Posted 4/7/2014 12:00 am
Updated 8 months ago
The Tesla Model S electric car costs $70,000. The Apple iPhone 5s costs from $199 to $399, depending on the gigabyte storage. But they both use lithium-ion batteries. And that may be the common denominator linking the two companies.
AppleCar. AppleAuto. iCar. MacMotors. Use your imagination. Point is, there may be an Apple-branded and manufactured automobile down the road. Such rumors have been ubiquitous in recent months. Industry experts say the rumors are unfounded. However, financial news reports confirm Tesla and Apple have been talking, but talking only about the making of lithium-ion batteries, critical to the sustainable success of both mobile-based industries.
Discussions began upon the announcement by Tesla that it would build a new Gigafactory, a large rechargeable battery production plant. The facility is scheduled to open in 2017 and will cost an estimated $5 billion to build. The link is Apple and Tesla both have at their core (sorry) a need for the volume production of rechargeable batteries. So why should they develop separate capabilities in research, development, design and production?
Further, last year, Apple’s CEO, Tim Cook, stated in one of the company’s elaborately staged presentations that 2014 would be the year the Apple iOS operating system would be integrated into automobile technology, including the Siri voice technology. And from a marketing 101 standpoint, Tesla and Apple target the same upscale consumer audiences. So we clearly have shared consumer demographics, the need to solve a critical production component problem, mobility-related platforms to interface technologies and, most likely, a compatible culture.
These Santa Clara County, Calif., neighbors — Apple is in Cupertino; Tesla is in Palo Alto — are all about the effective and efficient use of mobile technologies and what powers them. Imagine one car recognizing another as both approach the same intersection. Or cars communicating with road signs or traffic signals providing information to the vehicle about safety issues. What about cars requesting traffic information from a traffic management system and accessing a more efficient route? It’s called vehicle-to-vehicle and vehicle-to-infrastructure communication — just as one iPhone recognizes and communicates with another. Simplistic, I know. And real techies will make fun of this basic example. But combining communications, information and entertainment in one Apple-centered platform, with the added incentives of an electric car, is both sexy and serviceable.
If it’s mobile, Apple ought to be involved. Did you know Bluetooth now has a bicycle handlebar that connects to an iPhone, which provides navigation and an on-screen speedometer for bikers?
From Apple’s standpoint, the financial requirements of a deal with Tesla should not be a high mountain to climb. In fact, Apple Inc. is currently sitting on approximately $160 billion in cash. Cash! And stockholders are eager to learn what the company plans to do with this hoard. Increased dividends might be one idea. How about the next big idea? Reuters reports the company is under “increasing pressure to come up with the next big thing” by introducing a spectacular new product by year’s end, breaking a dearth of innovation during the past several years “during which it stuck mainly to iterations of the iPhone and iPad.”
There are other connections. Tesla’s so-called dealerships, where customers can shop and determine via touch screens their own specifications for a custom-made Model S, were designed by the same executive who designed Apple’s retail stores. However, this direct-sale-and-delivery business model is being challenged through traditional retail regulations by several states’ auto dealer groups.
The Apple car — the combination of Tesla and Apple technologies — may never happen. But it is an idea that maximizes the collaboration of futuristic innovation, design, manufacturing, power, communications, entertainment and the effective use of information technology.
By the way, a lithium-ion battery’s main ingredient, lithium, can be extracted from brine. Brine has long been found in significant quantities in south Arkansas’ Smackover fields. Because Tesla has stated it plans to “manage everything from the processing of raw materials to the assembly of batteries,” could the Tesla Gigafactory be located here? Texas, New Mexico, Arizona and Nevada are currently in the hunt.
Craig Douglass is a Little Rock advertising agency owner and marketing and research consultant. He is president of Craig Douglass Communications Inc.