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Thursday, February 20, 2014

A layman's comments on Tesla and Apple

The closest I’ve come to a Tesla is two  lanes over on the 405 and 101 freeways. They look very stylish. I see no lag in performance compared to a Porsche or Lamborghini. Of course, on the 405 North at 5  in the afternoon, my Dodge Neon is moving about as fast as they are. But I digress...

I don’t think it would make sense for Apple to buy Tesla. The idea that two makers of bright, shiny, battery powered luxury goods should merge is a Wall Street fantasy. Here’s my admittedly layman’s opinion of the whole idea.

First, selling Teslas is not as easy as selling Macs and iPhones. If Apple wants to open a new Apple store in a mall in Texas, I’m sure the mall management would happily cooperate. Right now, though, Tesla can’t sell its cars in Texas. Here’s why.

The automobile dealers have a stranglehold on new car sales in many states. Tesla wants to sell its cars through its own stores, just like Apple sells Macs, iPhones and iPads. They can’t in Texas and Arizona. Tesla doesn’t offer franchises. That’s why you can’t go to Keyes Tesla on the Van Nuys Boulevard Mile of Cars. 

I also believe that making cars is a lot different than making consumer electronics. The cars weigh much more than an iPhone or a Mac. You can’t just hire a bunch of Chinese workers to work in a factory right next door to a dormitory to ramp up production of a popular item.  And you can’t ship them by the 747 load as you can an iPad.

It would make good sense for Apple and Tesla to cooperate on battery technology. Wringing more performance out of a lithium-ion battery is a common goal. The fact that one wants a battery big enough to power a car selling for $70,000 at a sales volume of thousands of units per year, while another wants a battery light enough to power a featherweight tablet computer selling at $600 in the millions of units per quarter-could prove a problem in a merged company. Just sharing some engineering ideas, though, makes sense.

It is my prediction-don’t buy or sell any stock based on this-that the most we’ll see from this kerfluffle is Tim Cook in a Tesla SUV playing tunes from his iPhone through the  AirPlay equipped Tesla sound system. 

And if Apple’s Mergers and Acquisitions guy visits a Victoria’s Secret store; we’d see the rumors of a merger between the two companies. I anticipate this to happen about the time Apple brings out a lady’s watch

This is your editor in his Costco undies signing off.


Tom Briant

Editor, MacValley Blog




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