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Could Google Buy Tesla? Should It?

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2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

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Speculating on what will happen to Tesla Motors [NSDQ:TSLA] can be endlessly entertaining, and the discussions have taken up terabytes of server space already.

But last week, a Forbes contributor suggested an intriguing notion: Should search giant Google buy Tesla?

The conventional wisdom has been that ultimately, Tesla's backers and board will sell the company to a large global automaker.

Tesla Supercharger obelisk

Tesla Supercharger obelisk

Enlarge Photo

Such an acquirer could provide the parts-volume efficiencies and enormous capital resources required to grow production into the hundreds of thousands a year--ultimately perhaps millions.

Of course, Tesla has several times proven the conventional wisdom wrong--which is to say, the company built an astoundingly good car that has been snapped up by many thousand buyers already.

In fact, at its current production rate, the company will have more than 26,000 cars on global roads by December 31.

And Tesla has already surpassed four other fabled automotive startups: Delorean (9,000 cars), Bricklin (2,850 cars), Fisker (2,000 or more cars), and Tucker (a mere 51 cars).

So perhaps the company can remain independent, though the odds are still against it.

But where does Google come in?

It all started with an article last month on TechCrunch that reported carsharing service Uber would buy 2,500 driverless cars from Google.

Rather too many people failed to notice the date--July 25, 2023--and re-reported it as fact. TechCrunch subsequently added "Dispatch From The Future" to the title.

But Forbes writer Chunka Mui suggests that Uber would be dumb to invest huge amounts of capital in its own fleet.

Instead, it should become the centralized dispatch point for driverless taxis of the future.

And who might provide those taxis? Why not Google, with its ground-breaking research into self-driving cars based on its extensive maps of most of the world's roads?

Connecting the dots, a May article by Bloomberg noted that Tesla CEO Elon Musk has spoken with Google about driverless technology for Tesla vehicles in the future.

CA Governor Jerry Brown, State Sen. Alex Padilla, and Google's Sergey Brin beside an autonomous car

CA Governor Jerry Brown, State Sen. Alex Padilla, and Google's Sergey Brin beside an autonomous car

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Cofounder Sergey Brin has already said Google will make self-driving cars available, perhaps within four years, and only in states like Nevada and California that have laws in place that permit them.

Assuming that there's consumer demand for the cars--and more limited semi-autonomy features like Cadillac's SuperCruise and Nissan's various autonomous systems find a market as well--Mui suggests that Google would launch a pilot for a driverless taxi service sometime early in the 2020s.

And assuming that's a success--based on our experience riding in thousands of cabs, we're all for it--the company will eventually roll it out on a larger scale.

That would require tens of thousands of cars. And battery-electric vehicles of the next decade will make excellent taxis.

They have very few moving parts, their per-mile energy cost is far lower than the most efficient hybrids, and they're smooth, quiet, and emit nothing--meaning that they can operate even in central cities that ban emitting vehicles.

Mui suggests that Google will issue a tender for not just tens of thousands, but perhaps 250,000 driverless cars. Tesla, Nissan, and General Motors might all compete.

But rather than buy cars from one vendor, he posits, Google simply decides to use some of its cash hoard to buy Tesla outright (making Elon Musk its third largest shareholder in the process).

As Mui writes, "If you’re writing a dispatch from 2023, why think small?"

Such a scenario might fit neatly into Musk's goal of transforming the very nature of transportation.

Tesla has already started the process by making and selling remarkably good electric cars. Is taking the driver out of the equation the next big leap?

Leave us your thoughts in the Comments below.

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