7 Reasons why Apple will NOT buy Tesla
Don’t get too excited over the speculation. Apple will not buy Tesla Motors anytime in the near future.
After Jason Calacanis, entrepreneur and venture capitalist, made a bold prediction that Apple would buy Tesla for a mind-blowing 75 billion in the next 18 months, a “fantasy frenzy” has taken place in the media. His prediction has encouraged speculations of a futuristic love story between two “disruptive” companies that are perfect for each other.
As far as I’m concerned, the hype and speculation will remain unfounded. Apple is in a league of their own. Sorry, Tesla. They’re just not that into you.
Here are 7 reasons why Apple WILL NOT (and should not) buy Tesla anytime in the near future.
- Apple is an innovative company. Fundamentally, acquiring an “up and coming” motor company for an astounding purchase price is against everything Apple stands for. Last year’s 2.6 Billion dollar purchase of Beats received a massive amount of criticism and Apple would be foolish to make a purchase almost 29 times larger. This type of an acquisition would shake the confidence of investors and cause people to question Apple’s ability to innovate and create.
- Apple still has much research to conduct in the vehicle market. The introduction of the Apple Dashboard into current vehicle makers is the next logical step. If Apple can infiltrate existing car companies with “in-dash” hardware and software first, Apple will have an inside look at a massive amount of reliable data to use for their own electric car development.
- The electric car market is immature. Electric charging stations are slowly on the rise, but not conveniently located for most of us. Time is the major factor here. Apple will wait for the electric car market to have a sustainable nation-wide infrastructure before entering into the market. At this time, the demand is not great enough for Apple to make a substantial investment.
- Apple’s entry into the electric vehicle market will hinder (if not stunt) innovation and development of other car companies. It would be counterproductive for Apple to enter into the market too soon. Ultimately, a competitive landscape in the electric vehicle market will drive prices down, thus creating higher volume, which would create more need for infrastructure.
- Gas prices will most likely remain historically low. Warren Buffett’s recent exit from Exxon is a sure sign that oil is not a good investment for years to come. With low oil prices, the demand for electric vehicles and charging stations will not grow as rapidly in the next 7 years as it has in the past 7 years. Apple will wait for electric cars to make up at least 50% of the cars on the road.
- Elon Musk is not in it for the money. Elon wants to change the world. He’s eccentric and electric. I mean, c’mon, he wants to see people colonize Mars in his lifetime. He’s in it for the excitement. An astounding price tag would not entice Elon to hand over Tesla before he is ready. He knows there are many exciting advancements waiting for Tesla in the next 10 years and you can bet he wants to “lead the charge.” (No pun intended.)
- The Apple Car is a vision of Steve Jobs. It would be a slap in the face for Apple to acquire the vision (and patents) of Elon Musk and Tesla Motors to fulfill the vision of Steve Jobs. Apple should look at the electric car market as an opportunity and source of pride to grow one last masterpiece from the creative roots of their late, great Founder.
Important Disclaimers:
I have no inside information.
I hold no shares of Tesla or Apple.
I do not own a Tesla vehicle.
I do personally own Apple products and spend more than $1k per year on Apple products and services.
