Exclusive: Piper Jaffray's Gene Munster Explains Why Apple Should Buy Tesla

In an interview on Bloomberg Radio (http://www.bloomberg.com/podcasts/surveillance/), Piper Jaffray analyst Gene Munster said that Apple Inc.
should consider acquiring Tesla Motors
. He told hosts Tom Keene and Michael McKee that the electric car company is "the big thing that they could buy that I would be impressed with." Apple Inc. is sitting on over $203 billion in cash and is therefore well-positioned to pursue M&A. We spoke with Munster to glean some details on why Tesla might represent an attractive prospect. "The chemistry of cars is going to change dramatically over the next 10-15 years," he told Benzinga. "Tech companies have a real opportunity to box out traditional automotive guys." Particularly, he believes that firms like Apple have several cost advantages over more established auto companies. He explained that access to Tesla's battery technology could accelerate Apple's entrance into the car world. Plus, "[electric cars] are part of what's in Apple's DNA," Munster said, noting the recent hire of former Chrysler
executive Doug Betts (http://www.engadget.com/2015/07/20/apple-hires-fiat-chrysler-quality-lead/) to help oversee its planned foray into the automotive space. He admitted that "people close to Tesla" told him that CEO Elon Musk probably wouldn't be immediately receptive to a buyout. However, Munster maintained that the executive has only two options at this point: "sell or get comfortable with Apple as a competitor." He believes that a partnership between the two firms could yield immediate benefits for Tesla. "Instead of having tens of billions of dollars to fund [his] dream," he said of Musk, "[he] could have hundreds of billions" if he teamed up with Apple. And putting it plainly, "you need to be more funded than he is...he has to get comfortable with sharing the opportunity with someone else." For now, Apple is still down 5 percent after reporting disappointing iPhone sales on Tuesday. Tesla, meanwhile, is hovering around 0 percent for the day.

Posted In: Analyst ColorNewsM&AAnalyst Ratings

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