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I've changed my mind: Why Apple Should buy Tesla

Discussion in 'TSLA Investor Discussions' started by Clprenz, May 15, 2014.

  1. Clprenz

    Clprenz Member

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    While people pondered the idea of Apple buying Tesla over the years, I have quickly dismissed that idea. But, over the past few weeks I have realized that at this current point it may be a great time for both companies. For many simple reasons; Apple is looking to acquire many businesses to broaden their stance, Tesla is going to use all of their cash flow to expand for the next 10 years, and Tesla could use lots of cash to grow it's business.

    After the last earnings call I realized that Tesla's CapEx is going to be very large for a very long time. Tesla needs hundreds, maybe thousands, of superchargers and hundreds of store and service centers. Elon is interested in Tesla's best interests and is only focused on growing the company rapidly. He needs billions of dollars in resources and shareholders are becoming impatient.

    Before people jump to conclusions I want to make one thing very clear. I don't want Apple to be part of Tesla's day to day operations at all. At all. I'm not going to say the companies are similar, they aren't. One makes phones, popular ones but not necessarily the best. Tesla does make the best cars in the world, No competition at all.

    Main points:
    -Apple has roughly $155 billion in cash
    -Tesla could probably sell for $36 billion (~$300 share)
    -Musk could still Directly own his shares in the company*
    -Apple would help supply addtional cash for Gigafactory and make plans for china factory with Foxconn
    -Apple would help build more superchargers

    Benefits for Apple:
    Owning the next biggest automaker in the world

    Benefits for Tesla:
    Cash available all the time
    Not worrying about margins that much and rapidly expanding production
    Sell more cars
    Faster Giga-factory
    FoxConn in China
    Money to get rid of dealers

    Benefits for Tesla Owners:
    More Superchargers (They could effectively build the network overnight)
    More service centers
    Cash to fight Dealers off

    Shareholder benefits:
    Getting a great return on investment: $300 a share
    Knowing that Tesla will be in good hands and get to market faster
    Dealer problems will disappear


    *Tesla would take a cash infusion from Apple to buy back all public shares except Musk's and own the rest of the company privately

    I wholely would support this, while I believe tesla will be the biggest automaker someday. I think having an owner like Apple, Tesla could do HUGE things. They could be just epic.

    Done with rant, sorry for errors
     
  2. DaveT

    DaveT Searcher of green pastures

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    Thanks for your thoughts. Personally I think this would be a win-lose-lose proposition.

    1. Win for Apple - Apple would gain a huge addressable market (ie., $2 trillion) and it could fuel their growth for the next 2 decades.

    2. Lose for Tesla Motors - the company would no longer be under the vision/authority of Elon Musk but would be under the vision/authority of Tim Cook, which would be a big downgrade in my opinion. Sure, Tesla gains access to Apple's capital but Tesla currently has access to the capital of the public markets and could raise billions more if it wants. As long as Tesla continues to deliver, they will be able to raise tens of billions of dollars. In other words, Tesla doesn't need Apple's money... they can raise it themselves.

    3. Lose for shareholders - if Tesla sold to Apple at $300/share I'd be severely disappointed. This is not a "win" for shareholders as many shareholders like myself are betting long-term on Tesla and are looking toward a share price much greater than $300/share.

    In short, Tesla doesn't need anything from Apple... and I'd rather they stay away from Apple as Tesla is a much more bold, adventurous, visionary and compelling company IMO.
     
  3. green1

    green1 Active Member

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    Just what we need, a company famous for horrible user interfaces and devices with half the functionality of their competitors at twice the cost. .. No thanks. If Apple bought Tesla I would no longer want one.
     
  4. Familial Rhino

    Familial Rhino Endangerous Herbivore

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    I fully agree. The main reason I'm in Tesla is Elon Musk. I think Tesla is perfectly capable to execute if left on its own devices.
     
  5. Clprenz

    Clprenz Member

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    Both of you are missing what my main point is! Apple is not buying Tesla to become part of Apple.
    Tesla goes private with Apple and Elon as the only investors. Personally I don't think Tesla will turn a "real" profit until maybe 2021, because they are a growth company. Investors are dogs and they don't think like we do. I'm thinking what is best for the company not necessarily the shareholders.
     
