Posted on February 17, 2015 by Matt Pressman
First, let's back up. Last week, there was a lot of news surrounding Apple and Tesla... employee poaching, (future) market cap comparisons, etc. Then, some really, really big news hit in the Wall Street Journal on Friday. For a quick snapshot, let's review...
Since these reports, things have gone quiet. However, it's worth noting that last year it was confirmed that Apple and Tesla were in "conversations" and Tesla's CEO Elon Musk did not rule anything out. He seemed to keep the door (somewhat) open for some sort of alliance, particularly if it may help advance the Model 3. Listen closely to his comments from last year as it might help shed light on what's potentially coming.
Taking this into account, could there be something brewing? Although the web is abuzz with conjecture, there was one stand-out blog post that grabbed our attention. It was from Silicon Valley expert and insider Jason Calacanis. He says "it's a lock" that Apple will buy Tesla for $75B in 18 months. Why?
Here are a handful of his reasons:
• Apple’s Tim Cook very much wants to pursue the kind of “our-shoring” (I made that word up), that Elon has mastered. In fact, Apple wants to build an all-renewable energy production facility in Mesa, AZ (anyone know the latest on that?), and they are building the Mac Pro (the sexy black mini-cylinder) at their Texas facility.
• Tim Cook is obsessed with renewable energy, so much so that he told climate deniers to not hold Apple stock, and he is investing $850m to build a giant solar farm to power Apple’s new HQ.
• The Model S has a giant iPad in the center console — essentially — but it doesn’t have many Apps (and no App ecosystem). It would be trivial for Apple to power the center console with a retina display, and exceptionally easy for developers to create Tesla dashboard-aware Apps (think: Pandora, Waze, Apple Maps, iTunes, Beats, Spotify, etc). You could charge $50 to $150 per App for the dashboard of a car — people are used to paying a bucketload to upgrade their car hardware.
• Apple stores would look really F#@$%ing sexy with a car in the middle of them, no?
• Self-driving cars will be in the market in 7-10 years in a major way (you’ll test one in the next three years, of course), which means that with Apple and Tesla’s combined progress in this market, they could have the entire line refreshed and ready for a makeover for the coming driverless revolution.
• No one else in the world could actually make a run at Tesla, because they either don’t have the cash and, most importantly, they don’t have the ability to give assurances to Elon that they won’t f@#$ it up. Apple’s design team, software, and global distribution would actually LEVEL Tesla up.
• When cars become driverless you will have every passenger sitting there with nothing to do in front of a piece of glass that is massively larger than any screen Apple currently makes — and for hundreds of hours per year. Can you imagine the number of Apps that will be downloaded when we’re all sitting in our cars, with no need to drive?!?! App store revenue gone wild!
• Elon Musk as the CEO of Apple? Wow. Doubt he would want to do it, but I could see him being the Chairman — and that would be kind of special.
• Reports are 100+ Apple former employees are working for Tesla.
• Perhaps we will hear a spring surprise: Apple is [already] a partner in Tesla’s Giga factory?
Will this come to pass? It's hard to say. Certainly, Apple is not known to spend heavily for other companies - in fact, it's $3B acquisition for Beats was considered extravagant. Still, based on Calacanis' POV, there may be more to this story than what we've seen unfold so far...