Could the most popular electric car company in the world and the biggest tech company in the world enter into a powerhouse marriage? That has been the recent rumors circulating around the internet about a coming day when Tesla Motors Inc (NASDAQ:TSLA) and Google Inc (NASDAQ:GOOG) might join forces and create high-tech, clean cars. Although Tesla CEO Elon Musk strongly denies these rumors because he desires to turn Tesla Motors Inc (NASDAQ:TSLA) into a company that mass markets electric vehicles, news that Tesla Motors Inc (NASDAQ:TSLA) paid back a Department of Energy loan ahead of schedule, as well as posting its first quarterly profit since the company was founded, have driven speculation. Not to mention, Mr. Musk didn’t automatically rule out a takeover in the future, which leaves the door open.
How likely is it? Not right now
Mr. Musk has made it a wish that when he does decide to step away from his baby, he wants to leave it in the hands of a company with good corporate social responsibility and a futuristic outlook with respect for technology. To many observers, this describes Google perfectly, and with good reason. Google, despite starting as an internet search giant, has become a multi-headed beast offering computer software, email services, and a host of other things. Much of these developments have come thanks to Google’s purchase of 127 small tech companies since the company was founded, including most recently Israeli traffic software Waze. More importantly, Google was an early investor in Tesla Motors Inc (NASDAQ:TSLA) back in 2010, and if Tesla can make that early investment worthwhile, Google Inc (NASDAQ:GOOG) may soon the rest of the company. It would be within Google’s scope to buy an electric car maker as well, since it could expand its footprint even further with clean energy markets. Not to mention, an acquisition of a company like Tesla Motors Inc (NASDAQ:TSLA) takes a rising star in the automotive industry, and allows Google to have the opportunity to make its own “Google car.”
Unfortunately for Google, and for Google fans, Mr. Musk has no intention of selling his company just yet, and Google isn’t quite ready to take such a big leap. Mr. Musk’s aim is still to create a mass market electric vehicle that can be purchased by average people, rather than just sticking to luxury cars. Currently, Tesla Motors Inc (NASDAQ:TSLA) is developing the Model X, an electric SUV, along with a $30,000 model of the Model S, which would diversify their offerings as well as make a cheaper vehicle for the average consumer.
Tesla still has work to do
Tesla just reported its first quarterly profit as well, so it would be a tough sell because buyers are looking for a company with a more stable performance outlook. Also, it is a company that is currently trading at 816 times its 2013 earnings and has a forward P/E of 123.8, neither of which are indicators of affordability for a big shark like Google Inc (NASDAQ:GOOG). Also, Tesla’s market cap is currently at $12 billion, which according to many analysts is seen as too high of a valuation given what is keeping it upright. Tesla could become more affordable with a move into mass production, but even by Mr. Musk’s standards, that is a long way off.
Elon Musk’s other company
This doesn’t mean there aren’t options for anyone wanting to get in on Musk Mania. His solar energy company SolarCity Corp (NASDAQ:SCTY) could be a tempting purchase, although there are no rumors of a potential sale of this company. Even still, if Tesla in the future decides to be sold, SolarCity Corp (NASDAQ:SCTY) may go with it. SolarCity Corp (NASDAQ:SCTY) is currently testing Tesla batteries as well as selling energy efficiency software to homes, which forms the bulk of the small company’s operations. Like Tesla, SolarCity’s manufacturing and contracting are all in-house, which streamlines innovation, but means that it will take a longer time to be profitable and hit economies of scale.