The most important thing in the field of automotive technology is investment, and it is common to invest in mergers and acquisitions of tens of millions or even hundreds of millions of dollars.
In fact, Tesla, the leader of smart electric vehicles, has also experienced the process of buying and buying in the process of moving from infancy to strength.
Tesla's M&A strategy is similar to Apple's, focusing on acquiring small and medium-sized technology companies and acquiring technology and talent through wholly-owned acquisitions.
At the same time, Tesla has a grand picture of internalized production to reduce costs and increase efficiency - in key areas such as automobile manufacturing, autonomous driving and battery production, step by step to raise barriers, and constantly strengthen its own moat.
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Tesla M&A Strategy
Acquire talent and technology through holistic buy-in
As the king of the smartphone era, Apple has always been at the forefront of technology and fashion.
Tesla's leading position in the electric vehicle industry is also obvious to all, and people often compare Tesla to "the Apple of the car".
Tesla and Apple are not only the best in their respective fields, but also very similar in their merger and acquisition strategies.
Apple CEO Tim Cook once said, "We are mainly interested in small, technologically innovative companies that can complement Apple's products."
Tesla has a similar preference.
By detail, Tesla has acquired more than 10 companies: from Riviera Tool, a stamping parts manufacturer in 2015, to Sillion, a battery anode material technology startup in 2021, and Springpower International, a Canadian company that acquired battery cathode technology.
Interestingly, like Apple, Tesla doesn't often announce these mergers and acquisitions.
Apple employs a small-scale transaction strategy for mergers and acquisitions, which can be summed up precisely in one word: Acq-hire, in short, mergers and acquisitions aimed at acquiring talent.
Tesla's acquisition of companies are also mostly small start-up companies, and the acquisition amount and process are very confidential.
In most cases, Tesla never announces these acquisitions in a generous manner, always quietly completing the acquisition, and most of the speculations that have completed the acquisition are also in the newspaper.
Tesla's announcement in 2016 of its $2.6 billion acquisition of solar panel company SolarCity is an exception. The acquisition was also brought to court because of Tesla's entanglement with shareholders' interests, and Musk even defended the acquisition.
Well-known acquisitions like this are in the minority after all, and in most cases Tesla is still private, and the outside world relies on various news speculations about the acquisition process, amount and even whether to complete the acquisition.
Another feature is that most of Tesla's acquisition targets are small and medium-sized companies, focusing on talent and technology.
To put it bluntly, the use of acquisition as a means to legally occupy talent and technology, and quickly grow their own strength.
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Tesla merger three stages
In terms of mergers and acquisitions, Tesla basically follows the route of automobile manufacturing, automatic driving, and battery production and manufacturing.
In those areas that are very important for business development but difficult to make breakthroughs for a while, Tesla has gradually acquired corresponding talents and technologies through mergers and acquisitions to lay a solid foundation.
This is also the three main stages of Tesla's acquisition road: the early stage is the technology related to automobile manufacturing, then autonomous driving and artificial intelligence, and then continues to battery production and manufacturing. This also alludes to the phased characteristics of the development of electric vehicles.
(1) 2015-2017: The focus is on ensuring access to automotive manufacturing technology
In 2015, Tesla first acquired Riviera Tool, a stamping parts manufacturer Vieira Mould Company, to increase electric vehicle capacity.
It was Tesla's first acquisition since its inception in 2003, and Tesla's business expanded into Michigan.
At that time, Tesla was on the verge of expanding product capacity and increasing sales, and only Model S models were on sale this year, Model X was scheduled to start shipping in the third quarter of that year, and Model 3 was scheduled to be launched in 2017.
Riviera Tool, a company that produces tools and dies for stamping metal parts, can supply stamped parts to Tesla's Factory in Vermont, California, boosting Tesla's capacity.
Tesla also confirmed the acquisition and renamed Riviera Tool, a Vieira mold company, tesla tool and Die Factory, but Tesla did not disclose the transaction price.
Prior to the acquisition, Riviera Tool was not only a supplier of parts for Tesla, but also had customers in Detroit's General Motors, Ford, Chrysler, and BMW, Nissan and Daimler.
After the acquisition was completed, Riviera began to focus on Tesla after completing orders with other customers.
In order to increase Model 3 production capacity, Tesla acquired Grohmann Engineering, a German automation production company, in 2016.
After being acquired by Tesla, Grohmann changed its name to Tesla Grohmann Automation, and Klaus Grohmann, the founder of Grohmann Engineering, joined Tesla as the head of the newly formed division "Tesla Advanced Automation in Germany".
