“There’s a lot of hullabaloo right now about the prospect of Apple Inc. building its own electric car,” Jeff Reeves writes for MarketWatch. “Big freakin’ deal.”
“This electric car will never impact Apple’s bottom line within the next 10 years,” Reeves writes. “No, don’t say ‘unlikely’ — it will NOT add up to anything for Apple investors in the next decade. Period.”
“Apple racked up $74.6 billion in revenue last quarter. In roughly the same period, iconic electric car company Tesla Motors recorded $957 million in automotive sales. So even if Apple could instantly sell as many cars as Tesla, those sales would add a measly 1.3% to total revenue next quarter,” Reeves writes. “So forget the iCar. If you want to buy Apple, make sure it’s because you believe in the iPhone, which accounted for two-thirds of revenue last quarter. Or make sure it’s because you believe in the tens of billions being spent on dividends and buybacks, driving real value to shareholders.”
Read more in the full article here.
MacDailyNews Take: Reeves just assumes it’d be a plug-in electric car. The lack of imagination and the willingness to blindly leap to conclusions in stunning. Do not make investment decisions based upon potentially faulty conclusions based on possibly incorrect assumptions.
Related articles:
Apple Car: Forget ‘electric,’ think hydrogen fuel cells – February 20, 2015
Apple working with Intelligent Energy on fuel cell technology for mobile devices, sources say – July 14, 2014
North Carolina regulators approve Apple’s 4.8-megawatt fuel cell facility at Maiden data center – May 23, 2012
New aerial images of Apple’s planned NC fuel cell, solar farms published – April 7, 2012
Apple’s massive fuel cell energy project to be largest in the U.S. – April 4, 2012
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
The Apple Car is a figment of the imagination of journalists feeding off of no real information. It is the classic Apple rumor, reaching the pinnacle of the steaming pile, Gene Munster has officially weighed in. Apple is a technology company. Why would they need to build a car, when they can build the tech in all cars?
Agreed, putting the tech into all cars is more broadly a one size fits all solution – with the possibility of upgrades. I’m not going to replace my iCar every 2 years.
Car replacement cycle is not the same as a mobile phone replacement cycle. Most people (although not all) replace their cars at about the same intervals they replace their Macs (about every 3 – 5 years). A five-year old car is out of warranty, things begin to wear out and the time comes to begin replacing parts, which sometimes end up costing more than the car loan installments. Same with the old Mac, which can no longer be upgraded to the most recent OS, and some most recent software versions can’t run on it.
Car can easily be a high-margin item, if they manufacture it, like the iPhone and the Macs, in China. Few Americans have been exposed to Chinese-made cars so far, but they are, much like the iPhones and Macs that they manufacture, made well, look good and cost little.The Chinese auto industry has surpassed American and Japanese combined (over 5 years ago!). It is safe to say, they know how to make cars just as well as Japanese or Americans do. And they will do it much cheaper than the unionised American auto makers.
It is still a rather far-fetched idea, but I will not completely discount it.
@Predrag: I have stood on the floor of many Chinese vehicle factories and agree entirely with your assessment of their car-building capabilities.
All of the people who dismiss the AppleCar rumors seemed to have forgotten the most important advice Steve Jobs ever gave: Skate to where the puck to going to be, not where it is. They imagine that Apple would simply design something cool and then make it like everybody else in the industry. LOL. An AppleCar, if it ever exists, will be a radical rethink of how a vehicle gets made – similar to aluminum unibody laptop construction, vs. HP/Dell/Lenovo plastic crap. And it will almost certainly be built in China by robots.
I think an AppleCar is still speculative, but not delusional. Those afflicted with delusion are the analysts and industry “gurus” who don’t understand that Apple has the resources and capacity to remake cars just like it did computers, music, telephones and tablets. Feel free to iCal me. 🙂
@Predrag: One issue where we differ is on the impact of unions on the cost of cars in the US. In reality, the portion of a vehicle’s cost attributable to assembly is actually pretty small and it has been falling for several decades. The impact of union wages – the backbone of several generations of the American middle class – on the final cost of a car is minor.
The primary reason US car makers became uncompetitive has to do with legacy bureaucracy and often absurd executive compensation that had nothing to do with merit or performance. It can also be blamed on billions of dollars in car-making assets – factories, equipment, land, transport, etc. – that were rarely used efficiently.
What BS, executive compensation. You sound like a low-information Obama voter. Unions were the death of the Big Three.
Actually, JDSoCal, I am an executive in the automobile industry and possess easily 100X more knowledge of the business than you will ever have. It is you who is the low-information – but high ideology – player here.
“Even the roar from Congressional critics about assembly line largesse seemed to miss the fact that (according to the UAW) labor costs account for about 10 percent of the cost of producing a vehicle; the remaining 90 percent includes research and development, parts, advertising, marketing and management overhead.
