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Wednesday, 11 March 2015 14:00

Apple will buy Tesla instead of reinventing the wheel Featured

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Tesla Model X Tesla Model X

While every geek and his dog is prattling on about useless electronic wrist watches, this week Apple has quietly signalled its intention to push forward with its plans to enter the next real Silicon Valley frontier – electric cars.  What’s more, Apple shareholders are pushing the cash-rich company to buy the number one e-car maker in the world, Tesla.

For Apple, with a daily growing cash pile of US$200 billion in the bank, Silicon Valley-based Tesla, with a market cap of US$24 billion, would be almost a trivial purchase, even if Apple had to pay a premium on the current price.

Tesla founder Elon Musk is renowned for founding and building up good companies and then selling them. He did it with PayPal and SpaceX and there’s no reason to think he would be averse to the idea of selling out to Apple.

In fact, many of the workers at Tesla in Palo Alto have been poached from Apple just 10 miles down the road in Cupertino. Apple has also tried to poach some workers from Tesla, without as much success.

Apple is a newcomer to the car game and is starting from a long way behind Tesla and even Google. Tesla already has the products, the knowhow and at least the beginnings of a distribution network.

A Tesla Roadster, an electric sports car, owned by Australian Internet entrepreneur Simon Hackett, set a world record in 2009 by driving 501 km on a single charge. Since then, Tesla has released the Model S family sedan and the Model X sports utility, both praised for their style and performance.

Best guesses estimate that the earliest Apple could bring a car to market is 2020.

Well-to-do shareholders of Apple have recognised this and made their voices heard about Apple buying Tesla at a recent shareholders’ meeting.

While Apple CEO Tim Cook pretended to laugh off the suggestion, which was raised more than once at the meeting, speculation is now rife that his claim that Apple doesn’t have a relationship with Tesla may just be corporate politico speak.

The market for replacing gas guzzling vehicles with all-electric propulsion systems is huge and largely untapped.

Recent figures estimate that there are 1 billion internal combustion engine automobiles on the road globally, plus another 250 million or so larger transport vehicles.  Approximately 60 million cars are produced annually.

Mainly four countries mine lithium, the power storage source of electric vehicles and most electronics devices. Chile and Australia are by far the two largest producers, followed by China and Argentina.


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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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