WILL APPLE BUY TESLA?

WILL APPLE BUY TESLA?

Apple CEO Tim Cook on Tuesday confirmed what was one of the worst-kept secrets in the stock market: His company has autonomous car ambitions.

While calling it a “core technology that we view as very important,” Cook told Bloomberg that his company is working to build self-driving car technology, referring to the endeavor as “the mother of all AI projects.”

Notably, this admission marks the first time the CEO has publicly discussed the car program, dubbed Project Titan, which Apple began three years ago. This, however, is a pivotal point in paving the options that Apple has next, including making an M&A run at Tesla.

Until Bloomberg’s interview, which occurred on June 5 but aired Tuesday, Apple had never stated publicly that it is working on a car. Last year Tesla CEO Elon Musk called Apple's car plans an "open secret ," saying, "It's pretty hard to hide something if you hire over a thousand engineers to do it.”

But the project had hit several sangs, which last year prompted Musk to suggest Apple was too far behind to enter the autonomous vehicle race.

"I'd think there will be volume production no sooner than 2020," he said about Apple. "Is that too late?”

To be sure, trailing market leaders has never been a problem for Apple. In fact, the tech giant prides itself on being fashionably late. With autonomous car technology, however, there’s too much at stake for Apple to risk perfecting it on its own. Aside from Tesla, Alphabet  subsidiary Google, which has already collected more than 2 million miles of public-roadway testing for its vehicles, has a significant lead on Apple.

Google in December launched Waymo, which stands for “a new way forward in mobility.”

The search giant has since unveiled various car prototypes fitted with Google’s hardware and software built to move with the touch of a button, with neither a steering wheel nor a brake pedal. But by acquiring Tesla, Apple can immediately take the lead.

In Tesla’s most-popular sedan, the Model S, for instance, the company has already rolled out self-driving capabilities that — as with iOS devices — receive incremental updates on autopilot features. These updates, which include “exit ramp autonomy” on highways, automatic lane-changing, and auto-steering, are also available to Model X, Tesla’s SUV family.

Given Apple's automotive and mapping efforts with Apple Maps and the fact that it has teamed up with automakers to have its CarPlay platform supported by infotainment systems, the synergies with acquiring Tesla seems like a no-brainer. With some $257 billion in cash on the balance sheet, which is more money stashed than the U.S. Treasury, Apple has enough firepower to take on Tesla, which has an enterprise value at just $70 billion.

Hope apple buys Tesla.

Best Regards,

K.Akshay