Apple: Rumors of EV to Challenge Tesla or Buying Tesla

[sundaymorning]

I'm so tired of this meme. Why does this brain nettle stick so stubbornly in people's heads?

I for one do not want to sell to Apple, even at $600/share.

I agree, Tesla has the potential to be $1,000 a share by 2020 so no way I would want Elon to sell to Apple, not even if they offered $75 billion tomorrow. Right now it's a sit on my shares and wait game, forget you Apple!! If you're reading this Tim Cook, stick with your darn iPhones and iwatches, create your own icar the patents are free, leave my Tesla shares out of the equation! My vote is a NO!!

 

[avatar]

As a general rule when you see articles that say company A should acquire company B, ask yourself what company A will get uniquely through acquisition that it will not get through a partnership or some other lighter weight arrangement. Why would Apple choose to build an electric car? What purpose will it serve? Why wouldn't they just partner with Tesla and all the gasoline car companies by offering CarPlay? I say these rumors are FUD. Apple will develop CarPlay into a deeply integrated automobile OS. CarPlay will have autonomous driving features, mapping, voice control and all the features that Tesla is building into it's cars. They will most likely partner with Tesla as opposed to acquire. My $0.02.

 

[chickensevil]

Even if you don't think it is a good idea for Apple would you consider it a better way to expedite the adoption of EVs (BEVs) and completing TM's stated objectives?

Not with some other company's stranglehold over them, no. I have seen so many acquisitions over the past few years make me sick to my stomach at how big company A buys little company B for some ungodly sum of cash and then destroys the very image of what the original concept was. Occulus Rift and Instagram are two that immediately come to mind... Granted those weren't bought by Apple but I can't really speak to their recent acquisitions. What I will throw out there is that their stated philosophy is to acquire *small* companies that can be *easily* integrated into existing projects. One Tesla is far from small both by market cap and by employee count. Their most expensive acquisition was Beats Audio and that was for 3B. Nothing about Tesla would fit their philosophy and Tesla would lose their core mission as it is drowned out by iCrap devices instead of electric vehicles.

To other people's responses, how in the world does an electric car make sense to Apple? At least with Google their business model thrives on advertising so the goal is to get you less on driving andore looking at their advertising so cars make sense to them... In some.. Weird way... But Apple? They focus on computer hardware and software. So while the dash of the car could eventually be a Mac the rest of the car is really outside of their comfort zone for business goals. Same with stationary storage. They are not a battery company... They don't make batteries. Never mind the programming that goes into managing said batteries. This is not one of their core competencies. Apple getting in cars and solar/storage is like them deciding to become a grocery store and start selling actual apples. I mean, sure they have Apple in the name and logo... But does it really make any sense?

 

[Causalien]

If anything, Apple's electric dream will force the manufacturers to wake up and take EVs seriously. With that said, it will probably push a few of them to take up Tesla's open patents and use Gigafactory batteries since Apple has a historic tendency of entering a market and just killing all its established players. Tesla will survive and the rest will be dependent on Gigafactory.

However it plays out, it will be a net benefit on Tesla because by then, Tesla will be either #1 or #2 EV maker in the world. Which is a bigger role than the current situation.

*edit BTW. If Elon sells to apple. I am out. I think the same can be said for most of the diehards here.

 

[Raffy.Roma]

IMO it's not a matter of selling to Apple or not. What really matters is that now Elon is leading TESLA with the purpose of building smart electric vehicles and of getting rid of fossil fuels for all transportation. If Apple buys TESLA will the new CEO lead TESLA with the same purpose? This is the main point IMO.

From this point of view Elon is a guarantee, while we don't know what would happen if Apple will buy TESLA.

