GM's loss could be Tesla's gain.
General Motors dropped the collective jaws of everyone in the automotive industry with the announcement it would be killing off six models and closing down factories in the process. The six discontinued models include the Chevy Cruze, Volt, and Impala, Buick LaCrosse, as well as the Cadillac CT6 and XTS - and more models could still be on the chopping block.
So far, GM has announced it will be closing five of its plants in Canada, Ohio, Michigan, and Maryland. It is unsure whether these plants will be closing permanently, or if GM has other plans for them. If GM will, in fact, leave these plants idle, there may be a buyer interested in using them.
In an interview with CBS '60 Minutes,' Tesla CEO Elon Musk said he would be interested in buying the GM factories. "It's possible that we would be interested. If they were going to sell a plant or not use it then we would take it over," Musk said. Tesla initially struggled to hit production targets on its highly anticipated Model 3 sedan but has recently been able to produce them at a steady rate.
In order to meet production goals, Tesla resorted to unconventional methods such as building a second assembly line in a tent-like structure next to its Freemont plant. Musk says this effort helped increase production by 50%. Purchasing one or more of GM's factories could help Tesla further increase its production capabilities.
It is still unknown which plant(s) Telsa would be interested in purchasing and whether or not Musk's interest in the GM factories is even serious. Musk does have a habit of making bold claims. If Tesla were to buy one of the GM plants, the facility in Oshawa, Ontario would be an unlikely candidate. In an interview with CTV News, Will Mitchell, a professor of strategic management at the University of Toronto’s Rotman School of Management said there was a “very low” chance of Oshawa plant being a target for Tesla.
“It’s a huge plant. They’re not ready to go to that scale of production yet,” he said. “Never say never, but it’s unlikely.” The factory would also need to be significantly retooled to produce electric cars and the staff would likely have to be retrained. “The only solution for Oshawa is General Motors at this time,” Mitchell said.