  6. Familial Rhino

    Familial Rhino Endangerous Herbivore

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    Ok, I see what you're saying. But I don't see Apple taking such a big risk with their pile of cash. I'm also a selfish bastard who wants a much higher return than the $300.
     
  7. ecarfan

    ecarfan Well-Known Member

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    #7 ecarfan, May 15, 2014
    Last edited: May 15, 2014
    Me too. I'm in TSLA for the long run and expect a much greater return.

    I understand its fun to speculate about Apple buying Tesla but I don't think it would be a good fit. A company can only grow so fast. Tesla has access to as much capital as it can effectively utilize. It doesn't need Apple to be a success and I don't believe it would become successful faster if owned by Apple.

    I own a MacBook Air, an iPad, an AppleTV box, an iPhone, and AAPL stock. Have been a Mac user for 16 years. Obviously I am an Apple fan. I am also a Tesla fan. I don't see a logical connection between them.
     
  8. c041v

    c041v Member

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    Although it doesn't fit his principles, the only company I'd want buying Tesla would be Berkshire Hathaway. At least they'd be hands off with the management, and hold their share of the stock for a long time.

    I'd be really happy to see Tesla become too big to acquire though. :biggrin:

    Edit: I would also not be happy seeing some company give Tesla billions of dollars anytime soon. There's a difference between reckless growth and cancer. This is still a young company that needs to iron out many things, and that takes time. Adding money to make it go faster will not necessarily yield a better product.
     
  9. RunningOnMangoes

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    $300 is a win for the shareholders? HA!!!! I intend to keep my shares till Tsla reaches $1000. Now why would I want to sell my golden goose so cheap?
     
  10. Skotty

    Skotty 2014 Model S P85

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    Twice the cost, yes. But I have to wholly disagree with horrible user interfaces. I would argue that good user interface is one of the best things about Apple. In face, the Model S interface seems very Apple-esque.
     
  11. DaveT

    DaveT Searcher of green pastures

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    Actually, I think you're missing something here. It appears you're assuming that Apple can buy Tesla, take it private, and yet give it a ton a capital to expand. This isn't how it works. If Apple purchases Tesla, it's brought into Apple's financial domain, and Apple needs to report revenue, expenses, earnings, etc. especially if they're going to give capital (ie., billions of dollars) for Tesla to expand. Think of it more like if Apple purchases Tesla, then Tesla becomes an independent subsidiary of Apple but Apple is required to report earnings/expenses/etc from the subsidiary.
     
  12. aznt1217

    aznt1217 Active Member

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    Apple won't buy Tesla. If anything Google would due to personal connections and their overall strategy-- don't be evil.

    I do see Apple doing some kind of core trust/partnership for certain things, like raw materials (glass, aluminum, etc.) and sharing some manufacturing technologies (think of things like Apple's chamfered edgings on its phone)-- Elon is into cross pollination. I think this would be mighty cool to see on some things like a door handle or something inside.
     
  13. SteveG3

    SteveG3 Active Member

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    whether it's Apple, Google, Warren, or whoever, perhaps sometime around 2018-19 this would make sense...

    I agree with the comments that for now Tesla has pretty much all the cash they can do wisely with as there's enough money to get up lots of SuperChargers, service centers and launch a convincing Gen III vehicle with Gigafactory #1. From there, an acquirer has proof of concept for a product with massive market share penetration begging to be tapped, Elon has completed his Tesla mission and heads to SpaceX, Tesla is ready to make use of much larger amounts of acquirer's capital, and us investor's take one for the team and accept a measly $700 (40% premium on 2019 TSLA price) to better serve the purpose for which Tesla was founded.
     
  14. anticitizen13.7

    anticitizen13.7 Enemy of the Status Quo

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    The only "benefit" of Apple buying Tesla would be more leaks of upcoming Tesla products. Tim Cook vowed to "double down on secrecy" at Apple and has so far failed. You can already download 3D CAD schematics of iPhone 6 and 3D print your own mockup!

