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Apple-Tesla tie up could shake up automotive world

Posted: 21 Feb 2014     Print Version  Bookmark and Share

Keywords:automotive  IT  electric cars  digital 

Reports on a potential relationship between Apple and electric carmaker Tesla Motors that reverberated across media these past few days suggest a major transformation in the automotive industry could be underway.

The San Francisco Chronicle got the ball rolling when it published a report about a meeting between Tesla CEO Elon Musk and Apple's Adrian Perica who oversees the computer giant's acquisitions.

Though the meeting took place already in April 2013, the Silicon Valley seismometers are extremely sensitive (a late result of Andy Grove's statement that "Only the Paranoid Survive") and the report created quite a stir.

Now Tesla's Musk—probably against his intention—poured oil into the flames when he declined a blunt denial in a Bloomberg TV interview upon the question if Tesla is for sale. Instead, he manoeuvred around—he admitted that there have been talks between Tesla and Apple but he declined to elaborate.

When the interviewer put him the direct question "Are you for sale?" he did not answer with a clear "yes" or "no" but instead he said that "such a sale would be very unlikely," leaving lots of space for the interested public to speculate over his real intentions.

But a sale of Tesla to Apple is not so much the question. The simple fact that an IT company and a carmaker are discussing anything that might be even distantly related to an acquisition is per se very remarkable. Things are becoming a bit more plausible if one takes into consideration that Apple is not just a manufacturer of computers and cell phones and Tesla not just a carmaker.

Apple is the icon of the digital lifestyle, and in one sense Tesla is not much different—electric cars are an emerging symbol for a new kind of mobility. Green, environmentally conscious, high-tech and expensive.

This is already one common denominator in a potential marriage between these two companies: Both players are appealing up-market buyers—early adopters of technology with deep pockets.

Of course this is not enough to justify a potential takeover. But in times when analysts label cars (and even more so, electric cars) as "the ultimate mobile terminal" for IT services, it is just logical that IT technology players increasingly watch out for opportunities to occupy this promising market place.

Cars, and again: even more so, electric cars, will be the place to offer IT-based services of the future. This starts with navigation-related services (location-based online advertising, for instance), continues with behaviour-based, pay-as-you-drive car insurance and enhanced real-time traffic information and does not end with multi-modal transport.

Of course, all these services require hardware, software and wireless communications. But these elements are just the technological foundations for new business models. It is no wonder that it was just business model innovator Google who came up as the first IT company with the idea of selling (automatic) cars, and I am sure we will witness more moves from this side.

But, back to our original question: Would Tesla and Apple be the perfect couple? There have been repeated rumours that BMW aired a similar interest already years ago—something the carmaker does not comment either, much like Tesla's founder Elon Musk in his recent Bloomberg interview. To me, one thing is clear: The perfect partner for Apple will be not just a manufacturer of conventional cars. It has to be an electric car company (for the reasons described above) and it has to be a company with strong intellectual and emotional ties into IT and digital thinking.

Plus, it has to be someone who does not insist in calling the tune in the duo with a company as self-assertive as Apple. The latter condition, by the way, rules out more or less all established carmakers—in particular the German premium players who never would bow to an IT company.

Well, that is: for the time being. The IT race in the automotive realm is on. No matter how the outcome in the affair between Tesla and Apple: We will see more of them. And this could easily change the balance of power between IT-related service providers and traditional carmakers, premium or not.

- Christoph Hammerschmidt
  EE Times Europe

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