Talk of Tesla bankruptcy and the future of electric cars

By Christoper A. Sawyer
The Virtual Driver

(April 12, 2018) The word on the street — Wall Street, that is — is that Tesla is mere months away from bankruptcy. The glacial ramp-up of Model 3 production has placed a massive strain on cash flow, there is no end in sight to the delays surrounding this car, and there has been another fatal crash with a Model S on Auto Pilot.

Some money managers, however, say troubles like this are common for companies plowing new ground, and insist the recent continued drop in share price is a rare buying opportunity. However, those same advisors base their optimism on the “inevitability” of a wholesale move to electric propulsion and the broad acceptance of, and demand for, autonomous cars.

Perhaps those guys should read the paper.

Fewer than 200,000 electrified vehicles were sold in the U.S. in 2017, amounting to less than two percent of total new vehicle sales. This has raised concerns that consumers are, to put it mildly, unwilling to buy an EV or hybrid. So much so that seven Northeastern states (those that adopted California’s emission laws) have joined forces with 16 automakers (the companies that are going to have to design, develop, build and — most importantly — sell these cars at a profit to meet these standards) to promote buying an electrified vehicle.

The advertising and marketing program will include use of social media, advertising, and strategic events. The campaign will operate under the slogan “Drive Change. Drive Electric.” Drive me crazy…

Ford is one of the participants in the program, and recently increased its investment in EVs by $11billion to build up to 40 new EV and hybrid models by 2022. If the situation at Tesla is so dire, Ford might want to consider prepping for this event by readying a legal brief for a “wash-and-dry” bankruptcy that puts Tesla’s physical and intellectual property assets under its control.

All overhanging debt and liability could be placed in a shell company — e.g. The Old Electric Car Company — salvaging the Tesla name and image while not burdening Ford with Elon Musk’s troubles. It’s similar to what the government did with GM during its bankruptcy, but without all of the behind-the-scenes political shenanigans.

Buying Tesla would give Ford a ready-made electric vehicle division, battery plant, and Tesla’s  goodwill with the public. Though under Ford’s umbrella, it could operate with a degree of independence, and lend its name to Lincoln and Ford products with electrified drivetrains. In the same way the Toyota’s Prius became the gold standard for hybrids, Tesla could do the same for plug-in hybrid and full-EV Fords and Lincolns.

The irony would be that, instead of Shelby Cobras wearing “Powered by Ford” tags on their fenders, Ford and Lincoln-branded models would wear “Powered by Tesla” badges on their flanks.