Apple: Rumors of EV to Challenge Tesla or Buying Tesla

[green1]

The iPhone wasn't a knock-off. It was the first phone that you could use the advanced features without looking in the 100 page manual to see how to navigate down to what you wanted to do

BS. The iphone was not innovative in any way. There were more advanced and easier to use phones available at the time, and apple has continued to be a year or two behind the other manufacturers ever since.
The ONLY thing apple has ever done well is marketing. That may carry them in the phone market, but I don't think that's enough in the car market.

 

[pGo]

BS. The iphone was not innovative in any way. There were more advanced and easier to use phones available at the time, and apple has continued to be a year or two behind the other manufacturers ever since.
The ONLY thing apple has ever done well is marketing. That may carry them in the phone market, but I don't think that's enough in the car market.

BS. I've spent all of my career with mobile devices. Most companies have not figured out how Apple is so successful. It is because they excel at more than one front. Marketing is definitely one piece, but the product itself is a huge part. Check the services they hook you up with like itunes and app store and cloud. Check the precision with which Apple builds phones. Check the features that Apple incorporates. The fingerprint reader has been the most intuitive solution that is now helping them double down with payments. Yes, others had fingerprint readers on devices, but none had it this easier or simpler to use. Others have NFC since ages, but Apple is making mobile payments useful.

Since this is a Tesla forum, let's now go back to talk about cars!

 

[RobStark]

The ONLY thing apple has ever done well is marketing.

That is COMPLETE bovine feces.

Because the barriers to entry are lower, electronics is even more competitive than automobiles.

Easy interface plus design is Apple's strengths. Apple products are easy to use and look great.

From the business side, supply chain management is also an Apple strength.

Similar nonsense coming out of Detroit than Tesla has nothing to offer but Musk based marketing hype.

 

[ecarfan]

Strongly agree with @RobStark but please let's not let this topic go off the rails with arguments about Apple products. That discussion has been beat to death elsewhere. I hope the mods can do some pruning as needed.

 

[Curt Renz]

I have a suspicion that the two companies may be posturing in advance of negotiations for some form of combination. In the conference call Elon unexpectedly put forth the notion that Tesla could eventually be worth as much as Apple. Meanwhile, Apple has apparently leaked the possibility that it could build a viable electric car on its own. The two Silicon Valley firms are reportedly in a bidding war to entice each other’s engineering talent. They both may be coyly concealing the fact that they can envision highly advantageous synergy that could result from combining operations in one way or another, perhaps even an acquisition or merger.

 

[ggr]

Sorry to flog a dead horse, but what made the iPhone successful initially was the combination of the phone, the iTunes store, and the App store, and a boatload of apps. And yeah, marketing too. Qualcomm already had its BREW app programming model and a store, but it was very disfunctional and almost no-one knew it even existed.

 

[wa_pacnw]

Curt, What about the following angle ...
There are mounting pressure to bring assets US companies have accumulated overseas. I think there may be compromise made between corp. and the government on how to bring the money in.
Investing in US companies which have manufacturing presence in the US is one of them. So I think Tesla is an attractive company for these big high tech companies as a target.

 

[Robert.Boston]

Moderator's Note

Strongly agree with @RobStark but please let's not let this topic go off the rails with arguments about Apple products. That discussion has been beat to death elsewhere. I hope the mods can do some pruning as needed.

Thanks for this reminder to all. Let's keep the Apple comments focused on the Tesla angle.

 

[kenliles]

Thanks for this reminder to all. Let's keep the Apple comments focused on the Tesla angle.

The Tesla Angle of Apple:
For years now many (of us) have emphasized Tesla is not at heart an auto manufacturer deserving of only an auto manufacturer valuation multiple (partially evidenced from the 30+ margins). They are in fact a consumer technology company making and direct selling cars (and batteries for energy markets).
Apple, the largest, most financially succesful, cash rich, consumer technology company in the history of mankind is reportedly 'investigating' EV with 1000 employees including top pedigree. I don't see how a more catalytic consumation of Tesla's work and market position as a consumer electronics core strategy (including direct sales), could possibly be made. Agree with Curt, all future possibilities are on the table, even if buyout is the least among them. I can't think of a better long term endorsement of Tesla, and if I was any current ICE maker, I'd be ******** my pants right now at the possibility of Apple joining Tesla in producing EVs, all without engines, fuel, dealers, etc.

Apple is not Tesla's problem here, they are its solution. why do you think Elon hires so many of their employees? Certainly not to make Apple a weaker competitor, but to bring more of Apple to Tesla. They are complementary to each other, even as 'competitors' and Musk knows it

 

[bluenation]

^ um, i think you're waaaayyyyy ahead of yourself

lets wait a few more years for titan. whatever it is.

if it doesnt get cancelled.

 

[schonelucht]

while I agree hubris wont help, the monumental amount of cash needed to be spent on battery plants and converting ICE plants (or building new EV plants) to move from ICE to EVs gives Tesla an extraordinary moat. even if some success with an initial low volume project meant Apple were emboldened by 2019 or so to throw their entire cash hoard at EVs, that would only fund enough battery and auto plants to take ~10% of the addressable market perhaps as early as the mid-late 2020s when all that new infrastructure was producing at full capacity.

