How Apple Could Help Tesla By Building A Car

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Apple Inc.AAPL
has yet to reveal its roadmap for automobiles, which might be limited to the dashboard but could involve the production of an
entirely new car
. If Apple moves in this direction, it could help the leading manufacturer of electric vehicles. "I think [Apple would help Tesla] but I don't think it would be inadvertent," Cathie Wood, founder and CIO of
ARK Investment Management
, told Benzinga. "They're agreeing on the right battery model to make this happen. I don't know this for sure. I haven't seen Apple's specs, but I'd be shocked if they did prismatic batteries when they built the rest of their business on small cell batteries." Wood believes that Apple could inspire other battery manufacturers to "step up their investments in this kind of battery, which ultimately would help Tesla." "Even though it's a battery company itself, it wants to continue scaling the cost down, so that both Tesla and Apple can ride this declining cost curve and leave the other manufacturers further behind, or invite them into the same model," said Wood.

Related Link: Are Apple And Tesla Secret Partners?

'Cross-Pollination'

Rob Enderle, principal analyst at Enderle Group, said that both Apple and
Tesla Motors Inc.
TSLA
already have a lot of "cross-pollination" together. "Mostly it's Tesla hiring people out of Apple, but there's been a certain amount of hiring from Apple out of Tesla," Enderle told Benzinga. "Tesla's model is based on Apple's model in terms of how they built the stores and their retail approach to what was a non-retail market so the affinity between the two companies is actually pretty high." Enderle said there might "a lot of sensitivity" around the ways in which Tesla has copied Apple. "But at the end of the day, these are two companies that probably should have been partnering long before now," he said. "And, in effect, were informally or indirectly partnering because so much of what Apple is, Tesla emulated."

Industry Leverage

Wood said that in developing automobiles, Apple would probably "leverage off the same industry it helped to develop, and that's the consumer electronics industry." "My sense is Apple would use the same kind of battery [as Tesla], but Tesla would be in a superior position because it's the largest battery manufacturer," she said, noting Tesla's partnership with
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Panasonic Corporation (ADR)PCRFY
. "I think it would be great if Apple got in because it would validate what Tesla has been doing here with the small cell batteries." Wood speculated that the market would end up being "Tesla and Apple against all the other guys." This is not unlike the smartphone industry, where two players -- Apple and
Google IncGOOG
-- also hold dominant positions. Disclosure:
At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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Posted In: TechAppleARK Investment ManagementCathie WoodRob EnderleTesla
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