Two days ago CNET reported (via the San Francisco Chronicle) that Apple's mergers and acquisitions chief Adrian Perica met with Tesla CEO Elon Musk in Cupertino in the spring of 2013. But let's not jump to conclusions just yet. Although Apple has the resources to buy Tesla with cash, and analyst Andaan Ahmad suggested as much an open letter to Tim Cook in the fall of 2013, I'm not sure that Apple should get into the car business.
While some have speculated that Apple might acquire Tesla to produce an all-electric "iCar," Peter Misek, a senior technology analyst at Jefferies, says that there's "zero chance" of that happening.
Misek thinks that Apple would be more interested in partnering with Tesla on entertainment options in upcoming vehicles. The most likely candidate would be Tesla's highly-anticipated Model X SUV which is due to begin rolling off production lines in small numbers by end of 2014, with high volume production slated for the second quarter of 2015.
Apple and Tesla could work together to provide back-seat entertainment options in the upcoming Tesla SUV, the Model X, according to Misek. That would provide a "nice, little incremental catalyst" for Apple shareholders as they look for the tech giant to delve into new product areas, he added.
In-car options have been on Apple's radar for several years. iOS in the Car was announced by Apple SVP Eddy Cue at WWDC 2013 and allows an iPhone to be connected to a vehicle so that iOS apps (like Maps and Phone) can be easily accessed from the touch screen in your car's dashboard.
It's easy to see how Apple's collaboration Tesla could manifest in the form of rear seat entertainment options for passengers (music, movies and apps come to mind) but it's also possible that Apple's OS X and iOS could take a larger role in the front seats as well. The Tesla Model S is currently equipped with a massive 17-inch touchscreen dashboard.
While it might only amount to in-car entertainment and navigation options, it's fun to think of what features an iCar might ship with.
What would you want in an iCar?
Update 2014-0219: Elon Musk confirms that Tesla did, in fact, meet with Apple. In an interview with Bloomberg, Musk said this about a possible acquisition:
If one or more companies had approached us last year about such things there’s no way we could really comment on that. We had conversations with Apple, I can’t comment on whether those revolved around any kind of acquisition…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 car then possibly it would make sense to entertain those discussions. I don’t currently see any scenario that would improve that probability, so that’s why I think it’s very unlikely.’