 

[schonelucht]

First of all, if Apple really is seriously working on a battery-driven electric car this is very good news. It vindicates Elon Musk's vision that the future of the car industry is indeed going to be battery operated vehicles. It validates Tesla's business model in a supreme way. Not just that, it will make sure other industries will fall over themselves to help the car industry electrify (everyone wants to be a friend of Apple)

But it also is a great danger. Apple is company that can execute. It has the engineers, it has the cash, it has the retail infrastructure, it has the brand, it has consumer trust, it has the management. It just lacks manufacturing experience. But Apple as a company has such a halo effect that I think it would be quite easy for them to hire manufacturing top talent in very, very short order. Or alternatively, it could just buy any of the current car manufacturers easily. We all know Tesla's largest challenge is (timely) execution. A new contender justs entered the market and it will turn up the heat on Tesla's weak point. Tesla's management will have to up their game!

 

[jerry33]

But it also is a great danger. Apple is company that can execute. It has the engineers, it has the cash, it has the retail infrastructure, it has the brand, it has consumer trust, it has the management. It just lacks manufacturing experience. But Apple as a company has such a halo effect that I think it would be quite easy for them to hire manufacturing top talent in very, very short order. Or alternatively, it could just buy any of the current car manufacturers easily. We all know Tesla's largest challenge is (timely) execution. A new contender justs entered the market and it will turn up the heat on Tesla's weak point. Tesla's management will have to up their game!

If Apple does something, they have two choices: 1. Make a Model S clone. 2. Make a popular priced car (which might also be a Model 3 clone as even in the best case they won't be able to execute it before the Model 3 comes out). Neither will hurt Tesla because A. There is plenty of room for multiple EV manufacturers. B. No one wants a knock-off if they can have the real deal (which is why Android doesn't fare very well, except for the cheapest no-profit models).

 

[schonelucht]

If Apple does something, they have two choices: 1. Make a Model S clone. 2. Make a popular priced car (which might also be a Model 3 clone as even in the best case they won't be able to execute it before the Model 3 comes out). Neither will hurt Tesla because A. There is plenty of room for multiple EV manufacturers. B. No one wants a knock-off if they can have the real deal (which is why Android doesn't fare very well, except for the cheapest no-profit models).

This kind of hubris cost Nokia their crown. Remember, iPhone was the later entry to the smartphone market but when Apple dialed up their innovation tenfold on the second generation, the 'knockoff' suddenly was the market leader and the original smartphones quickly forgotten. Hopefully Tesla won't make the same mistake to think 'what could Apple potentially bring to the market that we already have'. Bigger companies have bitten their dust...

 

[jhm]

There is a kind of paternalism that underlies these recurrent speculations that Apple or BMW ought to acquire Tesla. It comes down to a patronizing view that Tesla needs a strong parent company to realize its potential. Nothing could be further from the truth. Tesla is fully able to reach its goals without a parent company to provided adult supervision as Kramer and others have suggested. I call such corporate paternalism FUD.

 

[Drax7]

Tim Cook was the person responsible for outsourcing apple's manufacturing. The last thing he will do is buy a massive manufacturing enterprises .

 

[kenliles]

If anything, Apple's electric dream will force the manufacturers to wake up and take EVs seriously. With that said, it will probably push a few of them to take up Tesla's open patents and use Gigafactory batteries since Apple has a historic tendency of entering a market and just killing all its established players. Tesla will survive and the rest will be dependent on Gigafactory.

However it plays out, it will be a net benefit on Tesla because by then, Tesla will be either #1 or #2 EV maker in the world. Which is a bigger role than the current situation.

*edit BTW. If Elon sells to apple. I am out. I think the same can be said for most of the diehards here.

this mirrors my thoughts as well. I think acquisition is extremely unlikely and less beneficial than if they just compete in some way. Truthfully the EV market pie will expand so fast under Apple entry (in a few years if at all), it will be net benefit to Tesla. Also, a benefit that Apple is even 'evaluating' - I have a feeling Elon sees this as a total positive to the Tesla mission and for long term TSLA health

 

[farzyness]

Apple will invest a large stake in Tesla to build manufacturing plants overseas. Apple will provide Tesla with tech to make Tesla cars fully integrated with the iOS platform (i.e. regardless if you're home or being driven around a driverless car i.e. a Tesla, you will be doing all your work/entertainment in iOS). Apple will leverage its infrastructure of stores to market Tesla cars. Apple will enter the car market (powered by Tesla) and build their own car sometime after Model 3.