At that time, Grohmann Engineering had 700 employees.
JB Straubel, then-Tesla CTO, also said that Germany's large engineering talent pool was also an important factor in Tesla's decision to invest in Germany, and the completion of the acquisition will expand Grohman's team to 1,000 people.
Musk attaches great importance to this "first major deal in Tesla's history". "Automation is a very important part of Tesla's future," he said.
By acquiring "machines for the production of machines," Tesla once again expanded its business to Germany, the home of automobile manufacturing.
Tesla believes that at a time when the Model 3 is increasing car production before its launch, automation has significantly improved production speed and quality.
In addition, Musk also said, "The key to the business is people, and we are very honored to be able to keep Groverman", saying that "he is a pivotal figure in the company."
News reports say Tesla's acquisition price is as high as $150 million.
Improving production capacity and efficiency is also the focus of mass production of Tesla vehicles.
In November 2017, Tesla acquired Perbix, a company that makes automation equipment for factories.
Prior to the acquisition, Perbix had been working with Tesla for three years to produce various automation tools for Tesla, including those that drive rotors in Tesla cars.
With this acquisition, Tesla will be able to produce more auto parts in its own factories and reduce the cost of car production using highly automated technology.
This is in line with the acquisition of Grohmann Engineering, a German automation production company, in 2016.
Tesla suffered from the Model 3 capacity dilemma, and Musk also pointed out the capacity problem on Twitter. One reason for the reported lack of capacity is that many parts need to be machined manually, and the acquisition of Perbix can effectively solve this problem.
Tesla went to great lengths to solve the problem, and although the transaction price was not disclosed, James S. Dudley, the owner of Perbix, received 34,772 shares of Tesla stock, which were worth more than $10 million at the time.
Tesla focused on car manufacturing and mass production technology in the early days of development, and constantly ensured the scale of mass production through acquisitions, as Musk once said, a high degree of automation can reduce the cost of car production.
This is also Tesla's business logic, as is now the gigafactory in California & Texas, Shanghai in China and Berlin in Germany.
(2) 2019: Start focusing on autonomous driving and artificial intelligence
After the scale of mass production vehicles came up, Tesla focused on the problem of intelligence, and Autopilot became the top priority of Tesla's development.
In 2019, artificial intelligence companies began to appear on Tesla's merger and acquisition list.
The first tesla to take a fancy is self-driving perception startup DeepScale.
Deep Scale, CEO of Deep Scale, a startup that uses low-power processes to achieve high-precision computer vision technology, believes that Deep Scale's strength lies in pre-perception fusion, "what we do is use the pre-fusion of raw data, and do the fusion before object detection."
Using raw data rather than target data for perceptual fusion is also Deep Scale's most differentiated competitive advantage.
With this acquisition, Tesla also includes the CEO of Deep Scale, who works for Tesla as a senior machine learning scientist.
At the same time, Tesla and Deep Scale have achieved a strong coupling of pre-fusion perception and completely independent research and development perception at the technical level.
Tesla, which takes a purely visual route on the road to self-driving, the strategy of acquiring deepscale to acquire technology and talent is really precise and far-sighted.
At present, Tesla FSD has expanded from the United States to Canada, and Musk also said that full self-driving can be achieved within this year.
Judging from the test of Tesla FSD by foreign car owners, although there are always small problems, the test results are often amazing, and Tesla is committed to making the software behave as natural as a human driver.
(3) 2019-2021: Focus on battery production
At Battery Day in September 2020, Musk demonstrated Tesla's ambitions in batteries and kicked off the prelude to the internalization of batteries.
Tesla not only released the third generation of 4680 batteries with stronger energy density and lower energy consumption, but also introduced the architectural innovation of the physical level of the battery - CTC technology, which can eliminate the pack design and directly install the battery or module on the body.
Just before and after battery days, Tesla also launched five battery-related mergers and acquisitions.
Frequent mergers and acquisitions in the battery field show that Tesla's new focus is on battery technology innovation.
In early 2019, Tesla announced an acquisition agreement with Maxwell Technologies, a U.S.-based battery technology company, to acquire the latter at a price of $4.75 per share for a total price of $218 million.
Upon completion of the acquisition, Maxwell Technologies will merge with a subsidiary of Tesla to become a wholly owned subsidiary of Tesla.
Maxwell Technologies' highlight was the development and patenting of a dry electrode technology.
