Apple’s electric car dreams may bring auto industry nightmares

“Before Apple Inc. decides to move ahead with its Project Titan project and build an electric car, the company may want to look at the menu of challenges that come with being in the automobile business these days,” David Welch and Dana Hull report for Bloomberg News.

“Apple has put a few hundred people, including some new hires from the auto industry, on a skunkworks project to do the early development of an electric vehicle resembling a minivan,” Welch and Hull report. “Such a car would challenge Tesla Motors Inc. as well as electric and hybrid cars sold by Nissan Motor Corp., General Motors Co., Ford Motor Co. and other companies.”

“Apple does have the advantage of a $178 billion cash hoard. That’s six times the cash Volkswagen AG has on its books and seven times what GM is carrying, according to Bloomberg data. In fact, that cash hoard alone could fund GM’s capital expenditures budget for 20 years,” Welch and Hull report. “There is even an open question about EVs being the right choice for the future, said Eric Noble, president of The CarLab, an automotive consulting firm in Orange, California… Changes to the regulations now favor hydrogen-powered vehicles because they can be refueled faster than electric cars can be recharged and can often drive longer before needing to fill up. Also, state tax rebates for hydrogen fuel cells can be double that given to buyers of electric cars. These incentive programs may start to turn the tide toward hydrogen over electric drive, Noble said.”

Much more in the full article here.

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Apple working with Intelligent Energy on fuel cell technology for mobile devices, sources say – July 14, 2014
Apple patent application reveals next-gen fuel cell powered Macs and iOS devices – December 22, 2011
Apple patent app details highly-advanced hydrogen fuel cells to power portable devices – October 20, 2011

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Apple is already positioned to be a car company in many ways – February 16, 2015
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24 Comments

  1. Will Apple make a car? Only they know. Should they make it, that is subject to debate. I for one think that they should but I can think of a thousand reasons why one would say thy should not.

    What interests me most is the question — Can they do it? The question covers not only the technical capability but also the “business” of car making and selling.

    I spent 12 years in auto industry (Ford), 8 in US developing new cars and 4 in Japan, developing and marketing the cars to Japan. I have followed the car industry for last 40 years. Bases on that experience my answer is a solid Yes!

    First, money — Apple has plenty. A concept to customer car program starting from scratch will need less than $25 Billion. Apple generates that in less than 6 months.

    Second, access to basic technology — The base car technology is roughly 125 year old. Refinements of over a century and the wide use means that there is plenty to engineering talent that can be hired. Cars can be roughly divided into body, chassis, power train and electronics. The first two are well understood and are fairly mature from engineering point of view. Fossil fuel is old technology for power train, but electric/fuel cell is new and that is where Apple may have some challenges to overcome. Electronics has a lot of room to grow and innovate (e.g. drive less car) and that is where Apple will really

    Third, high end technology — From basic transportation, cars have evolved into a high technology machine. Most car companies however, design the vehicle but then get the parts made from OEM suppliers. Apple will have no difficulty getting the same suppliers to provide parts — think apple getting the CPU, RAM, Hard Drive, Displays from other. Part of the job is just supply chain management. More complex than Apples current supply chain, but given the DNA of the Apple CEO, very possible.

    Fourth, the distribution — People will be lining up to open dealerships.

    Fifth, Marketing — Just slap the apple Logo on! It will be an Apple ‘Cart’ to over turn all other apple carts.

    Six, Apple Sauce — That special touch that only Apple can provide. Look, feel, driver interface, etc.

    One final thought — Cars manufacturers work on about 15% gross margin on low end and 30% on high end. On the premium end the the margins can be much higher, but the volumes are low. Since Apple likes to work with 45-50% margins, they will need to think about the volume/margin tradeoff carefully.

    (Just dreaming for now, but this is very possible) – There are 50 million vehicles sold annually. If Apple “does a Mac” and just gets 5% share at $50,000 each it will add $125 Billion to the top line and about $50 Billion to the bottom line. At a PE of 10, this will add $500 billion to the valuation, almost doubling the share price. By the way Tesla is only making $100,000 + premium sports cars, sells a few hundred units, looses money and is valued at $25 billion.

    1. What’s your opinion on hydrogen powered cars?

      I remember GM coming out with the sled hydrogen chassis in the 90s and one could put different “car tops” on the same hydrogen sled. I really thought it was a great concept. But hydrogen never caught on. I don’t like how long batteries take to charge and I worry about batteries in cold weather.

      1. Hydrogen is potentially a better option especially unless that ever intangible breakthrough in battery/cell technology comes into focus.

        However producing it still uses electricity and indeed hydro carbons in the most commonly used method. However the biggest challenge is that it needs a supply chain similar to petroleum/gasoline and the cost of setting that up is quite frightening. A bit of a chicken and egg problem you can’t have one without the other.

        Always been a great supporter of Hydrogen cars but with the standards now being reached in electric and hybrid vehicles it would seem this is the more likely direction. The small petrol motor combined with increasingly efficient electric motors/batteries looks like the immediate future and fill the gap until pure electric options can hit more acceptable standards. That will be a combination of range and recharge time with breakthroughs in the latter the more likely which will seriously diminish the problem of the former.

  2. If Apple can crack barium titanate and transform that into a workable battery, then having an electric car that can charge in 10 minutes might not be a lot different than todays refueling and with 2.5 times the battery capacity of any current tech, it would be the breakthrough tech that could seriously challenge hydrogen. If not this, than perhaps any of the many other ultra capacitor tech that is being worked on. With their cash pile, Apple has the greatest ability to fund or purchase the next breakthrough, AND the ability to bring it to market in a style others can only dream of.

    1. Apple has been burned on patents before.

      I couldn’t blame them on not wanted to spend billions on a new battery technology only to have it either stolen or a court ruling it’s for the greater good for the patents to be nullified.

  3. Nobody makes money building cars. Apple made a lot of money by hiring cheap Chinese labor workers at vast Foxxconn plants in China. Only Americans sell them for great mark up prices. GM and Ford are still saddled with heavy pension and health obiligatoins that I doubt Apple would want to touch. maybe Apple will make cars in China then this will be a different story.

    1. Couple of problems. One is the optics, no one who builds Apple products can ever get healthcare or retire because the work too cheaply and their employers are not forced to provide those benefits. Does that make Apple customers feel good about their choices? Will it make Apple feel OK? It’s kind of shameful, long term. Right now, Apple is providing better jobs than the workers have had so far, but in the long run people have to make enough to buy what they need and save for their futures.

      Second, overseas manufacturing of cars is a problem. Japanese and German manufacturers have set up plants in the US for good reason, it costs too much to ship and ties up inventory for a month or more. Apple can ship its entire daily production run of iPhones, iPads, Macs, etc in one 747 cargo aircraft. The goods are available for sale in the US in a matter of days. Not so much with cars sitting in a slow boat from China.

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