Interesting that the Street seems to view Titan as neutral-to-good news for TSLA. This supports my investment thesis that all disruptions to the current ICE age are helpful to Tesla.
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It can be if signed a non-compete agreement with previous employer. Very rarely enforced though.
There was a hint in one of the articles on this that some former A123 employees who jumped to AAPL solicited current A123 employees, which may be in violation of non-solicit agreements those (now-AAPL) employees signed. In MA such restrictions are enforceable. Very sloppy if that's true. There are easy ways around such non-solicits.
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IANAL, but I used to run a consulting practice in Boston, and we constantly had to be aware of these issues when we hired a new employee from a competitor and/or lost one of ours. Non-competes are certainly enforceable under MA law, but only if there was consideration paid to the employee (above salary) that was roughly commensurate with the value of the restriction. So, receiving a signing bonus of cash or stock options may make the non-compete enforceable. In A123's situation, losing a core of key engineers is also likely causing significant disruption to their attempts to get back to a viable business. The engineers are surely lost; what A123 is trying to do is to extract some cash from Apple to help offset the damage. In all likelihood, Apple will reach a settlement with A123, based on some multiple of the salaries of the poached individuals.
The key part of the story, though, is that Apple is looking to get into the battery business pretty seriously.
You know, we should really collaborate under some nom de plume on writing those FUD articles for SA, then writing rebuttals under a different nom de plume. Might be a more reliable way to make money on TSLA than my recent options investments, and we could do a much better job than these hacks.
Even still then the suit would be against the employee, not against apple! I see this dismissed at the first round.
Perhaps Apple is looking at a move to the battery business for EVs and/or stationary storage. Their own EVs could be an option as an additional business to potentially develop over time, but on the periphery at this point, with the battery business the current focal point of project "Titan."
If Apple focused on the battery business it would avoid many of the complexities of becoming an automaker. If they are looking at this it would make sense for them to hire people with EV backgrounds as the plan would be to sell a core component of EVs. Some of the articles I read the past week suggested a keen interest of Cook and/or Apple in sustainable energy. Things would be simplest for Apple to start with stationary storage rather than battery packs for EVs, but it makes sense that they would explore both.
What about the margins? I realize Apple's current margins on their existing products dwarf what the perhaps 10% or so ceiling on what they could net making batteries. However, Apple would not be replacing iPhone, iPad, etc sales, or growth of sales, with battery sales... they'd be replacing a big chunk of their $180 billion in cash earning perhaps 1% or so with a business that might earn 10%. As others have pointed out, there simply is not a long list of new businesses with a scale of potential revenue to be worth Apple's focus. I think the battery business is worth their consideration.
If Apple focused on the battery business it would avoid many of the complexities of becoming an automaker. If they are looking at this it would make sense for them to hire people with EV backgrounds as the plan would be to sell a core component of EVs. Some of the articles I read the past week suggested a keen interest of Cook and/or Apple in sustainable energy. Things would be simplest for Apple to start with stationary storage rather than battery packs for EVs, but it makes sense that they would explore both.
What about the margins? I realize Apple's current margins on their existing products dwarf what the perhaps 10% or so ceiling on what they could net making batteries. However, Apple would not be replacing iPhone, iPad, etc sales, or growth of sales, with battery sales... they'd be replacing a big chunk of their $180 billion in cash earning perhaps 1% or so with a business that might earn 10%. As others have pointed out, there simply is not a long list of new businesses with a scale of potential revenue to be worth Apple's focus. I think the battery business is worth their consideration.
schonelucht, I'd agree that it would be "absolutely delusional" to suggest that Tesla has more cash available than Apple. perhaps you misunderstood, but I was suggesting nothing of the kind.
