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Regarding Apple Buying Tesla

2015-02-19 14:54

There are more rumors around now that Apple is working on an electric (possibly self-driving) car. Any discussion of this quickly leads to a “why wouldn't Apple buy Tesla Motors?” follow-up.

Gruber posted his view, which is that they would have done it long ago if they were going to.

A friend of mine has a Model S; actually he is on his second, since he upgraded to the P85D as soon as that came out. When he first got the Model S a couple years ago, we marveled at it. The thing screams "I AM THE APPLE OF CARS." It's the attention to detail and the extremely well-integrated software. It is an internet-enabled computer with four wheels.

I believe that Apple and Tesla attract the same kinds of engineers and designers, those that want to do something really well, that has a big effect on the world. I also think that Elon Musk sees himself as very much like Steve Jobs, which is not entirely a good thing. I don't think Musk would want to sell Tesla to Apple. Would Apple want Tesla without Musk? If Musk's reputation is reality, he seems a poor fit for the Tim Cook era collaborative Apple executive team.

I think Tesla would still have a lot of value to Apple without their founder, since the product and team seem pretty amazing. So I don't think Apple could buy Tesla while they are flying high. If Apple does buy them someday, it will be if and when they are in trouble, and it can be rested from Musk's control as a distressed asset.

Update: there are more Apple car rumors, and JLG has a very thoughtful post that is very compelling. In a nutshell, he acknowledges all the reasons why an Apple car is plausible, but then lays down the economic realities: it's hard to make money in cars; the addressable market is a tiny fraction of the market for computers (whether pocket sized, lap sized or wrist sized); there is no Moore's law driving the possible at a crazy pace. All of which I agree with.

The thing is, I don't think Apple gives a crap about how much money they could make building cars. I actually believe it when Tim Cook and Jony Ive say they want to make the best products. Apple is a company that is closing in on $200 billion in annual revenue. If they could make a car that added a couple billion dollars to that figure (profitably), I think they would do it. The only things that matter are:

  1. Can they build the best car in the world?
  2. Can they do it profitably?