One major point about compensation and wage disparities: In 2007 GM’s CEO Rick Wagoner earned about $15.7 million (including $1.6 million in salary, plus non-equity incentive compensation, benefits and other expenses), a jump of 64 percent compared to 2006. Ford’s CEO Alan Mulally’s total compensation in 2007 was $21.7 million, including a $2 million base salary.
Meanwhile, last year Toyota paid its entire 37-member leadership team approximately $22 million. (Stock options and amenities like housing and country club membership weren’t factored into the figure.)” – CBSNews.com
So in reality, if the cost of labor for assembling an American car doubled the price would rise only 10%. Therefor, the cost of labor is definitely not the issue.
One thing that you fail to site though is the loss of sales due to anti-Union customers who refuse to buy Union made products which support unions which in turn support political parties. I’m in the South and I know a LOT of people who would never have bought non-American vehicles who are now devout Toyota, Volkswagen, , Nissan and Honda buyers. Right or wrong, these folks buy based on ideology and the sales decline in the big 3 has been proportionate to the movement of these customers away from those manufacturers with the image of supporting unions who in turn support candidates that are opposed to the values that these folks hold dear. That loss of sales rarely is blamed on the poor image of unions and therefore the companies who support them in modern America. Regardless, cost per widget, unions cost companies a lot more if you dig deeper into why more people don’t purchase any particular Union widget.
So it all gets back to racism. Unions back Democrats, Democrats are responsible for desegregation and civil rights laws, so we buy from foreign owned car manufacturers.
What a bunch of backwards assholes, if your theory is true. But what about the popularity of the pickup truck? Haven’t seen too many Hondas rolling coal. I think you are full of it.
LOL. This is hysterically funny and a perfect example of how ideology shapes perception, not facts and real knowledge.
Chinese cars don’t have the NTSB concerns that US cars do. WSJ did a piece on the Chinese EV boom. Cheap little unregulated deathtraps that would never be approved for the US in 1980, let alone today. But yeah, the manufacturing processes, Apple could take advantage of.
You mean NHTSA, not NTSB. And my comments had to do with Chinese factories THAT I HAVE BEEN IN that are making vehicles with Chevy, Buick and Cadillac badges on them, among others. These vehicles – and ones made by BMW, Audi, Toyota, Honda and many others in China – meet global quality standards and are generally engineered in parallel with those built in the West. Technically, they do not meet the FMVSS, but they don’t have to, because they are not being sold in the U.S. But that day is coming, and sooner than you think.
Actually, the Buicks made in Chinese factories are being made there for the Chinese domestic market, as are most of the other makes. American brands are very popular in China.
Honda, Toyota, Volkswagen, BMW and MB all established manufacturing facilities in the US because it was more cost effective that manufacturing anywhere else and shipping cars here. Cars are not like iProducts. Apple can fit their entire daily production for China into one 747 cargo aircraft and have them on shelves for sale in a matter of days. Cars come by boat, tying up their entire cost for weeks, if not months. Not the same process at all.
@quiviran: I don’t understand your point. Of course, the Buicks I have watched be assembled in Shanghai are for the Chinese market; I wasn’t a tourist, but rather professional invited to be there by GM. I can tell you from direct inspection of these vehicles that they are essentially the fit-and-finish equivalents of their American counterparts.
Your second paragraph assumes that all of the production of a Chinese car factory would be going to the US. Not so. The American market for Apple is already less than the rest of the world, and long before 2020 it will be smaller than China. If an AppleCar comes into existence, it is a certainty it will be made in China. Might it also be made elsewhere, including the US? Maybe.
Again, I will note that the vast majority of comments here are ignoring Steve Jobs’ advice to skate to where the puck is going to be…
My point was attempting to be that making cars half-way around the world hasn’t worked out for anyone. American companies established factories in China to satisfy that market. Honda, Toyota, Volkswagen, BMW and MB did the same in the US to satisfy US demand.
Chinese ability to make a quality product is very much dependent on the buyer. If the buyer will accept crap, crap will be produced. If the buyer insists on quality, like Apple, quality will be produced. An Apple car, made in China or the US can be a quality car. If it isn’t, Apple will find another supplier. It is one of the strengths of the contract manufacturing business model.
It will be interesting to understand where Tim Cook and his merry band envision the future location of the puck in this particular rink. I doubt they are heading any place that looks like Detroit.
Clearly not the Chinese built cars I have been looking at which are mostly terrible. Electronics don’t have the negative factor that goods like cars, white goods and other such large scale items have presently in regard to being made in the China. Who is going to buy an up market card made in China when at present its Germany or having taken them about 30 years to gain a foothold in that end of the market Japan? It will be years before Chinese made cars escape form their tinny, ugly naff reputation Im afraid even if its simply perception rather than reality of the quality of the product. But as I say no one in the Western is rushing to buy MGs or Rovers now sadly produced there and as far as I know Chrysler stopped importing its cheap Chinese sourced vehicles here because they were concerned about it damaging their less than stellar image.
