Daimler's Tesla Deal Doesn't Help Either Company

musk scratching head

Even after the dust has settled on the Daimler-Tesla deal, we’re struggling to figure out why either side made the deal.

Sure, the $50 million infusion helps Tesla, but it’s not going to be enough to save the company. We hear the it will still need another $50 million to get through this year.

See the Complete Guide to Electric Cars

If Daimler really bought in at a $550 million valuation, we have to wonder what it was thinking. That’s half the size of GM. Crack wise all you want about GM going out of business, but the company does make a diverse set of cars, many of which people actually want to buy.

Tesla makes one car, and thinks it might be able to make a second car in three years if all the stars align. Its only product, a $100,000 electric sportscar isn’t selling particularly well, we’re told. Once Tesla burns through its back order of those Roadsters, the demand picture isn’t looking pretty.

And there’s more competition down the road. Tesla’s cars look a lot less exotic now that the government and auto makers are pushing hard to develop electrics. You can flip through this slideshow of electric cars that are in the works if you don’t want to take our word for it.

Tesla is also about to sign up for a $350 million DOE loan to build a plant to make Model S sedans. That car, we think, will cost well over its $57,400 estimate. While the company did get 1,000 refundable downpayments on the car now, there’s no guarantee it will be a winner when it hits the road in 2012.

In short: Daimler picked up a company that has got one product with weak sales and is about to be saddled with enormous debt.

Daimler doesn’t even seem to believe in Tesla’s battery technology. At the press conference to announce the deal, Elon Musk admitted he wasn’t married to his own battery technology.

Tesla is the only company using lithium cobalt technology, which is what is used in laptop batteries. Greentech Media says could they could become an anachronism someday soon. When Tesla developed its batteries, that was cutting edge. Now, it’s not.

Aside from brand, we don’t see Tesla contributing much to this partnership.

We must be missing something, though, because in this market, car companies don’t let $50 million walk out the door for no good reason.

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