One thing to remember is that any time there's mass disruption like there's about to be in the car market, anyone with enough cash can show up and become a car brand. Apple is ABSOLUTELY in the perfect position to make their own cars. However, they'll leverage Tesla to provide batteries and powertrains. I wouldn't be surprised at the slightest if Apple comes out with an electric supercar that's powered 100% by Tesla but branded by Apple. This will taken on the existing guard of Ferrari, Lambo, Porsche, etc. Any current car manufacturer that doesn't follow this path, or comes up with tech that's close or equal to Tesla will stop existing.

 

[green1]

The real question if Apple gets in to cars is if people will accept all the compromises they take on phones on a car. On phones people line up overnight to pay more for a product that does less than any of the competition. Will car buyers do the same? Apple has phenomenal marketing, but car manufacturers know marketing too, I don't think their marketing alone would be enough in this space, and their history doesn't show any inclination to make either a superior product, or a lower cost one, so if marketing is the only thing they bring to the table, I don't see Apple surviving in this space.

 

[SteveG3]

This kind of hubris cost Nokia their crown. Remember, iPhone was the later entry to the smartphone market but when Apple dialed up their innovation tenfold on the second generation, the 'knockoff' suddenly was the market leader and the original smartphones quickly forgotten. Hopefully Tesla won't make the same mistake to think 'what could Apple potentially bring to the market that we already have'. Bigger companies have bitten their dust...

while I agree hubris wont help, the monumental amount of cash needed to be spent on battery plants and converting ICE plants (or building new EV plants) to move from ICE to EVs gives Tesla an extraordinary moat. even if some success with an initial low volume project meant Apple were emboldened by 2019 or so to throw their entire cash hoard at EVs, that would only fund enough battery and auto plants to take ~10% of the addressable market perhaps as early as the mid-late 2020s when all that new infrastructure was producing at full capacity.

however, a) it's extremely improbable they'd be that aggressive (that Cook would take such a massively high stakes move as betting all the cash, or that a board of directors would give it the okay), b) how quickly could they manage construction of ~20 GF size battery plants and similar amounts of auto plants (or build the battery plants and manage the integration of an existing ICE manufacturer who they would have to put through years of large losses as they transitioned it to EVs)? I realize improving energy density could lower the amount of GFs needed some, but even still the level of capital and execution on a tremendous number of large scale projects (new factories, perhaps conversion of old businesses and plants) in my view is simply out of scale with Apple coming in and dominating, even with 15 years to do it.

All that said, if Apple goes somewhat big, it could pull in other new players with hoards of cash (like a Samsung, Google or even oil companies), push the automakers into more substantial efforts, and perhaps start to impact Tesla's growth opportunity by about 2030. What's more, given the fact that the incumbent automakers are tied down to their investment in ICE and so restricted in competing, and there's not a long list of other fields Apple can move into and have the kind of potential revenues vehicles (and stationary storage) have that could make a difference to a company as big as Apple, I can see why it makes sense that they are at least considering moving into the field.

(fwiw, this is just a summary of some points I made about a couple of Tesla's moats on the first page of this thread).

 

[TEG]

In other news: I found this image (of stationary storage) in the comment section of an article on Tesla (has it been posted on here before?).

Yes, here:
Storage unit

 

[sandpiper]

Tim Cook was the person responsible for outsourcing apple's manufacturing. The last thing he will do is buy a massive manufacturing enterprises .

I cannot imagine Apple buying Tesla. They have a lot of cash, but much of it is overseas and inaccessible. What I could see is the two companies doing some sort of partial share swap or something of the like, together with a technology sharing agreement. Tesla would make a very high profile but generally non-threatening (to other car makers) showcase platform for Apple's car electronics offerings. The Tesla is already a rolling, internet connected computer. The possibilities for Apple to showcase their car software would be endless.

And honestly, while Tesla's system isn't bad, it could benefit from a little of Jony Ive's magic on the user interface.

