Categories Analysis, Markets, Technology

An Apple-Tesla merger could be the shortest route to an iCar

For long, the concept of an Apple car, or iCar, have remained mostly under the covers. But a recent prediction by an analyst has brought the limelight back to the much-awaited product. Ming-Chi Kuo of TF International Securities has said the iCar would reach the markets between 2023 and 2025.

He has also added that Apple’s (AAPL) foray into the automobile industry and augmented reality would help it attain a market cap of $2 trillion. Many market watchers believe that Apple acquiring Tesla (TSLA) could be the shortest route to achieving these targets.

Tesla earnings conference call Q3

In its outrageous predictions for 2019, Saxo Bank said Apple may acquire Tesla next year at $520 a share, which is roughly $200 above the current trading price. The Danish investment bank predicts Tesla would be valued at $90 billion at the time of the deal.

The merger makes sense and it offers a win-win situation for both the companies. While Apple can offer the financial assistance that Tesla badly needs to improve productivity and efficiency, the Elon Musk-led firm could give the iPhone maker a leeway into the automobile industry.

Apple’s interest in the auto industry is no secret in the tech circles as the company holds more permits to operate autonomous cars in California than any other company, including Uber.

Since the launch of iPhone in 2007, Apple is yet to come up with a pathbreaking product. Though it has launched numerous innovative products since then, nothing has gained the cult status enjoyed by the iPhone. An Apple car, meanwhile, offers all the ingredients for the next breakthrough product.

But why should Apple acquire a financially-crippled Tesla and not another global automaker?

‘Model 3 killers’ coming from all sides, yet the Tesla EV may emerge unscathed

The simple answer is – because Tesla is the leader in the electric vehicle market. None of the other automakers offer the kind of digitally advanced vehicles that Tesla does. Add to that its wide network of charging stations and market-leading energy storage capabilities.

Tesla is also miles ahead of other automakers in artificial intelligence, which is bound to have widespread applications in the auto industry with the introduction of  5G next year.

It’s a match made in heaven.

 

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