Musk says Apple gave up on Tesla acquisition three years ago

Robotic arms surround an incomplete sedan.
Extend / A Tesla Model 3 is seen on the general assembly line at the Tesla plant in Fremont, California, in July 2018.

A few years ago, Elon Musk tried to spark interest from Apple CEO Tim Cook in buying Tesla, Musk said in a Tuesday tweet. “He refused to accept the meeting,” added Musk.

According to Musk, this occurred in the “darkest days of the Model 3 program” – probably sometime in late 2017 or early 2018. Musk recently revealed that at one point at the beginning of the Model 3 manufacturing process, Tesla was “about a month” away from bankruptcy.

“The Model 3 ramp has been extremely stress and pain for a long time – from mid-2017 to mid-2019,” Musk wrote in November. “Hell of production and logistics.”

Although the Model 3 was not Tesla’s first car, it was the company’s first attempt to build a mass-market vehicle – one that could sell for less than $ 40,000 and therefore win over hundreds of thousands of customers all the years. Although the car was cheaper, the equipment needed to manufacture it on a larger scale was more expensive than Tesla’s previous production lines.

Musk had an ambitious plan to automate the Model 3 production process, using robots for tasks that traditionally were done by human workers. But things did not work out as Musk expected. Building the necessary robots was more difficult and expensive than expected. Some did not work well. Therefore, Tesla was forced to reduce its automation plans and build a more conventional assembly line.

“Excessive automation at Tesla was a mistake,” Musk admitted in 2018. “Humans are underestimated.”

Designing the Model 3 and setting up its production line was so expensive that Tesla’s survival depended on the success of the Model 3. If Tesla couldn’t start selling the Model 3 in volume by mid-2018, it would run out of money and probably not could pay its multi-billion dollar debt.

Tim Cook was not interested

Apparently, at some point during the process, Musk became so concerned about Tesla’s survival that he thought about selling the company. Apple would have been a logical candidate. It was (and is) one of the largest companies on the planet, with more than US $ 70 billion in cash and short-term investments. This could easily have provided Tesla’s $ 60 billion market valuation.

Apple and Tesla also have similar design philosophies. Both are known for their vertical integration, creating their own hardware and software and selling their products online and in their own stores.

But, according to Musk, Apple CEO Tim Cook was not interested. When Musk contacted Cook in 2017 or 2018, Cook even refused to hold a meeting on the matter.

By the time Musk contacted Cook, Apple had been working on a car project called “Project Titan” for several years. Titan allegedly started out as a plan to build an “Apple Car”, but was later reduced to creating standalone software to license existing car manufacturers. On Monday, Reuters reported that Apple was once again working on creating its own car.

With the advantage of hindsight, it seems that buying Tesla in late 2017 would have been a good deal for Apple. Tesla’s market capitalization today is 10 times what it was in 2017. After the rocky launch of the Model 3 in 2017 and 2018, things started to go more smoothly. Tesla launched the Model Y on time, built a factory in China and is now working to build two more plants in Texas and Germany.

Musk’s offer to Cook was not the first time he considered selling Tesla. According to a 2015 Musk biography by Ashlee Vance, Tesla had a similar crisis in the first quarter of 2013. The Model S had been launched the year before, but early sales were so slow that Tesla’s survival was in question .

According to Vance, Musk struck a “handshake deal” with Google founder Larry Page in March to buy the company for about $ 6 billion. But as lawyers argued over the details, sales of the Model S have improved enough to lift Tesla out of immediate danger. Tesla posted an unexpected first quarter profit and Tesla’s share price soared. Tesla remained independent.