That would take the question of capital off the table at Tesla for years to come. It would more than cover the negative free-cash flow estimated at $ 4 billion through 2020 by researchers at Auburn University, in a report titled âDriving Off a Cliff: The Case Against Tesla,â plus any extra needed for the accelerated production targets the company has since announced.
For Apple, with more than $ 230 billion of idle cash, the investment would be close to a rounding error. Its shareholders would probably rejoice at converting a sliver of money in the bank for a placeholder in an emerging leader in self-driving cars. Unlike a full purchase, buying a minority stake will not dilute Appleâs profitability, either. The company has projected gross margins of around 38 percent in its next fiscal quarter.
Now, what could Tesla do for Apple? With a market capitalization north of $ 600 billion, Mr. Cookâs business is doing fine at the moment. Shares of the company have gained some 5 percent since the iPhone 7 was unveiled earlier this month. Pre-orders for the new handset have been robust despite reviews that largely called it an incremental advance on its predecessor. Features like wireless earbuds are novel, but hardly game-changing.
Many analysts, investors and observers want Apple to develop more new products. Its last big product introduction, of watches, was a relative dud. Since the devices went on sale in April 2015, Appleâs shares have fallen 8 percent, and investors fret that the company has been running short of new ideas. At the same time, shares of Alphabet, Googleâs parent, have rallied by nearly 50 percent.
One area in which Alphabet appears to be further ahead is self-driving vehicles. Apple doesnât talk publicly about its plans in the car business, but earlier this month it fired dozens of staff members and closed parts of its so-called Titan project, focused on autonomous cars.
Ideas are something Mr. Musk has in abundance. In addition to running Tesla and creating SolarCity, heâs trying to make a going concern of space travel and freight through Space Exploration Technologies, or SpaceX. In his spare time, he also hatched the Hyperloop, an idea to use air pressure to speed human beings through tubes at extraordinary speeds.
In that respect, he resembles Steven P. Jobs. Even when Apple was in its relative infancy in 1986, its co-founder bankrolled the creation of Pixar, the animation studio. For two decades, that side project put him in conflict with some of the media companies whose content would become a key attraction for iPhone users. In 2006, a year before introducing the handset that changed the world, Mr. Jobs sold Pixar to Disney for $ 7.4 billion in stock; Disney put him on its board.
With competition no longer an issue, Mr. Jobs became a consigliere to Disneyâs boss, Robert A. Iger, who told Fortune after the Apple founder died: âWe would stand in front of a whiteboard and talk about ideas. And every once in a while heâd come to me thinking the skyâs falling apart and that our business was screwed. And Iâd say, âTell me how.ââ
That sort of relationship would probably be hard to develop between a chief executive and a subordinate â one argument against Apple swallowing Tesla whole. But as a collaboration, with shared goals and running businesses that work together rather than competing for talent and customers, a functional Cook-Musk partnership might serve both companiesâ shareholders.
As part of the deal, Apple could fold its wobbly car operations into a joint venture with Tesla, add a couple of directors to Teslaâs board â helping to handle deals with the likes of SolarCity â and bring Mr. Musk onto its own. Of course, the two executives would have to be capable of playing nice. Mr. Musk might have to walk back his crack last year that Apple was the âTesla graveyard.â