Rethinking the Apple Car. Rethinking Apple.

“The hints that have piled up in the past week are intriguing,” Philip Elmer-DeWitt writes for Fortune. “Jony Ive and his pal Marc Newson, we learn from Ive’s New Yorker profile, are as obsessed with car design as they are with watches. Veteran Apple VP Steve Zadesky, who according to the Wall Street Journal is assembling a 1,000-man team ‘researching different types of robotics, metals and materials consistent with automobile manufacturing,’ is from Ford. Luca Maestri, Apple’s chief financial officer, spent a couple decades at General Motors.”

P.E.D. writes, “All this has led some people who thought they knew Apple — understood the nature of the beast and the scale of its ambition — to think again.”

“When I stated previously that Apple has always been a personal computer company, that is because Jobs believed so deeply in the potential of the computer to change people’s lives. If Ive, as this [New Yorker] profile argues, now serves Jobs’ function as the soul of Apple, my characterization is surely obsolete: perhaps we need to think of Apple as a design company with a specialty in computers, not the other way around. And it’s much more plausible to imagine that Apple building a car.” – Ben Thompson, Stratechery

Read more in the full article here.

MacDailyNews Take: A Mac is custom hardware packed with custom software that does X. An iPod is custom hardware packed with custom software that does X. An iPhone is custom hardware packed with custom software that does X. An iPad is custom hardware packed with custom software that does X. An Apple Watch is custom hardware packed with custom software that does X. An Apple Car would be custom hardware packed with custom software that does X.

Related articles:
Forget the rumor: Apple will never build cars – February 17, 2015
The real battle Apple is waging in autos – February 17, 2015
O’Leary: Yes, give me the Apple car – February 17, 2015
Will Apple become a car maker or a platform/content aggregator? – February 17, 2015
An Apple Car is exactly what investors want – February 17, 2015
Apple’s electric car dreams may bring auto industry nightmares – February 17, 2015
Jean-Louis Gassée: The fantastic Apple Car is a fantasy – February 16, 2015
Apple is already positioned to be a car company in many ways – February 16, 2015
Why Tim Cook would want to build an Apple Car – February 14, 2015
Apple working on self-driving electric car, source says – February 14, 2015
Apple’s project ‘Titan’ gears up to challenge Tesla in electric cars – February 13, 2015
Apple’s next big thing: The Apple Car? – February 13, 2015
Apple hiring auto engineers and designers – February 13, 2015

27 Comments

  1. Tesla has disrupted the US auto industry with resources that are barely 1% of Apple’s cash horde. And it had to start from scratch. Apple has tens of thousands of engineers and managers – trained in the Apple way of doing things – that can immediately be drawn upon to address a major ambition such as a car.

    An Apple car may be speculative, but it is not delusional. It is, in fact, true to Apple’s long-time approach where it enters existing markets and disrupt them with innovation.

    1. While absolutely not impossible, it is very unlikely that Apple will come out with an Apple Car.

      For years people speculated (and even announced expected launch dates for) an Apple Television. Some people are still claiming the Apple Television is coming in the not too distant future. Nothing has shown up (or is even on the near horizon). I believe an Apple Car is in the same class.

      All these rumblings are much, much more likely a fuller integration and enhancement to Car Play. When Apple announced it, they claimed it would be both “hands free” and “eyes free”. We are still waiting on the full delivery of those two ideals.

      Apple will need to know A LOT MORE about cars, how drivers use them, potential safety issues, and how Car Play could play out in a real world environment long before Car Play will reach the two ideals of truly being both “hands free” and “eyes free”.

      So… While an Apple Car may be in development, I believe it is a large, focused effort to do better integration between Apple’s products (iPad, iPhone, and Apple Watch) and better user interfaces for, and better integration into the car of, Car Play. Make it so that it is 100% “hands free” and “eyes free”, AND make it so obvious how to use it that 99% of drivers get it in a few seconds of use, THEN Car Play will really take off (and sell more iDevices too).

