What Would Apple Have Gained From Buying Tesla (And Vice Versa)?

February 17, 2014

The San Francisco Chronicle has suggested that tech giant Apple seriously considered purchasing start-up automaker Tesla. How seriously? Reporters Thomas Lee and David R. Baker say that Apple's mergers and acquisitions chief, Adrian Perica, met with Tesla CEO Elon Musk last spring, presumably to discuss possibilities.

Of course, neither Apple nor Tesla has commented on the story, and the Chronicle's source for the rumor remains unnamed, so at this point, we give the tale about a 50/50 shot of being true. But just for the sake of argument: what if the two companies had talked? And what if they'd gone through with a deal? What would each of these red-hot firms have gained in the process?

Apple would've gotten..

A halo product: No doubt about it, Tesla's cars are hot property. (Sometimes too hot.) They're stylish, green, and they sit at the vanguard of automotive technology. They're also fairly pricey, beyond what mainstream car-buyers can afford. For a company like Apple, which prides itself on providing well-designed products at premium prices, vehicles like the Tesla Model S would fit nicely in its portfolio.

Another outlet for Apple software (and hardware): Apple hasn't been shy about the fact that it wants to control the world's dashboards. Tesla would've provided a high-tech pedestal for Apple to show off its latest in-car offerings, making those features desirable. It would also give Apple a huge workshop to test future products and work out kinks. 

A big ol' distraction: Apple is great at designing and selling consumer electronics. In fact, Apple is so good and so focused that it seems to have become averse to stepping outside its box.

Consider this: countless other tech companies have debuted wearable devices, including Apple's biggest competitors, Google (e.g. Google Glass) and Samsung (e.g. Samsung Galaxy Gear). But Apple? It's rumored to be working on a watch of some kind, but that's the most we know, and by the time it debuts, many similar gadgets will have hit the marketplace. We appreciate wanting to get a product right before releasing it to the world (something Apple learned when it debuted the disastrous Apple Maps), but Apple's forays beyond computers, smartphones, operating systems, and tablets seem especially tentative. Tesla would've been a huge step for Apple -- maybe too huge.

Then again, maybe Apple took a close look at Google's Android model and realized that it doesn't have to create every last bit of hardware on the planet. It can create an "Apple experience" simply by controlling a car's dashboard software.

Tesla, in turn, would've gotten...

Money: It's not like Elon Musk -- the man behind PayPal and SpaceX, among other successful projects -- is living paycheck to paycheck, but being bought by Apple would've created a huge infusion of cash, which would've allowed Tesla to expand operations exponentially.

Broader brand recognition: We talk about Tesla a lot, but there are many, many folks who know nothing about the company or its cars. Apple would've given Tesla access to mass market consumers -- even if they couldn't necessarily afford its products.

They both would've gotten

A battle-royale of egos: Apple is full of control freaks, and so is Tesla. On the one hand, this means that their products are unique and cohesive in a way that, say, HTC's are not. On the other hand, having too many of those folks under one roof could easily set up a kind of Hunger Games for industrial designers. (Which, BTW, sounds like a hilarious movie. We'll start working on a script this afternoon.)

For more thoughts on this story -- or non-story, which it may turn out to be -- check out our colleagues at Green Car Reports


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