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How the Tesla drama could end

Illustration of Tesla CEO Elon Musk's head on a balloon, about to be popped by Tesla logo
Illustration: Sarah Grillo/Axios

Tesla's tumultuous year has analysts and industry pundits speculating about a possible end game for the 16-year-old electric car manufacturer, ranging from a distressed sale of the company to a soaring, China-led rebound.

Why it matters: Even once-bullish investors have turned decidedly sour on the company lately amid slowing demand for cars like the Model 3 and cash flow warnings from CEO Elon Musk. The next 6 to 12 months will be critical in determining the eventual outcome.

Driving the news: Tesla has always been a roller-coaster and generated divergent views among investors. What's new is a greater wariness about the company's long-term future.

Predicting what's next at Tesla is always difficult — and Tesla declined to comment — but here are some plausible scenarios:

China to the rescue: Electric vehicle sales in China are through the roof, thanks to government mandates, which makes it a perfect market for Tesla.

Yes, but: A brewing trade war between the U.S. and China could limit Tesla's upside in China, and should Tesla default on its loans, Chinese interests could wind up with a bigger stake. In the current climate, however, the U.S. government would likely stop that from happening.

Distressed fire sale: Some analysts have weighed the possibility of a buyout by another automaker or tech company, but most say Tesla is still too expensive, despite the share collapse.

  • Some analysts mention Toyota as a potential white knight, mostly because it's seen as a laggard in electric vehicles.
  • But Toyota has other plans that don't involve Tesla. Later this week, the company plans to roll out a long-term electric vehicle strategy that leans heavily on its own Chinese partners.
  • Any buyer would likely insist Musk leave the company, but that's unlikely, too.
"Tesla is Elon. And Elon is Tesla"
— Brian Johnson, Barclay's automotive analyst, to Axios

Licensing its technology: Tesla's lithium-ion battery pack and related power electronics in the Model 3 are the envy of the industry, but it has struggled to master vehicle manufacturing.

  • Instead of trying to build its own cars, it could license its premium EV technology and software capabilities to other manufacturers.

Or ... Tesla delivers: Musk has a way of defying skeptics, and the company may well manage to muddle through — again.