Apple may be shopping for car companies, but Tesla shouldn't be on its list
Matthew DeBord
Tesla Model 3 Elon Musk
(The right man for Apple?AP)
Last week, rumors circulated that Apple was investigating an investment in or an acquisition of British supercar maker and Formula 1 powerhouse McLaren.
McLaren said that the reporting was off the mark, but it's obvious to anyone paying attention that something is going on with Apple and its interest in transportation.
Earlier this year, the Cupertino colossus invested $1 billion of its $200-billion-plus cash hoard in Didi Chuxing, a Chinese ride-hailing service.
Then, of course, there's the mysterious "Project Titan," Apple car experiment that is either going to remake mobility as we know it — or is falling apart at the seams.
My take is that Apple is gradually turning itself into a sort of stealth holding company; it can't figure out what to do will all that excess moolah, so like a person with a bulging bank account, it's going on a shopping spree and will sort it all out later. Drop $3 billion on Beats in 2014, throw a billion at Didi, pick up McLaren for something in the same pricing ballpark — the synergies will eventually appear.
Buy Tesla?
The McLaren news also revived an idea that's often been bandied about: Apple should buy Tesla. The notion, daffy as I think it is, makes more sense than getting mixed up with a manufacturer of high-tech sports cars. The tech world is very attracted to an Apple-Tesla tie-up because it would combine two of the most beloved brands that Silicon Valley has yet produced. For many, Tesla CEO Elon Musk is the new Steve Jobs.
Steve Jobs
(Like Musk, a visionary.Justin Sullivan/Getty Images)
But that's the problem. Apple has grown so large that it's become a company that's less about innovation and more about managing its achievements, which are considerable. In commenting on the Apple-should-buy-Tesla argument in the past, I've usually asked why Apple isn't yet doing a stand-alone TV, the best opportunity to completely reinvent the user experience for a familiar product. I think it's because they've talked themselves out of it — something that wouldn't have happened when innovation was on the ascent at the company, before Jobs' death.
For all its stumbles and growing pains, Tesla is rapidly innovating. Just last week, the automaker released a major software update for its vehicles that contains at least one totally new technology for cars: Cabin Overheat Protection, which enables a Tesla to use its large battery packs to cool itself off when the car isn't on, making the interior safer for small children and pets.
Apple, meanwhile, is busy screwing up EarPods and the headphone port on the new iPhone 7, telling customers that should be courageous about these needless tweaks to a product that's getting long in the tooth.
There is some logic to Apple buying Tesla. Project Titan appears rudderless — Is it a real car? An in-car interface? A self-driving technology? — so at least by acquiring Tesla, Apple would center the undertaking.
But then Apple would need to figure out what to do with Elon Musk. And therein would lie the challenge, as Musk and Apple CEO Tim Cook are the two most dissimilar leaders in modern business: mercurial visionary versus a modest caretaker. Cook inherited a world that Apple had already changed, while Musk is in the thick of trying to change it again.
Additionally, even if Apple figured that it could swallow Tesla's $30-billion-ish market cap without developing managerial heartburn, it would be adding the Palo Alto carmaker as Musk and his team are headed into a deeply challenging period.
It would be one thing if the only major objective to achieve were Musk's goal of delivering 500,000 vehicles annually by 2018, or launching the Model 3 mass-market vehicle on time in 2017. But there's so much more: Complete an acquisition of struggling solar-panel leaser and installer SolarCity; get the Nevada Gigafactory up and running and cranking out lithium-ion battery cells in huge numbers; establish Tesla Energy as a viable power-storage business; continue to expand the Supercharger network, especially in China; grapple with the blowback from a spate of Autopilot accidents, one of them fatal; hit up Wall Street for another capital raise; and execute the post-Model 3 agenda, which includes developing an electric semi-truck, a compact SUV, and maybe even a pickup.
That's a lot of problems to buy for a lot of money, even by Apple's standards.
Chevy Chevrolet Bolt
(GM debuts the Chevy Bolt.Bill Pugliano/Getty Images)
The limits of tech
Finally, it's worth thinking about whether tech companies, generally speaking, are really equipped to play a role in the transformation of mobility. We have this idea that Apple and Google, simply because they're Apple and Google, can use their brainpower and cash mountains to deliver earth-shattering, insanely great progress.
But so far, the only tech company that's had a massive impact on transportation is Uber, and that's because it's always been in the mobility business. Sure, Tesla has made its contribution, but on balance the overall effect has been marginal; the vast majority of cars on the road are still powered by gas engines, and, in any case, Tesla is increasingly becoming a hybrid of a technology company and an old-school automaker.
The companies that are starting to move the needle are actually the traditional carmakers. They have the scale to get new products into the market quite rapidly, as GM has done with its Chevy Bolt electric car. Optimistically, GM could sell as many Bolts in the next two years — production starts next month — as Tesla has sold in its entire existence, about 150,000 vehicles.
So maybe Apple should forget about the Teslas and McLarens of the world. If it really wants to do something with cars, Detroit could be the place to go for its shopping spree.
