Rumor has it that Apple (NASDAQ: AAPL) is working on an electric car.
The highly secretive project, code named Project Titan, is what some are calling a potential rival for Tesla (NASDAQ: TSLA).
Interestingly, both Tesla and Apple have been stealing employees from each other recently. In fact, according to Bloomberg, Apple’s been offering $250,000 starting bonuses and 60% pay bumps for folks who have expertise in this field.
Most of those experts already work for Tesla. To date, Apple has hired close to 50 former Tesla employees.
While some have suggested that Apple’s plan to get into the electric car market is little more than hype, I don’t buy it. Steve Jobs wanted to build a car for years, and had he lived, he would’ve designed one.
What I don’t buy, however, is that Apple’s looking to compete with Tesla.
Pony Up!
Last year, it was reported that Elon Musk was meeting with Apple’s head of mergers and acquisitions. While Musk wouldn’t confirm the details of the meeting, he did say:
If there was a scenario where it seemed like it would be more likely that we would be able to create the mass market sort of affordable compelling electric car, then possibly it would make sense to entertain those discussions. But, I don’t currently see any scenario that would improve that probability so that’s why it’s very unlikely.
Musk has a very clear vision for Tesla, and he’s not selling out to anyone for any amount of money. For Musk, a company like Apple would basically have to come to the table with an extraordinary amount of capital and the willingness to follow Musk’s plan of attack without exception.
One year ago, Apple wasn’t willing to do that — or at least that’s my suspicion. But a lot has changed in a year.
While Tesla continues to crush it on sales (aside from the giant disappointment of China), the company’s battery manufacturing component has further proved to be an extremely valuable proposition.
We’re now hearing that Tesla’s gigafactory could open ahead of schedule, and the company’s recent announcement that it will soon have a home battery storage system — in as soon as six months — has analysts getting all kinds of giddy again.
The way I see it, if Apple wanted to acquire Tesla today, it would have to pony up more than it’s ever ponied up for anything.
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Times Have Changed
Angel investor Jason Calacanis lit up the Internet last week after he made the prediction — with some pretty competent supportive analysis — that Apple will buy Tesla for $75 billion in 18 months.
Now, I don’t know if that’ll happen or not. But I do know that compared to launching its own electric car division, picking up Tesla for $75 billion would be an absolute bargain.
If such a deal happens, it would actually be the tenth most expensive acquisition in corporate history. To put this in perspective, when Exxon acquired Mobil, it paid $80 billion.
Think about that for a moment…
An electric car company being acquired by a tech giant for a price that’s very close to what an oil giant paid for another oil company.
Boy, have times changed.
Folks, just five years ago, it was nearly impossible to get people to see just how real and valuable this new electric vehicle market would be. Now we’re talking about $75 billion acquisitions and quarter million-dollar signing bonuses for electric car experts.
While I see no immediate danger for the internal combustion engine, ignoring the massive profit potential of the electric vehicle market is nothing less than an exercise in foolishness.
Make no mistake about it: The Tesla brand is the most important in the automobile space today. And if Apple throws its weight behind it, it’s game over.
Inside of 10 years, Tesla will be the most popular and most profitable carmaker on the planet.
To a new way of life and a new generation of wealth…
Jeff Siegel
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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.
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