      1. No- the comparison between TVs and cars is wrong: TVs need content and are low margin, mass-market commodities. Cars are big ticket and don’t need content (there’s no cable monopoly problem in making a car: the roads are free to use for everyone).

        I think the big issue in making a car is regulation: every country has its own laws about safety and other constraints (how bright lights can be, etc.). It’s a lot more regulated market than hi-tech devices…

        Also, shipping, show rooms, distributors- these things are a lot more cumbersome with cars than they are with watches.

        Anyway, cars aren’t anything like TVs…

        1. I did not say that cars are like TVs. I said that everyone and their second cousin were predicting that Apple would do a TV. Similarly, in the last couple weeks there are a lot of people predicting that Apple will do a car. Apple didn’t do a TV and likely never will. I believe Apple won’t do a car — no matter how many people predict that they will.

  2. More churn from Wall Street types. There’s always money to be made by stirring up the market. People always fall for BS.

    So a car is just some hardware and software, eh? As competent as Apple engineering is, motors (of any type), wheels, safety requirements, dealerships, repair shops are part of what would be a brand new mix for them. It’s not just a matter of putting a hydraulic lift in the Genius Bar.

    Sure, competing phone makers poo poohed the iPhone. But the phone was hardly a radical change from things Apple had been doing for years. A car is a whole different thing.

    Business Insider had a great take on this, based on the money made by brands like BMW and Porsche. Even fine cars like that make very low margins–nothing like the margins Apple has made on every product. Apple doesn’t give up margin and very few will buy a $150,000 car just because it says Apple.

    I could be convinced that Apple might provide a high-quality entertainment system/GPS/control system. I’d welcome their sense of software security compared to the junk that’s out there now. I can even see an Ive signature body style for something like that–even a more formal partnership with a manufacturer. But a whole car? Ain’t gonna happen. They’ll make pixie dust first.

    1. Actually, Mikey, Business Insider doesn’t know what it is talking about. I am directly involved in the car making business and can speak authoritatively about what it costs to build a car, and what it gets sold for.

      Assuming we’re talking about a car that is similar to what Tesla has described as their Model 3, and assuming Apple would use a contract manufacturing approach similar to how it does Macs and iOS devices, and assuming we are talking about production numbers in (at least) the tens of thousands, Apple could see gross margins that are comparable to what it experiences on its existing product lines – somewhere in the 30-odd percent (remember that when Apple reports is gross margins each quarter it includes the services it delivers, which have far lower “hard” costs than the iPhones and Macs). This doesn’t include development, marketing, management and other costs, but neither does Apple’s quarterly report on gross margin. Those costs come out of what’s left after hard costs are paid.

      What is also key to this discussion is that Apple would probably go the Tesla route and sell the car directly, so dealer margin is a nonfactor. Moreover, since it has a retail store network in place, it wouldn’t have to capitalize that cost, and even operational expenses could be spread over several revenue generators.

      In short, those who dismiss the prospect of an Apple car with less than expert information look like fools to me. Again, I think the notion is speculative, but not delusional. The people who are delusional are those who think Apple lacks the resources, will or motivation to do it.

      1. Just a reminder: Tesla sells their cars directly because they were LOCKED OUT OF THE DEALERSHIP MARKET. ‘Legally’ (whatever the hell that means in the car market) Tesla isn’t allowed to set up dealerships in the USA.

        One story on the subject from 2014-03-11:

        New Jersey To Tesla: You’re Outta Here

        The New Jersey Motor Vehicle Commission voted Tuesday to ban the direct sale of vehicles in the state, becoming the third state in the nation to prevent Tesla from selling to consumers. That would force Tesla, founded by billionaire Elon Musk, to sell its cars through dealers.

        Instead, Tesla will stop selling cars in New Jersey on April 1, according to Dow Jones. That means the auto company won’t have access to one of the nation’s most lucrative markets for luxury vehicles, while well-heeled New Jerseyites will have to pick up their Teslas somewhere else.

        The commission’s vote followed month of discussions between Tesla and members of Gov. Chris Christie’s administration, according to a post on Tesla’s blog. The auto company said it thought that the commission and the administration were working to help it in the face of opposition from the New Jersey Coalition of Automotive Retailers.

