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What Would a Tesla-BMW Deal Look Like?

Stocks in this article: TSLA GM

NEW YORK (TheStreet) -- Fair disclosure right up front: The thesis presented in this article is speculation. I don't know anything, I could be completely wrong, but my conclusion is based on the logic of the argument presented.

With that out of the way, the purpose of this article is to advance the thesis that I believe the meeting BMW had with Tesla (TSLA) on June 11 -- as reported by none other than Elon Musk on June 12 -- will actually lead to a deal, and probably relatively soon.

First, let's deal with the core of any deal: Motivation. Why would BMW want to enter into a supercharging deal with Tesla and vice versa?

First, BMW: Automakers are generally uncomfortable dealing with fueling infrastructure. Many of these reasons are legal. For example, can you imagine General Motors' (GM) lawyers signing off on a project that would place hundreds or thousands of unmanned 440-volt DC chargers along the world's freeway rest stops? What if someone electrocutes himself?

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In other words, car companies are leery about the liability of managing unmanned electric truck stops. But there is another reason. Automakers and oil companies have a long history of being under attack by government for vertical integration. For example, existing automakers are famously disallowed from selling cars directly to the consumer.

One could also go back to the 1909 U.S. government antitrust case against Standard Oil. Old automakers don't want to become accused of vertically integrating the transportation and fueling food chain, and they don't want to spend anymore time in Congressional hearings defending their actions, on top of the painful experiences with bailouts and recalls.

Tesla, on the other hand, has no such institutional memory or inhibitions. Elon Musk famously tweets in a manner that would cause a general counsel to have a heart attack. Musk thinks big and wants to build a factory that vertically integrates as far as possible backward in the transportation food chain, seemingly all the way down to the lithium mine. In the other direction, he would integrate forward all the way to selling spacecraft services for travel to Mars.

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