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But Why Would Apple Want To Buy Tesla?

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Elon Musk says he tried to sell Tesla to Apple. Well, OK:

Elon Musk offered to sell Tesla to Apple but was turned down by Tim Cook, who refused to take a meeting, the electric car maker’s chief executive has claimed.

Rather wise of Mr. Cook:

The disclosure that Musk approached Apple is not surprising.

Sure, but what was in it for Apple?

The price being bandied about is $60 billion. So, what was there that was worth that much. Or, even, what is there that is worth that much when Tesla is worth $600 billion as today?

Well, actually, it’s the hope, the dream, that it’s going to become the world’s major EV manufacturer. Hey, we can laugh at that ambition and even insist that it’s currently vastly overvalued. But others disagree with us and market prices are indeed market prices.

So what would Apple be buying for the $60 billion? That hope and dream. Sure, there’s the occasional bit of technology in there but really, nothing that’s worth that much. Lidar can be bought elsewhere, batteries, electric motors, they’re all available elsewhere.

If Apple wanted to capitalise on that dream value what should Apple do? Well, start looking into its own batteries, Lidar, electric motors and the rest. Because it would be the creation of the dream that adds the value.

No, really, anyone with $20 billion to spare could go out and start producing electric vehicles. It’s not as if Tesla has consumed – so far at least – more than that in capital. The value additive thing is the creation of the tech that might meet the dream, not buying something already valued as meeting the dream. This is why Nikola, Nio and all the rest are at their own absurd valuations.

But leave aside all of this for a moment. Think like a proper businessman. You know, like Tim Cook.

Tesla can be bought for $60 billion. Ford for $40 billion. So, you want to revolutionise the world with EVs. As an already startling brand with decent technical knowledge you’re going to buy which?

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5 COMMENTS

  1. One of the interesting things about Tesla is that unlike the other self driving contenders they don’t used lidar. They never intend to do so.

    • They don’t use Lidar, they don’t intend to do so but they will. Regular optical self driving technology does not work and they know it but Musk does not want to add cost by adding Lidar. As a Tesla owner I can tell you that almost every day I get warning messages that one of the cameras is not working because it is blinded by the low winter sun or dust or rain smudges and you can’t have self driving with that going on.

      • In the long term no one will use lidar. Given time cameras and visual processing will improve. We know that even with just as single poor “camera” but fantastic visual processing, optical only driving is possible. It’s what we do when we demonstrate we can drive with one eye closed.

        Musk’s bet is that visual processing will develop fast enough for Tesla to be able to keep close to the competitors who are lidar based and eventually overtake them as their progress slows due to the vast data rate that comes out of lidar and needs to be processed. Due to the vast amount of time and intellectual capital the competitors invested it will be very hard for them to throw it away and start largely from scratch unless they have been perusing a strategy to only use lidar as a crutch.

  2. I agree that Tesla is way overvalued now but I’m not known for getting rich investing in the stock market. People think that electric cars are like regular cars but with batteries and anyone can do it, but it’s hard making a good electric car. Ask VW that’s been trying to come out with one for the past two years and can’t even get the software to work. Or GM who has been doing electric for longer than Tesla and has the good but not great Chevy Bolt (Ampera). Audi came out with an SUV that used 30% more batteries than a Tesla X and got 30% less range.

    The truth is that Tesla has a lot of valuable IP, especially battery IP and their batteries are considered the best in the market and they can make their own batteries at a time there is a big battery shortage. If Apple actually wants to get into electric cars, and I don’t see why they would, Tesla at 60 billion was worth every penny.

  3. Believe it or not, Apple did have a car program going. “Project Titian” was the code name, and it had about 1000 people working on it at one point. Apple doesn’t have any car manufacturing capability, but they have an immense amount of capital. Tesla would have been one option to buy manufacturing capability. At the time it would not have been that expensive for them. Tesla stock has gone up a lot since then.

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