Back in 2018, when Tesla was still worth $55B and Apple had more than $100B in the bank, they could've acquired Tesla in an all cash deal, but for some reason didn't. I think they would've made a great match.
Because Tesla was, is, and will continue to be overvalued as a car company. Why pay the “tech premium” for a manufacturing firm when you already have all of those core competencies in house?
Pffft. They have done over 10 billion net in the past couple years. High ROE. They have a big, durable competitive advantage with their buying process v other companies (just go through the buying process across a number of car types). They have a big competitive advantage in staff capabilities, also in the ability to actually produce software.
Elon is no dummy. He targeted fat tired old industries to attack. It was brilliant. He now faces possibly the weakest competition in large business.
Suggesting it's worth less than $55 billion is silly.
But they don’t have all the core competencies in house. I don’t think manufacturing a small, mostly solid state rectangles with maybe one major stress bearing hinge is the same as manufacturing a highly dynamic multi-ton steel machine that is meant to transport people 200,000 miles over a decade or two any more than an aluminum smelting firm could suddenly dominate glass manufacturing if they decided to.
I don’t think it’s really Apple’s MO to outsource product design to any significant extent, though they do use a lot of contract manufacturing, my understanding is that they dictate how a lot of that’s done. Their brand is all about quality and seamless integration between everything, you don’t get that without being involved in every aspect.
They won't outsource design, but they can outsource the engineering needed to make that design safe. Its not like the "boutique car from a consumer electronics" market is saturated, they can take more risks in regards to info leaking.
I agree with you, but Tesla did get things in gear fast enough to ship cars, early. If Apple's car ships in 2028 (and that's optimistic), then they'll be 20 years late to Tesla's party. The early mover advantage is worth something, not what investors value it at but still a hefty sum.
Apple could spin up a joint venture with, say, Rivian or even Ford for 1/10th of that tomorrow.
I’ll be honest, I think the whole Apple car thing is a pipe dream. Apple doesn’t have some sort of magic that is two decades beyond anybody else driving in circles underneath their weird spaceship campus. If they have their own full self driving, it doesn’t matter who assembles the car. They can sell the tech to everybody.
But isn't the Apple way to combine hardware and software better than anyone else?
I've only ever bought an Apple tableet for my wife, so I've got no bias here. But I'd be keen to see what they can produce. If only to differentiate the market up a bit ... it's as boring as hell at the moment and why I haven't pulled the trigger on one.
Tesla is now moving into making their cars cheaper, with exceptional results. That's leveraging your first mover advantage: compete where others can't, because your manufacturing process is mature.
You don’t have to look any further than the Cybertruck to see evidence that Tesla builds cars it wants to build, not what the market wants. This worked to their advantage when no one else was building an EV but now it’s their biggest liability. They could have captured a highly valuable truck or even light pickup market if they just produced something practical. Instead, they launched something like what you see as a concept at the Detroit Autoshow. It’s an art project, and a vain one at that.
They created a sex symbol which manages to include surprising practicality and insane technology. I've been excited about many concept cars, and now I get to buy one, and I know I'm not alone. It's a halo product, but a good one.
I don't think it's an execution problem: it's a product design problem.
When/if they figure out what they want to build, I expect they're leverage their existing expertise in partnering with third parties to churn out product.