Apple Inc. (NASDAQ: AAPL) and Fiat Chrysler Automobiles NV (NYSE: FCAU) merger may not be preposterous as it may sound as both companies look to expand in the auto industry. There have been talks in the recent weeks that Apple is working on a secret project with a view to developing its first car, as early as 2020. With Fiat CEO, Sergio Marchionne affirming willingness to partner other tech companies in the development of cars, a merger seems like a viable possibility should Apple come calling.
Marchionne is of the strongest belief that automotive and tech industries have become increasingly intertwined opening doors for partnerships in key areas. Talks between the auto and the tech industry should be encouraged according to the executive as both industries continue to develop innovation that can be used across the divide.
Apple looks to electric movement
Apple is exploring the possibility of developing its own electric car with reports indicating that the plans could be scrapped altogether, should the executives feel uncomfortable with the progress being made. The Cupertino based company is looking for other areas of growth having dominated the smartphone arena with iPhones. A slowdown in iPad sales also justifies the need to pursue other areas that should cement the ongoing momentum in growth.
CEO, Tim Cook, is all but focused on driving the company to other categories that he believes will have an impact on people’s digital lives, all within the Apple world. When it comes to expertise in the auto industry Apple seems to be well covered with its head of internet software and services, Eddy Cue, having worked for some time at Ferrari. Chief financial officer, Luca Maestri, should also offer some expertise in the industry having spent some years in General Motors Company (NYSE: GM).
Apple investors really like cars
Investor sentiments on the car business have slowly been building. At a recent annual shareholder meeting, there were proposals from a number of shareholders that the company should consider buying Tesla Motors Inc (NASDAQ: TSLA) sentiments that were sidestepped the CEO.
After ending the second quarter with cash of $194 billion, it is natural that pressure from shareholders is expected to mount on the company to put part of the money to use by pursuing other areas of growth. Apple’s biggest acquisition recently was the $3 billion purchase of Beats Electronics LLC, just an indication how the company continues to shy away from large acquisitions.
Owning a large automaker does not fit Apples current strategy that involves shifting the burden of producing products to lower cost contractors abroad.