This is absolutely delusional. Apple generates billions each quarter. Tesla is cash flow negative for the foreseeable future. Likes be likes and it comes down to capability to allocate capital to invest in gigafactories, Apple can easily generate an order of magnitude more than Tesla (10x) both on the street and in the market. So if the electric car is 10% of the global car market by 2025, 9% of it will be Apple's and 1% Tesla. Assuming no traditional car maker will enter, which is a false assumption. Are we valuing Tesla today to only take 1% of the market by then?

 

[Auzie]

There is a kind of paternalism that underlies these recurrent speculations that Apple or BMW ought to acquire Tesla. It comes down to a patronizing view that Tesla needs a strong parent company to realize its potential. Nothing could be further from the truth. Tesla is fully able to reach its goals without a parent company to provided adult supervision as Kramer and others have suggested. I call such corporate paternalism FUD.

Such view probably comes from Tesla bears and people that underestimate Tesla's team or talk it down.

Apple and BMW may also be thinking that Tesla would be nice to have in their portfolio.

Going to a bigger company may bring some security but at the expense of losing Tesla's spirit. More specifically why would Tesla need a parent to tell them what to do, how to do it, in what timeframe and to give them an allowance.

If Tesla gets into some kind of trouble, then such a trade-off might be a viable option. For the moment, business seem fine and there seem to be no need to sacrifice independence for security.

 

[kenliles]

^ um, i think you're waaaayyyyy ahead of yourself

lets wait a few more years for titan. whatever it is.

if it doesnt get cancelled.

Not sure waiting is in order, I'll be watching and investing. But yes all comments are in the context of years of development and years from now, I agree. But keep in mind, so is Tesla ModIII and Tesla Gigafactory but we certainly invest and discuss he impact of those on TSLA. With Apple, the progress will be much more behind closed doors

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Such view probably comes from Tesla bears and people that underestimate Tesla's team or talk it down.

Apple and BMW may also be thinking that Tesla would be nice to have in their portfolio.

Going to a bigger company may bring some security but at the expense of losing Tesla's spirit. More specifically why would Tesla need a parent to tell them what to do, how to do it, in what timeframe and to give them an allowance.

If Tesla gets into some kind of trouble, then such a trade-off might be a viable option. For the moment, business seem fine and there seem to be no need to sacrifice independence for security.

Yeah, I agree with that. I think Tesla benefit as much or more with Apple as a competitor and/or partner. I hope they remain separate and distinct both adding EV fuel in their own way

 

[voyager]

Didn't Elon Musk say that EV's are like big electric appliances? Means that any global brand may step up to the automotive plate, not necessarily the traditional car brands. Google wants to become big in people being online, staying in touch, being constantly fed information and tracked/traced wherever they go, etc. It's a small step then to "Skip ad to continue driving". Companies like Google and Apple don't need to start their own production facilities and run the risk of everything involved with manufacturing and distributing their own cars. They can afford to choose their own automotive OEM to partner with, and have their car blueprinted and made according to their specific wishes, all over the globe, not necessarily in one plant (which is the traditional car industry's m.o.). Google's robo car gives the impression that such a global car may well be very basic, except for the autonomous drive system. Perhaps Apple is aiming for the same thing, sort of.

 

[Gerardf]

Tesla already sold (and sells) drive trains and batteries to other car manufacturers.

I can imagine Apple partnering with Tesla to jointly produce Apple cars based on the fully proven and validated Tesla skateboard platform(s), instead of 'just' the drivetrain and batteries, where Apple designs the rest of the car (looks, shape, integrated connected electronics, app-store etc, etc).

By that time Apple can even chose to base Apple cars on at least two different size Tesla Skateboard platforms.

The Apple brand Cars will then be produced in factories that are owned by a partnership of Apple and Tesla. Same way as the Tesla GigaFactory is build and funded by a partnership between Tesla, Panasonic and most likely some additional partners as well.
Apple will take care of marketing as well as sales of their Apple brand cars in the apple shops, with online ordering on the Apple website. A model pioneered by Tesla. Actually, it will be hard for States to block apple offering this in there shops.

Tesla could also offer to take care of after sales service for Apple in the Tesla service centres.

This will have many advantages to Apple :

- Quick time to market
- Quick time to market
- Quick time to market
- Far lower risk and far less time to get cars through all safety testing, homologation and certification.
- Concentrate on Apple’s strength, not loosing focus in investing in car platform design, homologation, safety, certification etc, etc.


Advantages for Tesla :

- Major speedup in getting EV’s to replace ICE cars
- Major boost to Tesla image
- Immediate budget to start building Europe & China factories and GF’s.
- additional Profit from the joint operation / joint venture

 

[Robert.Boston]

Apple generates billions each quarter. Tesla is cash flow negative for the foreseeable future.

The term "cash flow positive" is usually a reference to continuing operations, not the change in the balance sheet. By this more meaningful metric, Tesla is strongly cash-flow positive. It uses that cash for R&D to develop the Models X and 3 and to build the Gigafactory, though, so Tesla is simultaneously cash-flow positive and burning cash.

