Tuesday, February 17, 2015

Apple Is Not Going To Buy Tesla (AAPL; TSLA)

At a minimum the instigator of the latest AAPL/TSLA rumor, Mr. Calacanis, should have lead his blog post with something like: "I was dreamin' when I wrote this, forgive me if it goes astray..."

This is at least the fourth fifth time this oddity has made the rounds and if it weren't for the fact the linked piece does such a nice overview of Tesla we'd ignore it as we did the previous iterations.

And seriously, is it too much to ask for trigger warnings? Please, please Mr. C., include trigger warnings if you are writing something moronic.

TSLA up 30 cents at $204.07.

From FT Alphaville:

No one needs to buy Tesla
Apple is recruiting experts in automotive technology and vehicle design to work at a new top-secret research lab, said several people familiar with the company, pointing to ambitions that go beyond the dashboard.
Friday’s news of a secret research lab in the FT there, which stirred the froth around Tesla, the electric car company run by Elon Musk. A $75bn takeover target for Apple, anyone?

The problem with the theory, aside from Tesla’s mere $25bn market capitalisation, is that nobody really needs to buy Tesla. Might someone? Sure, but a glance at the company’s history shows just how little cash it took to build.

The first vehicle was the Tesla Roadster, a proof of concept sports car. Total capital expenditures and research and development costs from inception to the day of the first delivery ran to about $125m.
Production of a high-end sedan followed, and the development of manufacturing facilities in Palo Alto, California, was helped by a $465m loan facility from the Department of Energy, agreed in 2010 and drawn down in stages.

Tesla also struck deals with Daimler and Toyota to help fund the development of what is known as powertrain technology — the combination of battery, engine, gearbox, clutch and management software that makes an electric car move — and with Panasonic for batteries.

One thing to realise, however, is the simplicity of the electric motor invented by Nikola Tesla compared to an internal combustion engine. The challenge is transferring the power to the wheels smoothly, as well as managing and prolonging the battery life. So far as engineering problems go, it is more a question of people and resources than reinventing the wheel. Tesla has also offered to share patents with the industry on fair terms.

So let’s say you wanted to start an electric car company (or division) from scratch. Here is what Tesla has spent on research and development and capital expenditures:
The 2009 R&D figure includes a $23m contribution from Daimler, but that makes little difference to the overall total of $3.1bn.

More spending is in prospect, with a planned battery “Gigafactory” expected to cost $4bn to $5bn by 2020, of which Tesla will contribute about $2bn, or about $400m a year. Also remember that Tesla was helped out early on by taking over a factory formerly owned by General Motors and Toyota, and you wouldn’t have Elon Musk running the show.

Still, if you think all cars will one day be electric (and driverless), there is time to catch up.

You would have to find staff, but assuming you are a well resourced multi-national company to start with, the numbers aren’t daunting....MORE
We've been posting on Tesla since before the 2010 IPO and as far as I can remember there were rumors that Apple would buy Tesla in Feb and Nov. 2014 and May and Nov. 2013.
I may have missed some if they were going around earlier.