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I have a prediction.


Recently, Google Ventures lead a huge $258 million investment round in Uber. Which is interesting in itself, because it's their largest investment ever. But, things are put into an interesting perspective when you consider some of the rumors floating around.

 

So... Google wants to build cars and sell them to Uber. Sounds great, really. Uber will corner the automated taxi business, grow huge and go public. Google will cash out and get a huge return on their investment. But why stop there? Why would Google limit themselves to just the taxi business. I mean, they'll need to invest billions into the car manufacturing, no way they'll get their return from just Uber, right?

 

Google will have to spend billions to do this, but not in the way you may think. After working in an automotive manufacturing plant, I can assure you that they don't just pop up out of the ground, on the cheap. There's hundreds and hundreds of millions of dollars of assets in every single plant. There's so much involved in setting up a plant that it'll make your head spin. It'll take too long and cost too much for Google to do it from the ground up, plus it'll give their competition time to get their act together.

 

Nope, Google needs to buy it. They're no stranger to making obscenely large acquisitions, so Tesla's market cap of $19.94 billion shouldn't scare them too much. They have the money to spend, after all. If that was me, it'd be burning a hole in my pocket.

 

But you may be asking yourself, why Tesla? Tesla is more of a technology company then it is a car company. On top of that, the CEO, Elon Musk, embodies everything Google wants. He already wants to bring affordable electric cars to the masses. Their Model S is one of the safest cars on the road. When it comes to customer service, they treat their customers well.

 

Google buys Tesla and has an exclusive deal with Uber. Where's that leave everyone else, though? The technology industry, by and large, won't care. They'll partner with Google to provide in-car entertainment, mainly Netflix, Spotify and Facebook. Amazon and Apple won't care. Microsoft may care, but they'll be so broken that they won't even be able to do anything about it if they wanted to.

 

The real threats, if you can even call them that, are from the incumbents - Toyota, GM, Chrysler/Fiat, etc. But even then, I don't think Google will have to worry too much. They'll dance circles around the old school manufacturers. The game will have changed and Google will be at the forefront, while the rest will be stuck in the past. It's happened before, to multiple industries. No one will be able to touch Tesla's reputation or Google's savvy.

 

My prediction: Google will buy Tesla as a way to fully utilize their partnership with Uber. They'll take full advantage, and take over the automotive market, flooding it with automated vehicles. Billions and billions of dollars in profit will follow and the shareholders of Google will become very wealthy people.

 

When will this happen? I have no idea. All I can for sure is that grand plan has been put into motion and nothing, hell or high water, will prevent it from happening. God help all those caught in the cross fire.

  • Like 2

4 Comments


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A.J.

Posted

I'm not as convinced as you are, but I do see Google looking at strategic partnerships to move the ball forward.  They will either buy or buy into a car company and exert their influence.

  • Like 1
advocatus diaboli

Posted

It only makes sense, to follow the dollar signs. I can't see them settling for a partnership with a car company. A weird, symbiotic dependency of each other forms, like Microsoft and Nokia. Google is too smart to put themselves in that position and they're too smart to pass up the opportunity.

 

Not only are they smart enough to do this, they have the financial power to actually make it a reality.

  • Like 1
Ashi

Posted

Google Buys Tesla reminds me of Time-Warner AOL merger....  Not a fan of Google dominates everything....  Though I love Amazon, but I am a little wary of it being too dominating in B2C e-Commerse....  So Google dominating everything in our lives is kind of scary thought (not to mention many things Google does is sort of going after Walmart pattern). 

Westie

Posted

I think they would have problems with anti trust in parts of your scenario....

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