By acquiring Tesla, Apple can turn one of the biggest potential rivals into an ally
Ever since reports surfaced that Apple was secretly working on an electric car project, there have been a lot of speculations whether the iPhone maker would be interested in buying Tesla. Serial entrepreneur Jason Calacanis even predicted that Apple would buy Tesla for an eye-popping $75 billion by 2016. Apple paying $75 billion for Tesla makes little sense considering it cost Elon Musk a total of $3.1 billion to build Tesla from scratch.
Tesla just fits the bill
But there are a number of things that suggest that Apple may just buy Tesla. Apple’s secret car team has hundreds of engineers. Reports suggest that the company has hired experts from Tesla, Johnson Controls, Panasonic, Samsung, and A123 Systems. The iPhone maker is serious enough about the car market to build a team of hundreds of engineers.
The Cupertino company has been poaching Tesla employees by offering them 60% salary hike and $250,000 upfront bonus. If Apple acquires Tesla, it will get a premium brand, a highly talented team, and wonderful products, says Michael Graham Richard of TreeHugger. Most importantly, Apple will be turning a potential rival into an ally.
Apple is probably the only company that can afford to buy Tesla at any premium to its current valuation. The iPhone maker’s commitment to electric cars may help convince Elon Musk that his company would be in good hands at Apple. Further, Apple has the capital to fund Tesla’s growth as it grows into a mainstream company. Tesla will face huge problems scaling up, and it may run out of capital. But if it has access to Apple’s cash reserves, capital won’t be a problem.
Apple and Tesla have the similar corporate culture
Tim Cook has repeatedly showed his commitment to clean energy. Earlier this month, Apple signed a $848 million deal with First Solar to build a solar farm in California. Tesla also has similar interests. So, it would make more sense for Apple to invest in an electric vehicle company than a gasoline car company.
Finally, corporate culture is one of the most important things when it comes to integration of two different companies. Elon Musk has officially stated that Apple was a model for the Palo Alto-based EV maker. Both are highly innovative companies. Both are centered around engineering and design. Both have a strong brand and customer support experience. If Apple buys Tesla, there won’t be a culture clash.