        Then there’s excrement like this from 2013-05-14:

        Tesla’s Direct Sales Business Model Targeted By N.C. Bill

        A proposed bill in North Carolina that would make it illegal for electric car maker Tesla Motors to use its direct-sales method to sell cars in the state.

        The bill, which passed the state Senate in a unanimous vote Monday night, would prohibit car manufacturers or dealers from selling their cars to consumers without using a licensed dealer.

        Manufacturers would be barred from “using a computer or other communications facilities, hardware, or equipment” to sell or lease a car to anyone in the state, according to the legislation.

        If approved, the bill would render a car manufacturer like Tesla unable to legally sell cars in the state. Since the company bypasses traditional dealerships by selling directly to consumers and allows buyers to place their orders online, it would not meet the state’s definition of a “dealer.”

        Eventually, the anti-Tesla portion of this bill was dumped and killed.

  3. Think of it like the original space programme. A central goal with thousands of problems to overcome that, in solving, will generate thousands of spin-offs in technology – UI/ AI etc.

  4. Whatever Apple is doing in the auto industry, it is quite possible that they are doing something much bigger than anyone imagines – after all, this is a company with big, long-term, vision.

    What if Apple are not just looking to build a car, but to change the way we buy and use cars altogether?

    Thinking bigger, could Apple be looking to build an ecosystem of non-polluting, smart, personal transport? Could it be a shared model as we are seeing in many European cities where you plan your trip, pick up a car from a pool of vehicles parked in various locations around the city (GoGet in Sydney use this model), using your iPhone to unlock it and pay for the trip, and leave it more or less anywhere close to your destination?

    Car ownership is falling in Europe and in the US. Apple would know that.

    Perhaps, too, these cars will eventually drive themselves.

    We’ll have to wait and see…

  5. “An Apple Car would be custom hardware packed with custom software that does X.”

    True, BUT: a car is a whole other kettle of fish than high-tech electronics. It’s massive production of large scale objects WITH the addition of LOTS of moving parts. Think about this: over the last 20 years Apple has systematically removed virtually ALL moving parts from their devices. From floppy disk and hard disks to DVD drives. These not only had motors in them, but there were motors to eject them. And moving parts break a LOT more often than non-moving parts (pretty much the only moving parts they’ve yet to eliminate are keys on your keyboard and the button on your mouse/trackpad).

    Cars have LOTS of moving parts. It’s a different animal. Now, would like to drive an Apple car? No. I would LOVE to drive an Apple car. The car hasn’t changed much since it was invented (I was an Apple Expo in Paris in the early 90’s where Jean Louis Gasse talked about this very thing: he said “Why does a car need to have a steering wheel, a brake pedal, a clutche, an accelerator and a gear shift when ALL of these can be replaced by a joystick placed between the two front seat passengers- either of which would be able to drive the car at any time?”).

    His idea was very “out of the box”. This is what I would expect from Apple. Of course, he answered his own question by saying the retooling of the car industry to use a joystick would entail massive investment and HUGE risk (if it were not to be accepted by consumers)- and that’s why no one does that.

    Will they make a car? I tend to doubt it (as much as I want one, I would be [pleasantly] shocked if they did).

    And while I’m on a car rant: what’s with Tessla? They don’t even have keyless entry on their electric car! How brain-dead is THAT?! WHY do we need a key for our cars, homes, bikes- anything really? TouchID is all we need. I fervently hope the day of the key’s demise is nigh.

  6. THERE IS NO APPLE CAR………..Building cars is a total NIGHTMARE by any metric……

    However- What there will be is the Apple iCar OPTION for a premium upgrade package of electronic features related to the Apple Ecosystem and related products.
    Think of this in the same mantra as the Bose sound package in a Cadillac, or the Harmon Kardon premium system in Land Rover.

    Obviously bringing your iPhone 6 features into a seamless feature set in your car would be fantastic.

    Having a Apple-Car four wheel manufactured vehicle would be a nightmare….!!!

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