what I was trying to convey, was that even with massively larger cash resources ($180 billion), if Apple somehow were to reach a point in a few years (after success with small volumes on a currently hypothetical first Apple car) to make the extraordinarily improbable decision of putting all that cash into being an EV maker (try getting a board of directors to approve that
), the entire $180 billion is roughly enough money to make battery and vehicle plants capable of supplying 10% of the global vehicle market. That is, in an extreme and extremely unlikely scenario, where Apple somehow set this "all our cash in on EVs" strategy as a goal, and they somehow decided to do it at a furious pace and somehow managed to succeed at building all those factories at that furious pace, perhaps by ~2027 they might capture 10% market share of global vehicle sales. When I then say 90% of the market would remain open to Tesla to penetrate, I'm not saying Tesla has the funds to take 90% of the market, or even match Apple's 10%. I'm just saying Apple taking 10% market share in such a scenario would not impact the ceiling of what Tesla might grow to 10-12 years from now. There would still be a tremendous segment of the market untouched by Apple, and by 2027, I think to a clear majority of consumers, EVs will be more appealing than gasoline cars. The vehicle market in 2027 will be something like 120 million units per year... if Apple scoops up 10 million or so, there's still a 110 million vehicle market for Tesla to sell to, maybe 75+% of which will prefer EVs to ICE, and I see non-Apple related issues limiting Tesla to a ceiling of ~5 million in production (limits Tesla faces in terms of available capital and the number of large scale plant construction projects they can successfully execute simultaneously, with or without Apple jumping in). That's why I see such a move from Apple as a non-factor (with the caveat I wrote about in my post that a massive move by Apple could bring in other new entrants with mammoth amounts of cash, who combined might possibly impacting Tesla's opportunity as early as 2030).
adiggs
Well-Known Member
That quote is missing some information I've seen in other articles. The issue isn't that Apple is offering a better job and salary package - it's that Apple is hiring people who are subject to very specific non-compete clauses because of their employment contact (not at-will employees), and those former A123 employees are now violating their non-compete clauses applying that knowledge on project(s) with Apple.
Here's a version of the story from Reuters with the incremental bit that the employees are acting in violation of their employment agreements with A123.
http://www.reuters.com/article/2015/02/19/us-apple-autos-lawsuit-idUSKBN0LN04Y20150219
Yes, but my point is: If that is the case then the suit is (or should be) against THE EMPLOYEES, not apple.
anticitizen13.7
Not posting at TMC after 9/17/2018
I've heard of something called "Tortious Interference" but I'm not entirely familiar with the concept: http://en.wikipedia.org/wiki/Tortious_interference
In this case, the plaintiff is A123, and Apple is the alleged wrongdoer who convinced ex-A123 employees to breach their noncompete agreement with A123.
I would think that both parties (Apple and the employees that left A123) are culpable. It makes most sense that A123 goes after Apple since they are more likely to reach a settlement that gives A123 more $ than going after the former A123 employees.
Bloomberg: Apple's first car could arrive by 2020
Apple Wantsto Start Producing Cars as Soon as 2020 - Bloomberg Business
Apple Wantsto Start Producing Cars as Soon as 2020 - Bloomberg Business
anticitizen13.7
Not posting at TMC after 9/17/2018
Apple Car headlines are all over Mac Rumors… and by the looks of reader comments, about 70% of the Apple faithful have reacted very negatively, because they believe the venture will be a waste of money on a low margin product.
However, I think it was Steve Jobs who said that customers often didn't know what products they wanted until the products became available.
2020 seems a reasonable timetable for a new car, although Apple is new at this and may run into unexpected hurdles just like Tesla did. For Tesla investors, a 2020 Apple car will have no short to medium term impact, as Model X is due this year and Model 3 in 2017/2018. I'd say keep an eye on Apple, but it's most likely a factor in the long game (10 years and out).
Agree with your comments although I think it will be a factor well before 10 year time frame. I think more like 5 and leaks well before that in terms of influence.
Yes it's interesting to see the Apple faithful negative comments you point out. They said precisely the same when MP3 player was rumored, and again when phone was rumored: 'Low margins', 'lot of regulatory red tape', 'WAY outside core competency'.
I disagreed then and disagree today. It's exactly all of those reasons that make it precisley Appleesque. Jobs would have done this even faster, but Cook-Ive will carry it through it grand fashion. JMHO
sundaymorning
Active Member
Building a phone is one thing, building a car is a whole different level. If Apple doesn't get its icar right, they may need to change their name to "lemons."
HBR's take on Apple DX (Driving Experience):
What Happens If Apple Starts Making Cars - HBR
My evolving take on this matter.. if the industry really sees more and more clue from Apple that its building EVs, smart companies will quickly align with Tesla tech. I can see BMW, Nissan and Tesla setup alliance for supercharge expansion and investments for a few more GFs.
What Happens If Apple Starts Making Cars - HBR
My evolving take on this matter.. if the industry really sees more and more clue from Apple that its building EVs, smart companies will quickly align with Tesla tech. I can see BMW, Nissan and Tesla setup alliance for supercharge expansion and investments for a few more GFs.
bluenation
Member
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