When a company like Apple is accumulating cash, that's a sign that management has run out of good ideas for deploying it. Apple is in this situation, which is why activist investors pushed for a dividend--return cash to shareholders so it can be profitably redeployed.

All that said, I think Apple's brand name works against it as a potential auto manufacturer. While I'm sure that they could make a very good car (they've got the cash to do just about anything well), it doesn't seem like a good brand extension. Apple is about human/machine interfaces, whereas the primary requirements for a car are about the hardware and safety.

 

[Krugerrand]

I think the most interesting part of all of this is that people are STILL talking about Tesla and Apple in the same sentence. The rumor just doesn't want to die. Are we two years into this Apple-Tesla partnership now? That's intriguing.

 

[mrdoubleb]

The term "cash flow positive" is usually a reference to continuing operations, not the change in the balance sheet. By this more meaningful metric, Tesla is strongly cash-flow positive. It uses that cash for R&D to develop the Models X and 3 and to build the Gigafactory, though, so Tesla is simultaneously cash-flow positive and burning cash.

When a company like Apple is accumulating cash, that's a sign that management has run out of good ideas for deploying it. Apple is in this situation, which is why activist investors pushed for a dividend--return cash to shareholders so it can be profitably redeployed.

All that said, I think Apple's brand name works against it as a potential auto manufacturer. While I'm sure that they could make a very good car (they've got the cash to do just about anything well), it doesn't seem like a good brand extension. Apple is about human/machine interfaces, whereas the primary requirements for a car are about the hardware and safety.

THIS!

I really don`t understand why (some) analysts/investors still don`t get this. Tesla is losing money because they decided to lose money. The have a 26% GM on the cars they sell so they could show a healthy profit if that was the point. But that`s not the point - at least for now. they don`t want to be a "one hit wonder".

They invest every cent they make and more (hence the loss) in relentless growth in products (D, X, 3, Home Storage, gigafactory, and so on) and service (service centers, showrooms, chargers) to gear up for the real mass market phase. By the time the 3 arrives, they may have up to 1000 superchargers world wide, have stores and service centers in every major city in Europe, North America and (some) Asia and a battery plant cranking out more cells than all the global production today at half the cost.

As an investor I say, if that`s what you are using it for PLEASE KEEP BURINING CASH!

As for your point on Apple that`s a really interesting angle and a completely fair remark that I haven`t seen in the mass financial media. while making $180BN in profits is certainly admirable, the fact that all that is just "sitting around" in cash and (probably some) general investments is a clear failure on the side of their board. Imagine if Elon had that much money! You`d see 3 Hyperloop lines in development, 2 more Gigafactories under construction, a fleet of Dragon Mars ships being built and an electric jetliner in development sending shivers down the spines of Airbus and Boeing execs.

 

[Johan]

Apple won't buy Tesla and Tesla won't allow themselves to be bought by Apple or any other entity. Period.

HOWEVER; Apple has piles of cash but not the innovative drive or opportunities within their core market to deploy that cash effectively. But neither the engineers nor the board of Apple Inc. are stupid or incompetent. What to do in this situation? Answer: create a new market and engulf it. Where does Tesla fit in? Partner with Tesla in a joint venture where Apple supplies cash + engineering talent and Tesla supply innovative thinking and "the Tesla model" of "reckless growth" (as Jerome would put it).

Now what is this new market? IMO not BEVs but perhaps autonomous "cars" (more like iPods), home energy storage with "smart homes"?

 

[Joel]

I have a suspicion that the two companies may be posturing in advance of negotiations for some form of combination. In the conference call Elon unexpectedly put forth the notion that Tesla could eventually be worth as much as Apple. Meanwhile, Apple has apparently leaked the possibility that it could build a viable electric car on its own. The two Silicon Valley firms are reportedly in a bidding war to entice each other’s engineering talent. They both may be coyly concealing the fact that they can envision highly advantageous synergy that could result from combining operations in one way or another, perhaps even an acquisition or merger.

I had this same suspicion. My suspicion stems from what you stated and Elon's comments on capital spending when he referenced Apple as "those guys spending money like water." Elon's projection of TSLA achieving a $700 Billion Market Capitalization (in ten years) may depend on additional partner(s) for many resources but primarily capital. If Elon's projections are correct and Apple wants to enter the automotive world, AAPL and TSLA may not be strange Bedfellows.

I believe the ball is in Apple's court. If they want to participate in the EV space, they will engage TSLA in some form or fashion (acquisition or partnership). I do not see them building an automotive company.

I believe Apple acquiring TSLA would be a positive. Apple would not acquire TSLA without being committed to EVs, so I don't see Apple "ruining" anything Elon started. In the short term, I would speculate TSLA would continue to operate as a wholly owned subsidiary of Apple (much like Beats by Dre). Elon stated he is stepping down as CEO in 4 to 5 years, so whether AAPL acquires TSLA or Elon follows through with his commitment, there will be a significant organizational shake up in 4 to 5 years.

I apologize to those who can't stand the endless "Apple / Tesla" rumors. I'm guilty for contributing (especially since I believe it is not likely to happen).