Elon Musk Stands to Make a Fortune on the Back of an Apple Car
As rumors continue to swirl about the possibility of an Apple car, an influential voice in the industry has spoken up. Apple still has yet to confirm that it’s interested in building a car at all, but if it counts for anything Elon Musk thinks an Apple car would be a great idea.
On an earnings call, Musk was asked about the idea and said, “I certainly hope Apple gets into the car business. That would be great.”
As chairman and CEO of Tesla Motors, it’s an interesting stance to take since many of the rumors are suggesting that if Apple did build a car, it would be fully-electric and would likely compete with Tesla. While Apple has been hiring auto engineers, it’s also been hiring quite a few battery engineers. In fact, at one point, Apple poached so many employees from the car battery manufacturer A123 Systems that the company sued Apple.
Then again, Apple has such large cash reserves, instead of reinventing the electric car, it could easily buy Tesla and take advantage of the progress and name recognition the company has already built. While it’s not necessarily an idea that Apple has publicly expressed interest in, it is an idea that has proven popular with both the public as well as Apple shareholders.
One shareholder put it to Apple CEO Tim Cook about as bluntly as he could. “Quite frankly, I’d like to see you guys buy Tesla.”
Cook avoided answering that suggestion directly, but his silence doesn’t necessarily mean there’s anything going on behind the scenes. It could have simply been that he didn’t want to delve into an issue he couldn’t talk freely about.
Even if Apple doesn’t buy Tesla and instead introduces an electric car of its own that would compete with Tesla, it’s no surprise that Musk supports Apple getting into the auto manufacturing business. Musk has been a long time supporter of greater competition among electric cars and has done a lot to encourage other companies to enter his space. He’s even gone so far as to open up Tesla’s patents for public use.
While it may initially appear that Musk is a benevolent billionaire who no longer cares about money and simply wants to change the world for the better with electric cars, don’t be so fast to assume. After all, Musk isn’t just in the electric car business. He’s in the battery business as well, and as everybody knows, electric cars run on batteries. Whether his plans are realistic or not, Musk is pursuing the construction of several large-scale battery “gigafactories” that would have the capacity to produce an absolutely humongous number of batteries.
When Apple entered the cell phone industry, it not only sold a lot of iPhones, but it also fundamentally changed the cell phone industry. If Apple decided to sell a car, there’s a very good chance it would do the same thing to the auto industry.
As Fiat-Chrysler CEO Sergio Marchionne said recently, “If [Apple] show up and they are truly successful, with their cash piles and know-how, they could fundamentally hurt this industry.”
Apple would also need lots of batteries to power all of the electric cars it sells, and who else would have the capacity to supply those batteries other than Musk with his gigafactories? Suddenly, Apple’s success would be Musk’s success as well, even if the Apple car ended up stealing sales from Tesla.
Those patents on electric car technology that Tesla has opened up would also come into play, allowing for other companies to use Tesla’s technology to try to build their own electric Apple car competitors. Even those cars would need batteries, though, and Musk’s gigafactories would be perfectly positioned to supply batteries to those manufacturers as well.
When the dust all settles, the eccentric billionaire who kick started the electric car industry could find himself going down in history more as the world’s first electric energy mogul than as an electric car CEO. It may sound crazy, but I’m pretty sure it’s exactly Elon Musk’s plan.