A few years ago, Elon Musk tried to interest Apple CEO Tim Cook in buying Tesla, Musk said in a Tuesday tweet. “He refused to take the meeting,” Musk added.
According to Musk, this happened in the “darkest days of the Model 3 program” – probably sometime in late 2017 or early 2018. Musk recently revealed that Tesla at some point early in the manufacturing process Model 3 was “about a month” away from bankruptcy.
“The Model 3 ramp was extreme stress and pain for a long time – from mid-2017 to mid-2019,” Musk wrote in November. “Production and logistics hell.”
While 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 hundreds of thousands of customers each year. While 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 traditionally performed by human workers. But things did not work out as Musk hoped they would. Building the necessary robots was more difficult and expensive than expected. Some did not work properly. So Tesla was eventually forced to reduce its automation plans and build a more conventional assembly line.
“Excessive automation in Tesla was a mistake,” Musk said admitted in 2018. “People are underestimated.”
The design of the Model 3 and the setup of the production line were so expensive that Tesla’s survival depended on the success of the Model 3. If Tesla had not been able to start selling the Model 3 in volume by mid-2018, it would have run out of cash and probably could not have serviced its multi-billion dollar debt.
Tim Cook was not interested
At one point during this process, Musk apparently became so concerned about Tesla’s survival that he considered 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 $ 70 billion in cash and short-term investments. It could easily have given Tesla a market value of $ 60 billion.
Apple and Tesla also have similar design philosophies. Both are known for their vertical integration, by creating their own hardware and software and selling their products online and in company-owned stores.
But according to Musk, Apple CEO Tim Cook was not interested. When Musk reached out to Cook in 2017 or 2018, Cook even declined to take a meeting on the subject.
By the time Musk contacted Cook, Apple had been working for several years on a car project called “Project Titan.” Titan reportedly started as a plan to build an “Apple Car”, but was then reduced to creating self-driving software licensed to existing automakers. On Monday, Reuters reported that Apple was once again working on creating its own car.
With forethought, it looks like buying Tesla by the end of 2017 would have been a good deal for Apple. Tesla’s market value today is 10 times what it was in 2017. After the rocky rollout of the Model 3 in 2017 and 2018, things started to go more smoothly. Tesla launched Model Y according to plan, built a factory in China and is now working on building two more factories in Texas and Germany.
Musk’s offer to Cook was not the first time he was considering selling Tesla. According to a 2015 biography of Musk by Ashlee Vance, Tesla had a similar crisis in the first quarter of 2013. Model S was launched the year before, but early sales were so sluggish that Tesla’s survival was in doubt.
According to Vance, Musk signed a “handshake agreement” with Google founder Larry Page in March to buy the company for about $ 6 billion. But while attorneys haggled over the details, Model S sales improved enough to get Tesla out of immediate danger. Tesla had an unexpected profit in the first quarter, and Tesla’s share price rose sharply. Tesla remained independent.