The rumors that Apple are interested in buying electric car manufacturer Tesla continue to rumble on. But is this really in the interest of the consumer electronics giant? When Apple recently held a media event on March 9 to unveil the Apple Watch along with a new MacBook laptop, the CEO of the company, Tim Cook, studiously avoided addressing this issue.
Apple / Tesla hook-up
Meanwhile, investors who hold stakes in both companies have been making their feelings known via a range of media. Undoubtedly, there are many people who are invested in Apple and Tesla that would love to see this deal happen. Many anticipate that it would cement the future of Tesla as a car manufacturer, and also that it could be economically beneficial for Apple.
The time certainly seems to be right for Apple to take a gamble. The corporation is in an inordinately strong position at the moment, having recently become the first company to be worth $700 billion in terms of market capitalization. This figure is expected to exceed the $1 trillion mark in the foreseeable future, and the profitability and stock price of Apple are also extremely healthy currently.
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While the hierarchy of Tesla has always plowed its own unique furrow, the advances of Apple would be difficult to resist. The prospect of being bought out by the world’s largest corporation, at least in terms of market value, would surely be an attractive one, even for a fiercely independent company such as Tesla.
The overall story of the electric car manufacturer is one of overwhelming success thus far. And simply to have established itself as a credible producer of electric vehicles is a massive achievement. But its financial position is nonetheless not entirely stable. Tesla has experienced a very fluctuating 18 months in terms of its share price:
And of all stocks available on the market, Tesla must attract some of the most divisive speculation. Some analysts believe that Tesla has huge untapped potential that it can unlock in the near future, while others are of the opinion that it is significantly overvalued, and that the corporation must circumvent serious obstacles in the near future.
Apple Tesla buyout
But the question still remains of whether Apple would be interested in buying out Tesla. The first thing to note about this notion is that Apple has been linked with Tesla for quite some time. Around this time last year, it was widely reported that Apple and Tesla were holding conversations. To this day, the subject of these talks has not been publicly revealed, and there is certainly no guarantee that a serious takeover bid was ever really on the cards.
In many ways, a hook up with Tesla makes sense for Apple. The electric car manufacturer is exactly the sort of cool and innovative company that Apple would wish to be associated with. And additionally the corporation has always attempted to push its green credentials, even if some people may be slightly skeptical about the validity of this branding.
But those in the know still feel that an Apple buyout of Tesla is unlikely. Ross Gerber, CEO of Gerber Kawasaki, which holds a large stake in both Apple and Tesla, spoke about this on CNBC recently, stating that Apple’s interest in the company is not related to a buyout. Instead, Kawasaki suggested that Apple is interested in making an investment in the new Tesla battery factory, and assisting the corporation with raising capital.
Apple controlling the screen
It has been suggested in relation to this that Apple is primarily interested in controlling every conceivable screen that people view. It already obviously has massive investment in smartphones, tablets, laptops and desktop computers, but the coming years could see Apple significantly expanding its scope.
The first step to achieve this could be some sort of collaboration with Tesla. The existing Tesla vehicle range has an outstanding screen, and some analysts believe that Apple is targeting this for its proprietary software. Running concurrent to this rumor is the idea that Apple will release a full-scale television set in the near future, thus giving the corporation an excellent grounding in living rooms all over the world.
This would seem to make sense for both companies. On the one hand, Tesla would certainly welcome an injection of capital, considering that it will need to make a significant investment in order to develop the new battery factories required for the future of the company. And Apple could invest in what will likely be a significant technology in the future, perhaps gaining the sort of grounding required to produce its own electric car at a later date.
The notion of an Apple Car has been another tech rumor which suggests that Apple may not be willing to jump into a Tesla buyout too quickly. It would obviously make little sense for the company to purchase the world’s premier manufacturer of electric cars if it was considering the possibility of launching one itself at some point in the future.
However, even though the Apple Watch is now out of the bag, and both investors and the market are now putting the corporation under pressure to reveal its next big niche, an electric car is a huge and unlikely undertaking. Manufacturing something on the scale of a motor vehicle would be a huge departure from the norm for Apple, and would certainly represent a massive commercial risk.
The Apple strategy
Apple has established its phenomenally powerful position by understanding what it is good at. The Cupertino-based company has built up a phenomenal reputation and prominence by producing extremely slick and user-friendly consumer electronic devices. Apple has always been extremely diligent about not overstretching itself, and, for example, even though it has spoken about producing a television set for sometime, this has still yet to come to fruition.
Buying out Tesla is simply not in-line with the strategy that has enabled Apple to become the most valuable company on the planet. It seems extremely unlikely that it will abandon this strategy now.