Tesla Motors, Palo Alto, CaliforniaEnlarge Photo
The suggestion hit the day before Christmas: Analyst Yra Harris of Praxis Trading predicted in a CNBC interview that General Motors might buy Tesla Motors sometime in 2014.
Harris called it "a perfect fit" for one of the three largest carmakers in the world to buy the closely-watched Silicon Valley electric-car startup.
The internet went wild.
Yra Harris of Praxis Trading on CNBC discussing why he thinks GM could buy Tesla Motors, Dec 2013Enlarge Photo
Investors, analysts, electric-car advocates, and Tesla supporters all weighed in from various viewpoints--although we'd say the majority opinion seemed to be on the "Hell, no!" end of the scale.
At a reasonable value, Harris said, "that deal is made in Heaven"--although in discussing Tesla's current stock price, he said, "to me, Tesla values are in La-La Land."
Harris did admit "it's a way-out prediction," and then the interview dissolves into banter and holiday wishes.
Harris's prediction starts at 1:35 in the CNBC video clip, and runs for exactly 1 minute.
What would Tesla offer GM?
But beyond issues of implementation, let's look at the pros and cons for each side. First, what would Tesla bring GM?
2014 Tesla Model SEnlarge Photo
Long-range battery electric vehicles: GM's biggest effort in plug-in electric vehicles has been the Volt, with a battery pack providing 38 miles of range and then a range-extending engine that produces electric power to drive the car for another 300 miles or so.
That system, called Voltec, is the core of GM's plug-in efforts and is expected to spread across a wider range of vehicles, body styles, and segments in future.
Its sole battery-electric vehicle today is the low-volume Chevrolet Spark EV minicar, with a range of 82 miles. It's hardly a competitor to the large Tesla Model S sedan, with ranges of 208 or 265 miles.
Harris suggested in the interview that buying Tesla would save GM the cost of developing its own electric-car technology.
For several years now, GM has a very large battery lab--which it expanded again last year--to evaluate dozens or even hundreds of the newest cells and rigorously test those that look promising.
Moreoever, GM has repeatedly said it expects to introduce an electric car with a range of 200 miles within the next two or three years, at a cost of $30,000.
It remains to be proven if the company can do so. But if it can, it's unclear that Tesla would provide any lasting advantage.
Tesla Motors - Model S lithium-ion battery packEnlarge Photo
Lower battery cost: Conceivably, Tesla could provide GM with the lowest per-kilowatt-hour costs for large battery packs. We don't know for sure, because no automaker will confirm pack cost, but it's a relatively plausible assumption.
But GM and Tesla use radically different types of lithium-ion cells. GM, like virtually every other large carmaker, uses large-format cells--from dozens to perhaps 200 of them.
Tesla, on the other hand, uses thousands of specially-designed small "commodity" cells in the 18650 format--a tactic no other carmaker has put into production.
Its current cell supplier, Panasonic, also custom-makes cells specifically to Tesla's requirements, whereas the cells used by GM are more "off the shelf."
The cells it buys from LG Chem for its Chevrolet Volt range-extended electric car, for example, are identical or very similar to the ones that LG Chem also sells to Ford for use in its low-volume Focus Electric.
2014 Cadillac ELR revealed at 2013 Detroit Auto ShowEnlarge Photo
More Cadillac buyers: In the interview, analyst Harris suggested that adding Tesla to GM dealerships would "lull people into a Cadillac," meaning that additional shoppers drawn in by the allure of an electric Tesla might be persuaded to buy a Cadillac.
At least so far, however, we've seen no data that suggests that buyers are cross-shopping the Tesla Model S against any Cadillac model.
We'll see how the $76,000 2014 Cadillac ELR range-extended electric coupe fares in the market this year, though GM has said it expects to sell only 2,000 to 4,000 of them.
Luxury brand: Tesla has definitely succeeded at one of the hardest tasks in the auto industry: building a credible brand from scratch that includes a vehicle with attractive styling, good performance, comfortable ride, and a sales and service experience that owners rave about.
The combination of that ownership experience and Tesla's unique technology image are a hugely valuable asset. Perhaps more than technology, it's why Tesla Motors would be an alluring purchase target for another automaker.
Tesla has ambitions to be a mass-market brand, providing electric cars at a variety of price points, but for the moment it's largely viewed as a luxury brand--since its cars curently start at $69,900.
Harris said buying Tesla would get GM not only the company's electric-car technology, but a genuine luxury brand in the bargain: "It's everything GM needs to build upon."
The challenge for GM is how the Tesla brand would fit into its slimmed-down global brand portfolio of Chevrolet, Buick, and Cadillac (plus GMC in North America).