A Tesla collapse would boost European carmakers, Bernstein Says

Germany's car industry, including Volkswagen AG and supplier Continental AG, stands to gain in both business and stock prices should Tesla Inc.'s precarious finances lead to the US electric-vehicle manufacturer's collapse, according to analysts at Sanford C. Bernstein & Co.

Photo: Kiichiro Sato/AP

Tesla's initial success with the Model S sedan, which a carmaking rival called "deeply impressive," seemed to show that new battery-power systems could soon overtake conventional engines, and that depressed the shares of established original-equipment manufacturers, Bernstein analyst Max Warburton wrote in a report Monday.

But now, the Palo Alto, California-based company appears to be "structurally unprofitable," with high fixed costs, a much smaller market for its models than expected and technology that is no longer unique, Warburton said. That compares with Daimler AG's Mercedes-Benz brand and BMW AG, which consistently generate cash and are set to widen their electric line-ups soon.

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