Apple buying Tesla isn't really a good idea say reports

Tesla founder, Elon Musk, has finally admitted that the car company may not be able to meet all the demands for its upcoming Model 3 electric vehicle. While Musk had maintained that deliveries would start from late 2017, auto analysts have predicted that deliveries on pre-orders would only start by 2018 or 2019.

Over 325k cars or ~$14B in preorders in first week. Only 5% ordered max of two, suggesting low levels of speculation.

— Elon Musk (@elonmusk) April 7, 2016

Apple investors have shown interest in the past about the idea of Apple buying Tesla, irrespective of Tim Cook’s attempts at avoiding answering this question. There hasn’t been any work on Apple’s own electric car project for a long time. Now, while Apple may certainly have the cash reserves to go ahead with buying Tesla, and at the same time have a supply chain management genius in the form of Tim Cook to streamline the production processes to meet the rising demand, is it really a right move for Apple? Former Apple CEO, John Sculley weighed in on the possibility that Apple could certainly buy Tesla, but he wasn’t too sure if they would. “If they chose to do that, I’m sure they would only do it with a product that was intended to be revolutionary in a large addressable market. So in automobile, a company like Tesla would certainly meet that criteria. But whether they have any serious interest in buying Tesla or even getting into the automotive business, we’ll just have to wait and see it,” he told TheStreet. According to a report in Business Insider, Apple buying Tesla isn’t such a good idea. The most important reason being that Elon Musk being the self-made man that he is, will not adjust well to the reality of working under someone. The sentiments are echoed by The Motley Fool which goes on to state that even if Apple were to buy Tesla, there was a chance that Musk would leave the company within a couple of years to concentrate on his other projects such as SpaceX. With no Musk at the top, Tesla wouldn’t be as successful. According to the Motley Fool, it would make more sense for Apple to invest in Tesla, just like it did with Chinese ride-sharing startup Didi. “A minority investment would give Musk the autonomy and the capital he needs to maximise Tesla’s value. As part of the investment, Apple might also provide some operational support or partner with Tesla in areas of joint interest like battery technology or in-vehicle entertainment,” says the report. The Business Insider piece stresses a lot on the personalities that are Tim Cook and Elon Musk, which makes the idea of Apple buying Tesla seem a bit off. While Cook is more of a supply-chain management guru, Musk is more of a visionary concentrating on making innovative products which may not be mass market yet. Cook hasn’t really shown any innovation streak since Jobs departed from Apple, but has instead concentrated on improving the iPhone franchise by making it the most valuable product in the company. Musk, on the other hand, is always trying out new things such as the just announced mass market Model 3 or his on going SpaceX project – which does not have immediate tangible benefits so to speak. According to Business Insider, “So if Apple were to buy Tesla, someone would have to go, and that someone would be Musk.” It is clear that Musk knows the limitations regarding the supply chain issues plaguing the Model 3 production. This may explain why Tesla Motors has just hired an Audi executive, Peter Hochholdinger, to look over the production goals for the Model 3. Musk aims to ensure that production of cars touches the figure of 500,000 in 2018 and close to a million by 2020 – with a large segment of that coming from Model 3. So, at least on surface it looks like Tesla Motors has no immediate plans of selling out to Apple or anyone else. But then again, one can’t really tell with Apple. As Sculley concludes in his interview to TheStreet, “Apple’s always been stealth, so I’m not going to second guess what they might do.”