Tesla more successful than with Fiat Chrysler?

But Google’s situation could soon be very different, since the Techgiant and Tesla have similar interests. In addition, Tesla offers Google an existing car hardware business with different vehicles for different target groups. Google has the knowledge and the money. With CapitalG, Google has a large venture capitalist whose portfolio includes startups such as Lyft, Airbnb and Glassdoor.

Looking at Waymo, investing in Tesla really makes sense, especially because the company has recently received an appraisal of $ 175 billion.

Already in 2013, Tesla and Google have negotiated about an acquisition of the car maker. At that time there was also an agreement – they agreed a purchase price of six billion US dollars and in addition investments in the vehicle production of five billion US dollars. Moreover, Musk would have continued to act as boss. But suddenly there was a sales boom at Tesla, through which the company was no longer dependent on the help of Google. This can be read in the biography of the Tesla boss.

Now Tesla is back in a crisis. Investors are waiting for results, but instead only face red numbers. And even though Tesla is getting closer and closer to its production goal, it will take a long time for the company to establish their new Model 3, in that they put all their hope in, on the market. With Google’s investment this process could be accelerated.

Shared responsibility for the success

And also in other places, Google could have a positive effect on Tesla. Unlike Elon Musk, the founders of Google know that it is better to divide the responsibility for a company among several people. That’s why Larry Page and Sergej Brin also brought top manager Eric Schmidt on board in 2001. And they have also ceded the search engine business to Sundat Pichai.

On the contrary Musk leads Tesla more or less alone, since he is CEO as well as Chairman of the Board of Directors. He also manages the companies SpaceX, Boring Company and Neuralink. So Tesla could use support very well.

There is another positive argument for the partnership between Tesla and Google: In comparison to Apple, Google has the edge in the field of autonomous driving. Although Apple has been working secretly on an auto project for a year, they do not yet have a hardware platform, as Google already has with Fiat Chrysler. But if Apple manages to integrate the iOS operating system into a Tesla vehicle, it would be a major setback for Google and its android system.

Just in the beginning of this week a Tesla investor advised Tim Cook, Apple CEO, to buy into Tesla as soon as possible.