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GM tipped to buy Tesla in 2014 - report

Tue, 31 Dec 2013 00:00:00 -0800

Tesla has made a real splash in the electric-car scene, so it should come as no surprise that its success is generating renewed interest in the fledgling start-up.

New media reports in the US suggest that one of America's biggest car makers, General Motors, is considering buying Tesla in 2014.

Veteran auto industry analyst Yra Harris, of Praxis Trading, told CNBC that GM may make a bid for Elon Musk's electric vehicle (EV) specialist in the coming months.

Tesla started off building the Roadster, an electric version of the Lotus Elise, at Lotus's manufacturing base in Norfolk, UK. That car was a stepping-stone launch product, but the latest Tesla Model S saloon (above) is a viable BMW 5-Series and Mercedes E-Class rival with an unusually long range.

The Tesla Model S has left reviewers highly impressed. And, it seems, other car makers who are considering buying into Tesla.

Autocar, which lavished praise upon the Model S, got more than 250 miles from each charge, at a cost of £4.50 to recharge from empty; the Aston Martin Rapide S it pitted the Tesla against, cost £120 to refill after a similar distance.

However, there are good reasons why Harris's prediction may not come to fruition. GM has in recent years been retreating from partnerships and acquisitions. It has sold or closed its Saab, Hummer, Pontiac, Saturn and Oldsmobile brands - and is currently unravelling its deal with PSA Peugeot Citroen and withdrawing Chevrolet from Europe.

Tesla has already struck partnerships with Mercedes-owning Daimler and Toyota, which would complicate any takeover. Not to mention its current status as a darling of Wall Street: its market capitalisation stands at $18 billion, making it an expensive and risky takeover target.

Still, the news that car makers are courting Tesla is further proof that electric cars are coming of age. And isn't it ironic that a Silicon Valley start-up is making bigger waves than most car makers with decades more experience in building motor vehicles?

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