Forget about Apple vs. Tesla for a moment. Instead, what about Apple + Tesla?
It's an interesting idea. Various people have suggested in recent years that Apple should buy Tesla (or Twitter, or Netflix, or whatever), but it never made sense to me. It just seemed like "Well, Apple has all this cash, let's find a shopping list of popular companies that they could buy with it." Apple had never shown interest in making cars, and Elon Musk didn't seem interested in selling (more on that below), so the pairing seemed implausible.
But in light of recent developments, I'm starting to rethink things. Here are some reasons why:1) Multiple credible sources have revealed that Apple is in fact interested in making cars, and not just any car, but an electric car. We don't know what it'll look like (I don't believe the "minivan" rumor), or if it'll be self-driving, but we know that Apple cares enough about this category to build a team of hundreds (some reports say over a thousand) of talented people, poaching employees from other companies (including many from Tesla). Since Apple is already spread thin between its existing products, taking resources away from them mean that they're serious.
And from Apple's point of view, not only would they be acquiring a tremendously talented team, great products, and a superb brand, but they would also be turning a competitor into an ally.
2) Elon Musk has said multiple times that his goal with Tesla is to change the industry and push forward electric cars (which can use clean energy directly). People might not believe him, but I do. If he just wanted to get rich, there were a million easier way than to create a new car startup (none had been successful for almost a century) that not only had to compete with giants, but also to do it using an entirely different technology that the general public didn't even trust at the time.
So Musk has said that he didn't think he would have to be involved in EVs. He thought GM would just keep going after the EV1, and eventually the EV3 or EV4 would be good enough and cheap enough for most people and that would be it, gasoline cars would be on the way out over time, and Musk could focus on going to Mars and other projects. But large automakers abandoned EVs, or did them half-heartedly (they didn't make electric version of their most popular models, they tried to keep it mostly niche). So Elon Musk would never sell Tesla to a big automaker, because he wouldn't trust them to do things the right way. Also, most big automakers probably couldn't afford Tesla; they are very large companies, but many recently went bankrupt or came close. Large revenues doesn't mean large profits...
3) Except at Apple. It would be a stretch for most automakers to try to buy Tesla at any premium to the market price, but Apple could easily afford it with just a quarter or two in profits. And if Apple shows a commitment to electric cars, that could convince Elon Musk that Tesla would be in good hands at Apple.
4) Apple also has the capital to help Tesla grow into a mainstream company that will change the world and help push the internal combustion engine into the recycling bin. The biggest challenge for Tesla is that if they face big problems scaling up, they might run out of capital (and lose the confidence of Wall Street). This is the fate of many fast-growing young companies, and in fact, Tesla almost went Bankrupt during the 2009 financial crisis. But if they are backed by Apple's balance sheet, then the only risk is execution (making good products). Building up factories for the Model 3 and other subsequent models, investing in R&D, building out service centers, Supercharging Stations, etc. All that would only cost Apple its pocket change.
5) Until recently, Apple had never done big multi-billion-dollar acquisitions, and never had a non-Apple brand as a major part of the company. But last year they acquired Beats and kept the Beats brand separate. This makes me think that a similar thing could happen; if Apple were to acquire Tesla, I think they would keep the Tesla brand (which is extremely strong) and just sell all their electric vehicles under that badge.
6) Gasoline cars would never interest Apple. But electric cars are different beasts altogether. As I wrote here:
vehicles have been moving in the direction of computers for a while now. They used to be all about mechanical attributes, like valves and pistons and crankshafts, but now, electric cars are becoming more about software, user interface, and batteries, all areas of expertise for the fruit company.
In a world where cars will increasingly be giant batteries with electric motors (above is a Tesla Model S drivetrain and battery), the differentiation will become more about design and these very things, in the same way that in a world of smartphones that are all glass rectangles, most of the differentiation comes from the user interface and software (hardware matters a lot too, but it's not sufficient on its own, as HTC realized). (source)
7) Tesla doesn't just see itself as an electric car company. It sees itself as an "energy innovation company". Apple is one of the biggest users of batteries in the world (for phones, tablets, laptops, soon watches), and any advantage that they can squeeze in battery tech would help them a lot. Apple would have the capital to help Tesla invest in more battery Gigafactories and more battery R&D, which would benefit both electric cars sold by the company and other consumer electronics.
8) Tim Cook obviously cares more about the environment than Steve Jobs ever did (or at least, than he had time to show --- maybe over time we'd have discovered a deeper commitment). We saw a glimpse of that this year, and even Greenpeace can't help by praise the company for its environmental leadership in the industry. Apple has been investing massively in solar power, so an investment in a clean transportation company that has similar interests (Tesla also likes to power almost everything with clean energy) would make sense on that front (in the way that investment in a gasoline car company wouldn't, for example).
9) Corporate culture matters. Elon Musk has said many times that Apple is a model for Tesla. Both companies are centered around design and engineering, they integrate vertically, designing everything, manufacturing the most important parts, writing their own software, creating a strong brand and customer support experience via company-owned stores, etc.
If Tesla was bought by Apple, there probably wouldn't be a big culture clash. In fact, both companies have been poaching each other's employees because they have similar ways of thinking about things and similarly high standards.