 

[ClownMouth]

I think the idea of Apple buying Tesla is as unlikely as most people here. My hope, however, is that the brand power/reputation of Apple scares some of the traditional ICE manufacturers into getting more serious about electric vehicles in a hurry. The result of this would likely be them realizing how unprepared they are to battle Tesla, and maybe making a play to buy Tesla. Of course Elon would never sell to them, but the offers alone would help the share price as Tesla's true value would be brought to light a lot quicker.

 

[pGo]

FT has an interesting piece out (again) on Apple - Tesla rumor.

http://ftalphaville.ft.com/2015/02/17/2119262/no-one-needs-to-buy-tesla/

Their thought is that Tesla took very little money to build a company where it is today. Which by all accounts, is true. Model S was developed with less than 50% of the money Nissan spent on the Leaf.

Total money spent by Tesla thus far on capX & R&D is somewhere around $2.7 B or so. The original team that introduced Roadster spent $124M and had a headcount of ~500 employees. With Tesla opening the patents already, it is not difficult for a newcomer with LOTS of cash and a huge brand value to develop an EV. There are in fact 10s of local shops that convert your ICE into an EV. Yes, the battery and power train matters. But Apple would not spend $75B to acquire all that. They are much smarter than that.

Also, by 2020, one would expect a few companies to have a successful run at EVs and since outsiders can have a go without learning complex ICEs, Apple does have a chance on its own. If current reports to be believed, Apple already has double the headcount compared to Tesla when Roadster was launched.

I say there is 0% chance Apple will buy Tesla at $75B. Biggest acquisition they have done is Beats I believe. Others, have been in 100s of M to acquire a solution to a problem and they fit it well into their product lineup to make it an excellent feature. I also think Apple is exploring EVs aggressively (just by looking at the hires and size of the team) and may end up doing its own products if its compelling enough.

 

[farzyness]

FT has an interesting piece out (again) on Apple - Tesla rumor.

http://ftalphaville.ft.com/2015/02/17/2119262/no-one-needs-to-buy-tesla/

Their thought is that Tesla took very little money to build a company where it is today. Which by all accounts, is true. Model S was developed with less than 50% of the money Nissan spent on the Leaf.

Total money spent by Tesla thus far on capX & R&D is somewhere around $2.7 B or so. The original team that introduced Roadster spent $124M and had a headcount of ~500 employees. With Tesla opening the patents already, it is not difficult for a newcomer with LOTS of cash and a huge brand value to develop an EV. There are in fact 10s of local shops that convert your ICE into an EV. Yes, the battery and power train matters. But Apple would not spend $75B to acquire all that. They are much smarter than that.

Also, by 2020, one would expect a few companies to have a successful run at EVs and since outsiders can have a go without learning complex ICEs, Apple does have a chance on its own. If current reports to be believed, Apple already has double the headcount compared to Tesla when Roadster was launched.

I say there is 0% chance Apple will buy Tesla at $75B. Biggest acquisition they have done is Beats I believe. Others, have been in 100s of M to acquire a solution to a problem and they fit it well into their product lineup to make it an excellent feature. I also think Apple is exploring EVs aggressively (just by looking at the hires and size of the team) and may end up doing its own products if its compelling enough.

Agree with this 1000000%.

Tesla already did all the legwork. Apple will use its hoards of cash to capitalize on it. They will probably use a similar model as Tesla did to enter (start high end, work yourself down). There's no competition for super car 2 seaters right now in the EV market - could this be where Apple is headed?

 

[jerry33]

This kind of hubris cost Nokia their crown. Remember, iPhone was the later entry to the smartphone market but when Apple dialed up their innovation tenfold on the second generation, the 'knockoff' suddenly was the market leader and the original smartphones quickly forgotten. Hopefully Tesla won't make the same mistake to think 'what could Apple potentially bring to the market that we already have'. Bigger companies have bitten their dust...

The iPhone wasn't a knock-off. It was the first phone that you could use the advanced features without looking in the 100 page manual to see how to navigate down to what you wanted to do (which is why almost no one used anything but the phone, address book, and maybe the camera). This is similar to how Tesla made the first electric car that was a real car.