There has been some talk just recently that Apple are interested in buying out Tesla Motors, which would see them expand their business in to the electric car industry. The potential partnership between a consumer electronic company and an automotive company could be something very special, but what possible factors could play a part in it happening?
These rumors started after Tesla CEO Elon Musk was reported to have met with Apple M&A boss Adrian Perica and possibly CEO Tim Cook. The Next Web reports that Tesla’s market capitalization is more than $24 billion which would make any potential acquisition gigantic; however Apple can afford it. They have an estimated $160 billion in cash reserves and have recently only spent parts of it re-purchasing their own stock.
Whilst the purchase of Tesla Motors would eat away at a chunk of their cash, it opens up a window for a new product category with a trillion dollar potential. Tesla is still trying to muscle in on the wider automotive industry with its electric vehicles such as the Model S, under Apple’s wing the partnership could strike global success and become as common as the iPhone one day.
The auto industry could be perfect for Apple as it is slow to innovate but at high value, they have revolutionized so many industries before so why not this one? We know that iOS 7.1 is set to bring an ‘in the car’ feature so it is clear that this kind of proposition has crossed Apple’s mind, Steve Jobs reportedly expressed a desire to break out into the auto business before his passing.
Whilst there is only so much creativity you can install into designing a new car, it would be the intelligent technology inside which could be the key to success. Sure Apple would make the car look stylish and smart from the outside, but their best work would come from on board software. There is so much potential here for greatness, will Apple and Tesla make the move?
For now we can only put this deal down to speculation and while it would be an amazing prospect there is no solid evidence to suggest it will happen. There is plenty of reasons to validate the buy out, perhaps a future ‘iCar’ is something Apple are already planning via other resources. It would be no surprise to see Apple launch a smart electric car one day, just do not expect it too soon.
Would you like to see Apple buy out Tesla and start producing vehicles, or should they stick with consumer electronics?
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