Elon Musk versus Tim Cook: Tesla stock split portends an epic battle with Apple

Tesla has done something dramatic to stem a recent decline in its share price—and perhaps score points with investors against Apple.

A week ago, Tesla stock opened at US$1,493.01 on NASDAQ. By the closing bell yesterday, the share price had dipped 7.9 percent to US$1,374.39.

But that slide was reversed after markets closed when it announced a looming five-for-one split in its common shares.

That caused Tesla's shares rose 6.46 percent in after-hours trading.

On August 21, shareholders will receive a dividend for four additional shares of common stock. 

That comes three days before Apple will determine which shareholders are eligible to receive three additional shares in its recently announced four-for-one split.

On August 31, both companies' shares will begin trading on a stock-split-adjusted basis on August 31.

Tesla CEO Elon Musk appears to have timed the stock split to take the wind out of Apple's dramatic July 30 announcement.

Musk might well have said: "My stock split is bigger than yours."

But he didn't beat Apple in the eyes of investors. That's because between the close of markets July 30 and the opening bell on July 31, Apple shares rose a stunning 10.5 percent.

And Apple is still the most valuable publicly traded American company, with oodles of cash on hand.

Tesla's looming challenge

While Tesla has achieved amazing results since it released its Model S, it still faces a monumental threat from Apple.

That's because the Cupertino, California–based tech giant has long been rumoured to be working on its own electric vehicle.

As far back as 2008, former Apple CEO Steve Jobs was reportedly musing about creating a car.

More recently, Apple CEO Tim Cook has hinted that the company hasn't given up on Jobs's idea.

In a 2017 interview with Bloomberg, Cook said that the company is "focusing on autonomous systems".

"Clearly, one purpose of autonomous systems is self-driving cars," Cook said. "There are others. We sort of see it as the mother of all AI projects. "It is probably one of the most difficult AI projects to work on." 

Autonomy and safety

The U.S. National Highway Traffic Safety Administration states on its website that fully autonomous cars and trucks "that drive us" will become a reality.

"These self-driving vehicles ultimately will integrate onto U.S. roadways by progressing through six levels of driver assistance technology advancements in the coming years," it declares. "This includes everything from no automation (where a fully engaged driver is required at all times), to full autonomy (where an automated vehicle operates independently, without a human driver)."

Nobody knows where Apple is on the NHTSA scale (see below) with its top-secret project.

Level 0: The human driver does all the driving.

Level 1: An advanced driver assistance system (ADAS) on the vehicle can sometimes assist the human driver with either steering or braking/accelerating, but not both simultaneously. 

Level 2: An advanced driver assistance system (ADAS) on the vehicle can itself actually control both steering and braking/accelerating simultaneously under some circumstances. The human driver must continue to pay full attention (“monitor the driving environment”) at all times and perform the rest of the driving task.

Level 3: An automated driving system (ADS) on the vehicle can itself perform all aspects of the driving task under some circumstances. In those circumstances, the human driver must be ready to take back control at any time when the ADS requests the human driver to do so. In all other circumstances, the human driver performs the driving task.

Level 4: An automated driving system (ADS) on the vehicle can itself perform all driving tasks and monitor the driving environment – essentially, do all the driving – in certain circumstances. The human need not pay attention in those circumstances.

Level 5: An automated driving system (ADS) on the vehicle can do all the driving in all circumstances. The human occupants are just passengers and need never be involved in driving.

On July 8, Musk told delegates at a Shanghai artificial intelligence conference that Tesla is "very close" to reaching level five.

The NHTSA website states that 94 percent of vehicle crashes are due to human error.

"Automated vehicles have the potential to remove human error from the crash equation, which will help protect drivers and passengers, as well as bicyclists and pedestrians," the agency points out. "When you consider more than 36,560 people died in motor vehicle-related crashes in the United States in 2018, you begin to grasp the lifesaving benefits of driver assistance technologies."

It's one reason why the Tesla Model 3 has been described as the safest car on the planet.