Maxwell's dry electrode process provides a new way to fabricate lithium-ion batteries by fibriling PTFE (Teflon) fibrils mixed with active negative or positive material particles to form a self-supporting film of negative or positive material.
Most critically, this technology will allow the negative and positive electrodes of the battery to be solvent-free. Traditional lithium battery manufacturing requires the use of solvents with adhesive materials, common solvent NMP toxicity must be carefully recovered, purified and reused, but also requires a huge, expensive and complex electrode coating machine.
This technology can significantly improve battery performance, with greater battery power and further reduce production costs in the future.
In October 2019, Tesla acquired battery manufacturer Hibar Systems, and hibar Systems' pumps will be used in the rapid battery assembly process introduced for the new 4680 battery cells.
Through the above two acquisitions, Tesla not only acquired the dry electrode process, but also had battery manufacturing technology, which further helped the internalization of battery production.
But Tesla did not stop there, and extended its tentacles to the field of battery materials.
In 2021, Tesla is targeting Springpower International, which has the technology to produce environmentally friendly anode materials, and SiILion, a startup with silicon anode material production technology.
With the acquisition of Springpower International, Tesla was granted a patent that could reap significant benefits in terms of the amount of water used to make the battery cathode and the costs associated with the process.
Tesla's engineering director Drew Baglino once described this problem in layman's terms: when manufacturing cathodes, metal sulfates are required to add chemicals and inject water, and after a series of reactions, the final result is a small amount of cathodes, but more wastewater and by-products, which are not efficient.
Springpower International solves real-world problems by providing Tesla with the technology it needs, which is a very significant boost to Tesla's mass production of 4680 batteries.
Tesla's eye on SiILion is researching a new high-energy-density battery chemical based on a "high-load silicon anode" and a patent called a "large battery anode containing silicon particles."
Tesla's fancy to SiILion actually has a foreshadowing. On Battery Day in September 2020, Tesla said that the new 4680 battery will be powered by a silicon-based battery anode, and the SiILion can meet Tesla's needs.
It is not difficult to see that these acquisitions in the field of batteries are paving the way for Tesla's self-produced 4680 batteries.
At present, Tesla has installed a 4680 battery production line in Texas, and production is expected to begin in early April. At the same time, Tesla also plans to build a 4680 battery factory in the Berlin Gigafactory.
On March 22 this year, Musk estimated that the production of electric vehicle batteries will face challenges in 2023, and batteries will become a "limiting factor" hindering Tesla's development in the next 2-3 years.
But with the scale of battery production and further reduction in costs, the 4680 battery will become Tesla's new sales killer.
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These acquisitions
Achieve Tesla's trillion-dollar market value road
From focusing on automobile manufacturing technology to focusing on intelligence and then extending to the heart of new energy vehicles - the power battery field, Tesla's every acquisition is to solve practical problems, obtain technical talents and ultimately achieve internalized production cost reduction and efficiency.
Tesla has been moving forward in its journey to become a leader in electric vehicles, especially in the capital markets.
On October 25 last year, hertz, an established CAR rental giant in the United States, announced a one-time purchase of 100,000 Tesla cars, with a purchase amount of up to $4.2 billion, and Tesla's stock price soared on the same day, leaping into a trillion-dollar market value club.
At this point, the membership of the global trillion-dollar club has increased to 6, and Tesla, whose stock price is "crazy", has surpassed Saudi Aramco and ranked behind Apple, Amazon, Microsoft and Google Technologies.
Tesla's achievements in the capital market are amazing, and its self-driving technology and manufacturing capabilities are also enjoyed by the industry.
The new forces of car companies and the traditional car companies facing the test of transformation are imitating and even copying the Tesla model, both overtly and covertly. Tesla has become the Apple of smart electric vehicles.
Focus on small and medium-sized technology companies, acquire cutting-edge technology and talents through acquisitions, and constantly solve practical problems in development.
Step by step, Tesla has mastered the important technology in the field of electric vehicles in its own hands, and through large-scale mass production, it has continuously amplified this technology and talent advantages, and the cost-effectiveness brought by internalized production has made Tesla a car company with a gross profit margin of more than 30% for two consecutive quarters last year, and it has ridden the dust among many car companies.
With the rise in the price of battery raw materials and the possibility of shortage of raw materials in the future, the industry's eyes once again fell on the power battery field, and Musk said that he would build the world's largest battery production plant at Tesla's Berlin factory.
When the battery production line in Texas and the battery factory in the Berlin Communist Party were in operation, Tesla's new killer was already in place.