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

Ali Hakim

Piper Jaffray analyst Gene Munster said on Bloomberg Radio that Apple Inc. (NASDAQ: AAPL) should consider acquiring Tesla Motors Inc (NASDAQ: TSLA). He said the electric car company is "the big thing that they could buy that I would be impressed with."

Apple is sitting on over $203 billion in cash and is well-positioned to pursue M&A.

Benzinga 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," Munster told Benzinga. "Tech companies have a real opportunity to box out traditional automotive guys."

Related Link: Apple And Tesla: Creating Industries Vs. Products

Particularly, Munster 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 Fiat Chrysler (NYSE: FCAU) executive Doug Betts to help oversee its planned foray into the automotive space.

Munster 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. Putting it plainly, "you need to be more funded than he is...he has to get comfortable with sharing the opportunity with someone else."

Latest Ratings for AAPL

Date Firm Action From To
Jul 2015 Cowen & Company Downgrades Outperform Market Perform
Jul 2015 SocGen Upgrades Hold Buy
Apr 2015 Canaccord Genuity Maintains Buy

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