Apple’s long cherished dream to get into the world of electric cars could finally come to fruition as the tech giant may lend its financial muscle to help cash-strapped Tesla.
The world famous electric car producer is undoubtedly a bright star of the industry, but Tesla has been struggling since it managed to raise $226 million during its initial public offering on June 29, 2010. The company has been reporting annual net losses year after year with the most dramatic one in 2017, when Tesla lost $2.24 billion.
Tesla’s failures have occurred as its CEO Elon Musk has been desperately trying to achieve the necessary balance to make the company’s products accessible enough to meaningfully change the world. Tesla was losing $6,500 every minute and needs another $2 billion to get through the current year, according Bloomberg estimates.
The agency stressed that there is a “genuine risk” that the firm will not survive until the end of 2018. Apart from financial losses, the car maker is failing to meet its own production targets for its Model 3 sedan, a Tesla driver was killed while using his car's autopilot feature, and some shareholders in the company want the board to boot Musk as chairman and to remove his brother Kimball Musk.
Apple, in its turn, has succeeded in manufacturing innovative products, but unlike Tesla, the firm managed to spread those products across the vast majority of the developed world very profitably. As a comparison, more than 700 million people all over the world are using iPhones, while only three million drivers are expected to hit the road in a Tesla by 2023, reports TheStreet.
Although producing electric cars and making smartphones are seen as two vastly different tasks, Apple could deploy its production know-how and vast cash reserves to make Tesla generate returns. There is all the more reason for this as the tech giant had some history of smaller acquisitions in the past. Last year, Apple paid more than $400 million for music-identification service Shazam.
Tesla’s current market value is hovering around $51 billion, while Apple is sitting on a pile of cash of around $285 billion. So, from a financial perspective, the iPhone maker could definitely afford to acquire the struggling electric car producer.
“They could certainly if they wanted to, they certainly have the financial capacity to do so," said former Apple CEO John Sculley in an interview with TheStreet.
“If they chose to buy a big company I am sure they would only do it with a product that was intended to be revolutionary in a large addressable market - so an automobile maker like Tesla would certainly meet that criteria.”
In 2016, Apple shelved its own electric car initiative, having laid off hundreds of employees working on the project. According to the initial plan, the company was set to unveil its first electric vehicle in 2019.
The corporation’s management could easily talk Tesla’s Musk into a takeover deal, according to Tesla expert Anton Wahlman, as quoted by the media. “He would jump at it faster than two flies jumping out of a hot stove,” he said. “This is a nasty ugly business. Musk wants to run SpaceX, that's what he wants to do. He doesn't want a car business.”
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