Apple Once Passed on Acquiring Tesla
By: Dylan Hughes
Tags: Transportation, Technology, Apple, Sustainability, Tesla

When notes leaked that Apple was planning to begin production of an electric “iCar” by 2025, Elon Musk responded. At first, he questioned Apple’s tactics for producing safe and efficient batteries and whether they actually gave the company a competitive advantage over Tesla.

Then, he dropped this bomb:

In 2017, perhaps the time period in which Musk is referring, Tesla wasn’t far from death. On “Axios on HBO,” Musk said his company was “within single-digit weeks” of folding as they struggled to ramp-up Model 3 mass production.

Musk also said he “personally redesigned the whole battery pack production line and ran it for three weeks,” trying to paint the picture of how dire the company’s situation was.

Musk said the amount of work he put in to save the company hurt his brain and his heart and that no one should put in the amount of work he did.

These reflections explain why Musk reached out to Apple. The company was bleeding money, as Musk said. While Tesla probably wouldn’t have actually died in 2017, it would have had to get money from somewhere.

An acquisition from a large-cap company like Apple would have taken all that stress off of Musk. He would have the financial backing that could keep Tesla afloat.

In a separate interview in 2018, Musk said ramping up the Model 3 production was a “bet-the-company” situation — a situation he didn’t see Tesla being in again.

Two years later, Tesla is worth over $612 billion, making it the most valuable car company in the world — more valuable than the next six car companies combined, mainly due to its stock market returns.

Musk said Apple would have acquired Tesla at 1/10 of its current valuation, meaning around $60 billion. Hindsight is 20/20, but that is obviously a huge miss for Apple.

Apple CEO Tim Cook passing on the meeting doesn’t make much sense. Tesla, a car manufacturer, is obviously in a much different space than Apple is with its technology. But part of what makes Tesla so unique is that it is, too, a technology company.

And, according to the Reuters “iCar” report, the two companies seem to now have similar goals.

The report states that Apple’s new car plans, referred to as “Project Titan,” have been on-and-off since 2014 when the company originally planned to produce a vehicle. Apple eventually stepped away from the plan but reignited it in 2018 by re-hiring veteran employee Doug Field, who returned after working at Tesla, to head the project.

After more than a year of building a team behind the scenes, Apple now feels comfortable moving forward with making a consumer product — an electric, self-driving vehicle.

There is doubt within the report, however, that Apple could see a profit on vehicle production in any reasonable timeframe. It took Tesla 17 years to become profitable. As discussed earlier with Tesla, mass-producing these types of vehicles can become a money pit.

Apple will supposedly not begin production until 2025, giving them plenty of time to find suppliers of technology and manufacturers for the car. By that time, though, every other company working to produce electric and autonomous vehicles will be miles and miles ahead of Apple.

“As we see with Tesla and the legacy auto companies, having a very complex manufacturing network around the globe doesn’t happen overnight,” Trip Miller, managing partner at Gullane Capital Partners, said in the report.

In 2020, Musk became the second-richest person in the world thanks to Tesla’s extreme success in the stock market — returning nearly 700% in the past year.

Had the company been sold to Apple three years ago, Musk would not be in the position he is in now and Tesla might not be either.

Apple is doing just fine with a valuation of over $2.2 trillion. Moving forward, though, it has to try to find a way to compete with the tech-auto giant that it could have had a stake in.