When it comes to technology, there are few names which are synonymous with success and high public opinion – and the two of the biggest are Apple and Tesla. Though they currently have interests in separate parts of the technology field with some minor apparent overlap, rumors are circulating that Apple may be looking to acquire Tesla to make it a part of its tech empire. This of course is pure speculation, but when you actually consider the concept it’s clear of the benefits that Apple could reap from the acquisition.

Apple AV sensor array

Engadget

Source: Engadget, MacCallister Higgins

Both Apple and Tesla have a large interest in the race to create the first truly autonomous vehicle (AV). Though Apple has kept its Project Titan under wraps for the most part, recently a research paper including a substantial amount of new information about the car has brought us some insight into the future of the autonomous vehicle and the work the researchers have done on it. Additionally, Apple recently filed a patent that may improve AVs and their navigation systems by auto-updating road maps when the cars travel on them. This concept is game-changing and would allow the AV to minimize its map usage in favor of other safety features. Apple has invested a mountain of cash in Project Titan and though the company has scaled back its original ambitious idea of going toe-to-toe with Detroit and disrupting the automobile industry, acquiring Tesla would revitalize this discussion.

Apple autonomous navigation system patent diagram

Fig1

Source: Engadget, Apple

Tesla’s AV system, the Autopilot, which Elon Musk claimed would allow Tesla drivers to sleep in their cars by 2019 – appears to have stalled recently with no new updates since June. In 2016, the company debuted an ambitious video that showed a Tesla vehicle driving across town and finding a parking spot entirely on its own (with a human safety driver). Since then, many of the features promised in the video have yet to be added and has left some Tesla owners questioning if the company will ever deliver on what it promised: a level 5 (full automation) AV. Given the challenges the Autopilot project appears to be facing, the opportunity for acquisition by Apple could be better now than ever. With Apple focusing more on the sensors and logistics of the AV, it could benefit from Tesla’s already proven success in automobile production. Given this information, the marriage of the two companies in regard to the creation of AVs appears like a match made in heaven.

Tesla Autopilot Cluster

Tesla

The Verge, Tesla Motors

The synergy for the AV with Apple acquiring Tesla is not the only reason this acquisition makes sense. Additionally, Apple has some $257 billion in cash on its balance sheet thanks to the enduring success of its iOS devices, which is more money than the US Treasury holds. Apple has more than enough firepower in its war chest to acquire Tesla, which is valued at a “meager” $70 billion (when compared to Apple’s cash pile). It would be a smart move for Apple to acquire Tesla.

Tesla Model S

TeslaModel

Source: Green Car Reports

Tesla also presents an opportunity for Apple to fill in some of the noticeable gaps in its corporate wheelhouse. Apple – though financially stable – lacks the innovation, growth, and leadership it had under CEO Steve Jobs. Tesla represents the pinnacle of innovation as its leader, Elon Musk, is bringing cleaner energy to a world in need and is forging ahead in his goal to create a level 5 AV. Unfortunately, that kind of innovation often comes with a financial instability, which Apple could provide if it acquired the company. The growth potential that Tesla possesses combined with Apple’s cash surplus would create an entity of epic proportions that could change the face of transportation, computing, and more.

Both companies exist within the Silicon Valley corporate ecosystem, which would allow the merger to flow more easily than many acquisitions of this scale. In fact, both companies’ corporate headquarters are located within 30 minutes of each another, making an easier transition for employees. However, Apple and Tesla tend to have differing views on their respective corporate cultures. Apple was developed to have an organizational culture of secrecy, in order to minimize intellectual property theft. Tesla on the other hand, appears proud of its innovation and Elon Musk likes to bring his new concepts to the public prior to completion – occasionally to the company’s detriment. A merging of the two styles may provide the balance that both companies need to bring them further success.

Rover prefers Tesla

caranddriver

Source: Car and Driver

One of the most interesting possibilities of this merger, would be the idea of Elon Musk helming Apple (which would presumably be a term of the merger). Musk represents innovation and the future of technology, his presentations are evocative of the bright future not only of his company but of the world. Since the passing of Steve Jobs, Apple has lacked that charismatic leader who is able to give life to its concepts and revitalize the company. Elon Musk could easily provide that leadership and bring his own entrepreneurial spirit to a company desperately in need of innovation as it moves forward.

One possible issue that may be holding back the merger is the valuation of Tesla reaching a level that would provide Elon Musk enough control to take over the helm of the combined entity. All said, the potential synergy created by an Apple-Tesla merger would be unparalleled and could create a brighter future for not only investors but for the world at large.

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