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Tim Cook fields questions from shareholders regarding potential Tesla acquisition

By Shawn Knight
Mar 11, 2015
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  1. apple tim cook tesla acquisition electric car elon musk shareholders auto industry

    With Apple’s Spring Forward media event now in the rearview mirror, the company’s shareholders are turning their attention to what could very well be Apple’s next major category – automobiles.

    During its annual shareholders meeting, Cook fielded a question regarding rumors that Apple is interested in buying Tesla. Cook said they don’t really have a relationship with the electric car maker although he’d love for them to pick up CarPlay.

    He added that every major auto brand has committed to using their in-vehicle solution and maybe Tesla would want to do that before asking if that was a good way to avoid the question.

    Apparently not.

    apple tim cook tesla acquisition electric car elon musk shareholders auto industry

    A few minutes later, another investor got on the mic, saying he had put down a deposit for the very first Mac in 1984 and since that time, nothing has excited him like the Tesla Model S he owns. The shareholder pointed out that every time he sees it, it blows his mind and asked Cook if he was insane to think something might happen between the two companies.

    The Apple CEO dodged the question once again, thinking out loud if there was another way to not answer the question before reiterating that they are very focused on CarPlay.

    Rumors of a potential acquisition date back at least a year and were renewed last month on reports that Apple is indeed planning to enter the automotive industry. The two have been locked in an employee recruiting battle as of late and at least one entrepreneur believes a deal will happen within the next 18 months.

    Permalink to story.

     
  2. davislane1

    davislane1 TS Evangelist Posts: 3,541   +2,337

    I like how an article about Apple & Tesla opens with a header image of a Ferrari FF.

    In any event, it would seem that there is something going on between the two companies. Apple haters and Tesla fanboys Musk groupies (often the same group) may be offended by the notion, but Apple's involvement could do a lot for Tesla sales.

    It is said that money marries money, class marries class, etc. If those notions are true, the union of two of the most pretentious brands in America is a match forged by the hand of God himself.
     
  3. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,750   +1,105

    I can see the reasons for the rumors... Apple is rich, both are highly innovative tech companies, and the tech community loves them both.

    But look at the culture of the companies. Apple protects it's technology and patents with legal ferocity that's unmatched by just about anyone. They force their users to use Apple storage, Apple apps, Apple connectors and accessories and they restrict features in their phones to dish out in future upgrades. Maybe the 6S will have SwiftKey and widgets, who knows.

    Tesla meanwhile is giving it's patents away for free in the hopes of promoting the EV market. The Model S has a pile of features that no one expects but is very pleased with. Like handles that extend when you go near the car, and a trunk that closes on it's own.

    These two companies look like a match made in heaven, but their cultures would clash worse than plaid and stripes. Not to mention, Elon doesn't strike me as the kind of guy who wants a boss.
     
    davislane1 and Skidmarksdeluxe like this.
  4. OneSpeed

    OneSpeed TS Addict Posts: 251   +73

    I think it'll be suicide for any car manufacturer to tie themselves with any exclusivity to something like the radio/gps/info system. I wouldn't change my mobile ecosystem for a car, as it should accommodate what I already have. I like the Tesla, but if they went with an exclusive like airplay, count me out.
     
  5. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 6,476   +2,034

    More bad than good or more good than bad?
    I'd love a Tesla but I'd hate it to be crammed with an Apple ecosystem. Anyway that point is moot, I can't afford one so it can't be targeted at me.
     
  6. davislane1

    davislane1 TS Evangelist Posts: 3,541   +2,337

    If they partner for a product both Musk and Cook will bridge the necessary gaps. There is far too much money to be made with Apple's marketing capabilities and Tesla's technology.

    I see the problem with Tesla and Apple as follows: Tesla's only truly unique trait is that it is the only car company that offers an EV with the quality and features of a BMW/MB. There's nothing special about that outside of the Model S being an EV. Apple, on the other hand, has no experience or expertise building cars in the automotive industry.

    Bringing the two under one roof is an obvious win for both companies. The only question is how to get the cultures to work together, as you mentioned. That will probably be the major issue concerning talks between the companies, but I don't think it is beyond their capabilities to reach acceptable terms.
     
  7. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,750   +1,105

    It might be a win... it also might make them both weaker. Mergers - and this sounds more like a merger than an acquisition since the focus of the companies is so different - often result in both companies struggling in the short term. I don't think Telsa needs any help struggling in the short term, and therefore I don't see the benefit to them unless something drastic happens to their funds. Like the govt stops subsidies or investors dry up, etc.

    Another funny point about this....We saw the story a while back about Telsa and Apple poaching each other's employees. The story said Tesla had taken a bunch of people from Apple. That could make for some strange reunions and rebuilding of bridges. And what if Apple buys out Tesla and then has the freedom to fire middle management (as often happens with a buyout) they might be firing former Apple employees. Crazy!
     
  8. davislane1

    davislane1 TS Evangelist Posts: 3,541   +2,337

    When it comes to big deals like a TSLA-AAPL merger it's the long-run that is of primary importance. I'd actually take the opposite position on the short-term costs of such a deal. Apple has more than enough capital on hand to handle the short-run impact of merging with Tesla. Tesla, on the other hand, is facing short- and long-term issues, especially considering the risk of losing subsidies and/or investors, as you mention. The appeal of an Apple merger for Tesla is security against that risk. They may very well take a hit in the short-run, but, depending on the terms, that could be a well justified expense.

    Thus, the questions for each company work out something like this:

    Apple - What is the product, how do we sell it, how do we overcome cultural differences?

    Tesla - Is our long-term outlook better or worse with Apple?

    Importantly, Apple is interested in developing a new product. They don't need Tesla for that. Tesla, on the other hand, may be in a position of needing someone to secure their long-term interests (this has yet to be thoroughly demonstrated, though). Apple can provide that security in spades.
     
    MilwaukeeMike likes this.
  9. Uncle Al

    Uncle Al TS Evangelist Posts: 1,662   +770

    If Tim and the rest of Apple are paying attention, the "great sell off" of the 1990's was from so many companies getting out of their core business units and trying lots of different things. RARELY is a major company able to take on just a diverse product line and keep from stumbling and failing. Apple isn't known for taking something expensive and decreasing the price which is exactly what Tesla is going to need if it wants to break out of the ultra-luxury market and put their own version of the Model T out there that the masses can embrace. They might develop a parallel product or something that would marry nicely with the Tesla, but without an ever expanding market, it too would certainly die of loneliness.
     
  10. davislane1

    davislane1 TS Evangelist Posts: 3,541   +2,337

    Tesla isn't anywhere near the ultra luxury market (ultra luxury includes Bentley, Rolls Royce, and a number of boutique brands). They are firmly within the standard luxury market (BMW, Cadillac, Audi, Mercedes-Benz ect.). Tesla is in desperate need of a solid economic class vehicle, but Apple may be able to provide them with the necessary expertise to be a stronger contender in the lux segment. After all, that's Apple's bread & butter.
     
  11. I had been planning on getting a Tesla model 3 when I purchase my next car in about a year or two. However, if Tesla and Apple partner up or somehow merge that idea is completely gone. The only reason I would have to buy a Tesla at that point would be to set it on fire.
     
  12. Closer to this:

    Apple - How can we brand this as our own and maximize our profit margin?

    Tesla - Can we do this on our own?
     

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