The management of Apple should consider buying Tesla Motors, said Gene Munster, managing director and senior research analyst at Piper Jaffray during an interview with Tom Keene and Michael McKeen on Bloomberg Radio.
Apple has $202.8 billion cash on hand. Keene and McKeen asked Munster’s opinion as to what Apple should do with its huge amount of cash. Munster responded, “The big thing they could buy that I would be impressed with is Tesla. To me, when you think about that absurd amount of cash, you have to go after opportunities. I think automotive fits within that camp.”
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There had been speculations that Apple is developing an electric car under a project called “Titan” given the fact that it is aggressively recruiting experts in the auto industry. The Wall Street Journal reported yesterday that Apple hired Doug Betts, an auto industry expert, who recently served as chief of global quality at Fiat.
Other auto industry executives who joined the tech giant include Steve Zadesky, a former engineer at Ford Motor Company and Paul Furgale, a former deputy director of Autonomous Systems Lab. Furgale developed that self-parking technology in the V-Charge Project of the European Commission.
Acquiring Tesla would be a smart move for Apple
According to Munster, it would be a smart move for Apple to acquire Tesla Motors over the long-term. He emphasized the electric car manufacturer is a leader in the industry.
Although Munster believes acquiring Tesla Motors is beneficial for Apple, he thinks the tech giant will likely develop its electric car if it would enter the auto business. He noted that Tesla CEO Elon Musk did not show any intention of selling the company.
Munster said, “Given Apple’s DNA, it probably makes sense for them just to develop something on their own. If they would go the Tesla route, and if Elon Musk would step aside, which those are two big ifs, then it would make structural sense for them to do that.”
During a shareholders meeting in March, an investor told Apple CEO, Tim Cook, “I’d like to see you guys buy Tesla.”
Cook responded, “We don’t really have a relationship with Tesla. I’d love Tesla to pick up CarPlay. Was that a good way to avoid the question?”
Apple Car idea is not totally bizarre
Bernstein analysts previously stated that the Apple Car idea is not totally bizarre. They pointed out that the tech giant aims domination once it enters a business category.
According to the analysts, Apple needs to overcome a huge number of technical barriers, achieve and simultaneously align a series of revolutionary developments to become feasible in the auto industry. Bernstein analysts suggested that the tech giant is evaluating the auto industry, and it is probably at the concept design stage of developing an Apple Car.