Image via Tesla Motors

Speculation Gets Stupid Over High Level Apple/Tesla Talks

on Tuesday, Feb. 18th

Is Apple buying Tesla?

Everybody who watches the Silicon Valley scene loves a good Mergers & Acquisitions story. Sometimes I think that Google exists merely to keep reporters on that beat employed. Yet nothing, and I mean nothing, gets the press corps sitting up on their hind legs like an Apple acquisitions story.

For one: Apple doesn’t buy many companies, and it almost never acquire a “name” company. Which is why the speculation mill went into overdrive  with an SF Chronicle report over the weekend that put the M&A head of Apple in a room with Elon Musk, CEO of Tesla.

Let’s cut to the chase: there is no way Apple is buying the car manufacturer.

First off: buying an auto manufacturer would be a set-back for iOS. Apple has been working iOS for Autos for a while now and yes the word is that Apple is having issues working with different car makers’ hardware. It fits the Apple narrative that it would just make its own hardware to go into cars–or just make the cars themselves.

Tesla is about as close as one can get to driving an iPhone, so the story fits, but it is a story born out of boredom with Apple’s steady but un-disruptive output for the past few years.

Purchasing Tesla would be a strategic error that only a short-sighted stock analyst could love. While Tim Cook could likely work wonders with Tesla’s operations, the battle for the Internet of Things (IOT) would be all but lost by Apple marrying a small auto maker like Tesla. A rad auto maker, yes, but one with a footprint too small to make a difference in the war for territory in the IoT.

What car maker would want to make a vendor for in-dash infotainment systems with an upstart competitor, particularly when they have sunk capital into their own electronics R&D for decades?

The looming threat for Apple is, as usual, Google. If car makers adopt Android as the kernel for their own “smart cars” then Google gets a toehold in the lives of the owners of those cars. This gives them an advantage in making Android the “default” OS of the IoT. That’s what the whole “self-driving car” Google X project is about. Google won’t be making cars: they want to be making the brains of the cars and be the lynchpin of the smart road system.

Apple can’t afford for that to happen. At least not while the IoT has no open standards in place.

9to5 Mac had a better analysis of what was probably going on in that meeting. It’s all about the batteries, yo:

Tesla is set to announce a US battery ‘Gigafactory’ in the coming days that will more than double world-wide lithium-ion battery production. Apple obviously has a huge interest here, as it uses the batteries in all of its products. Musk has announced that there will be several high-profile partners in the green US plant, likely including Panasonic and possibly Solar City. Apple has been investing in big green US factories recently, including its Mesa AZ Sapphire venture.

Apple is almost religiously focused on doing what it does better than anyone else. “What it does” being defined as a consumer electronics company. Much as it would thrill the press–even me–to see Apple make a bold buy outside of its usual wheelhouse that is just not likely to happen soon, if ever.


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