    I'm joking. Sort of. Tim Cook is great at managing a business, but he's not yet proved to be a visionary.
     
  15. mibaro2

    mibaro2 Member

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    I don't see Apple buying Tesla. However, I can see both companies engaging in long term alliances that benefit both companies. Like Tesla did with Toyota supplying them batteries.
    Here is why:
    -Tesla will be a key player in cheaper lithium batteries. apple can use that for all their devices.
    -Apple can help Tesla develop its car interface. Especially since it is very ipad like. Perhaps Apple radio would then be used instead of Slacker.

    It will be interesting to see what happens in the next few years between the 2 companies.
     
  16. dalalsid

    dalalsid Member

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    You just need to replace apple with Google. Google has more advantages than Apple with Tesla.

    Added Benefits to Google:
    1. Bring their self diving car to the public faster. Regular auto makers are slow as molasses
    2. More opportunities for the Google ecosystem.

    Added benefits to Tesla
    1. Google Street view cars can be Tesla's - easy to get real life high mileage tests for no cost.

    Added Benefits to Tesla owners (compared to Apple)
    1. More connectivity platforms will be supported. Apple would force degraded experiences on non iDevices (e.g. iTunes on Windows).
    2. Technology will not be withheld for years (e.g. Apple with 3G. Apple with LTE, Apple with NFC)

    The only Apple thing I own is stock. If Tesla became an Apple device, I'd have to think long and hard about buying a Gen III because I'd be worried about long term compatibility with everything else in my life, intentional degradation (by withholding features) of software on older cars etc. I will not be excited to want to jailbreak my car to get the desired end result.
     
  17. ggr

    ggr Roadster R80 537, SigS P85 29

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    It would be great to pick up a Model S P110+4 in a bar!
     
  18. DITB

    DITB Charged.hk co-founder

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    How ironic - at the moment, TM seems to have some issues with Google Maps and the Hong Kong market. Not sure what it is, but something about licensing.

    Imagine if Google had a stake in TSLA, it would almost be a requirement to have Google maps, at the moment TM has to fight for it.

    We are hoping to get Google Maps, as advertised (and as in other markets), and not some (inferior?), unknown product, maybe not even with live traffic.
     
  19. Cwin

    Cwin Member

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    #19 Cwin, May 16, 2014
    Last edited: May 16, 2014
    The more I think about this more I thinks its possible, even smart. Google has shown great interest in the future of automobiles and clean energy. Not only this, but there are a likely large number of people that own Models S's at Google that understand what Tesla Motors is doing, and how capable Tesla is in accomplishing it's goals.

    The time to buy TSLA is NOW, not when Tesla Motors gives the nation Gen 3. By that time TM's price tag will be more than what Google can easily afford.

    We know that Elon will EVENTUALLY want less control over TM so that he can focus on SpaceX. What would be the most surefire way to ensure that TM would have a secure future? Google gives access to some of the best talent, the best money, and the best synergy more so than anyone else.

    Sure he can hand it off to someone else that's been at the company for a while and keep it independant. But what if you got it acquired by Google, and made sure that the person you hand it off to gets the appropriate position at Google with the same authority over TM anyways?

    I'm not an optimist when it comes to TSLA. But ****, I can really really see this happening.

    It actually explains a lot of what happened post Q4. Why didn't we see a huge drop in institutional holdings of TSLA post Q4? Especially with a potentially shaky economy in the future? We should have seen a huge drop in institutional holdings as they reposition themselves into more value rather than growth. And if they didn't sell in Q4, they really should have sold in Q1, but no, instead we saw the least volume of trading after an ER ever.

    Instead we've seen a rise in ownership. Its institutional speculation. They wouldn't bet on Tesla succeeding on it's own, that's way too risky, they'd bet on Tesla being bought.

    Can anyone play devils advocate here? Why would Apple, or Google NOT want to be buying TSLA in the next year?
     
  20. Cwin

    Cwin Member

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    Here is an argument I've come across for Google not to buy TSLA.

     

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