- Elon Musk has tried to limit Tesla’s reliance on suppliers.
- He’s also expanded the company’s product offerings.
- Musk could look to acquire battery, ride-hailing, and insurance startups, experts say.
Tesla CEO Elon Musk has for years tried to limit his electric-car maker’s reliance on suppliers, and he hasn’t shied away from buying startups in pursuit of that goal. From solar panels to batteries to self-driving tech, Tesla has used acquisitions to bolster its diversification efforts.
As Tesla tries to grow its insurance and energy-storage businesses while developing batteries and an autonomous-driving system, Insider asked auto-industry experts which startups Musk might target next.
These are five areas in which Tesla could make an acquisition and the 11 startups that would make the best fit.
Tesla is trying to turn its Autopilot driver-assistance system into a full-service computer chauffeur, but it has a ways to go before owners can take a nap mid-commute.
The company is taking an unconventional approach to self-driving technology, favoring a camera-based system and ditching the radar and lidar sensors of its competitors.
That means startups focused on camera-based technology would be a good fit, said Asad Hussain, a mobility analyst at PitchBook. Two possibilities include Hypr, which was founded by the former CEO of Zoox, and Wayve.
Another option would be Recogni, which makes software and hardware to reduce the amount of power a car has to use to identify objects on the road.
In 2019, Musk said Tesla would roll out an autonomous ride-hailing service by the end of 2020. The company missed that deadline, and it doesn’t appear it will have the technology necessary to launch that service anytime soon, but buying a startup could help it become more familiar with the logistics of ride-hailing.
Revel and Kaptyn are already running small ride-hailing services with Tesla vehicles, so either could be a good fit, Hussain said.
Tesla started offering insurance plans to customers in 2019, but so far it’s been limited to owners in California and Texas. The company has said it plans to expand its availability to other states, and acquiring a startup with a built-in customer base could help it accelerate that effort.
Mark Norman, a managing partner at FM Capital, said Tesla would most likely focus on startups that sell directly to their customers online rather than work through third-party brokers, since the EV maker takes the same approach with its vehicles. Norman mentioned Clearcover and Metromile as possible targets.
In addition to controlling its sales process, Tesla operates its own service network, which includes repair centers and mobile technicians who travel to a customer’s home or office to fix their vehicle. But Tesla could expand its service offerings to include mobile charging services for individual or corporate customers.
The startups SparkCharge and FreeWire could give Tesla a head start, Norman said.
Batteries have become a focus for the auto industry as it rolls out more EVs. Tesla announced last year that it was working on its own battery cells, saying they would improve cost and performance while reducing the company’s reliance on suppliers.
Tesla has already made one battery-related acquisition, buying Maxwell in 2019 for its dry-electrode technology. If Tesla were to buy another startup, it would probably look toward those that make battery materials designed to fit easily into existing manufacturing processes, rather than those focused on creating new types of cells, said Luke Gear, a tech analyst at IDTechEx.
Two possible targets include Sila Nanotechnologies and Group14, he said, though, he added it’s unclear whether Tesla would benefit from making an acquisition.