But everyone did rush to buy cheap Japanese cars in the early 70’s. Don’t forget that the Japanese were the ones who gave us the plastic and cardboard interior, and chromed plastic body parts. The myth that early Japanese cars were better made is just that, a myth spawned by those trying to justify buying a cheap car in an American society where an expensive car was a status symbol.
“Why would they need to build a car, when they can build the tech in all cars?”
Apple have already built the tech, but how many cars are using it right now or will be using it by the end of this year ?
Only today, Toyota announced that it will not be adopting CarPlay after all, despite previously saying that they would.
If manufacturers refuse to adopt Apple’s technology, or put obstacles in the way of customers opting for it ( for instance CarPlay abilities might only be available if you buy the expensive navigation option, which CarPlay pretty well replaces ), there’s not much that Apple can do about it.
I have my doubts about whether an Apple Car is likely, but I certainly understand the frustration with offering something great and then manufacturers refusing to use it. Even more so when what they choose instead is so inferior. It could well be that Apple will decide that the best option might be to disrupt the car business as it currently exists.
Buying a car is a lot different than buying a phone. People buy a car for a decades use sometimes. Apple will have to really prove themselves before millions of people will buy a car from them. A phone was an easy jump, it’s just a small computer. It could run on air and still be a difficult sell.
If they were looking at the high end of prices, that means selling a lot less, which takes you into a similar market as Tesla, and therefore the revenue comparisons make sense.
I’m laughing at all of you who keep insisting that this rumor is baseless. It wasn’t suggested by an analyst like Munster. It was reported by numerous high profile reporters. And given the timing and style of the rumor (much like the reveal of the Apple Watch team), it is suggestive of an official leak by Apple. Why? To give people something to look forward to so they don’t complain about the ‘lack of innovation’ at Apple once the watch is released. Why? because Jony Ive and Co. love cars and car design. Why? Because they have a huge pile of cash burning a hole in their pocket and there are only so many markets big enough for personal technology to have a major impact and generate move-the-needle income. I think it’s clear that there are 200 people at Apple working on the possibility of an actual vehicle, whatever actually ends up seeing the light of day.
I’ve read a total of 2 out of at least a dozen frenzied Car articles here at MDN that provided ANY actual data. Outside of MDN I’ve heard and seen every network quoting no data, chattering on about vapor as proof of nothing at all.
The ONLY interesting thing amidst this typical vacuous Apple rumor mongering is the recent Apple hires in the area of car engineering and lithium battery engineering. There is a supposed project name as the umbrella for all this. We know just about nothing else.
Meanwhile, there is an Apple ‘mystery van’ driving around in various places using detailed mapping and imaging equipment. It turns out to NOT be any sort of self-driving anything, indicative of nothing related to any sort of Car.
Whatever Apple is doing with automotive technology is going to take time on the order of YEARS. So we get to wait.
It wouldn’t surprise me to see Apple roll out a ‘concept’ car, but I do think that Jeff Reeves (Marketwatch) is correct here: it would require a lot of cars sold to be able to move the needle on the bottom line of the overall corporation.
Case in point: Tesla’s unit sales are roughly 1/4 that of Porsche’s current sales GOAL of 200K units/year. This means that if Apple could be as successful as Porsche, it still would only be a 4-5% bump to the bottom line.
Thus said, we still have to reconcile what those 200 people are doing at Apple.
A concept car where there’s extensive integration of iOS is the best (and safest) bet, particularly when said “Concept” uses some sort of battery + fuel cell hybrid to explain those aspects of the rumors … but let’s not forget how Apple is famous for deception, and how such fuel cell tech would be quite applicable to powering laptops & mobile devices … particularly since such development work typically is more difficult to scale *up* to a kilowatt or megawatt application class.
You are thinking way too small in comparing a potential Apple effort to Tesla. Tesla is a stock market darling but most people have never even heard of it. It has a relatively tiny market cap and zero retail presence. If Apple gets into the automotive market it would be a tsunami compared to Tesla’s little ripple. How much money does Apple have compared to Tesla and Porsche combined? They will have an ability to scale operations that Tesla (and Porsche, and BMW, and Ferrari combined) can only dream of.
Apple won’t have that much money for long if they embarked on such a ridiculous quest. I certainly hope Tim Cook understands Apple’s limits far better than some of the people posting here.
> You are thinking way too small in comparing a potential Apple effort to Tesla.
Which is why I actually compared them to Porsche.
> How much money does Apple have compared to Tesla and Porsche combined?
Irrelevant. The correct question is to ask what segment they’ll target: do you really think that they’ll purposefully minimize profits to go against Ford & Chevy? Or go against the high margin luxury markets like Tesla and Porsche? Once you realize that they’re going to go for the latter, the next question is to examine how large (or small) the potential customer pool is for their product.
Case in point: the typical household income of a Porsche customer’s varies by model – – it starts at roughly $250K/year for their cheapest models (Boxster, Cayman, and now Macan) and goes up from there. As such, Porsche strategically allocates their dealerships so that each francise as a local population of around 1M people to draw customers from.
This whole car thing is utterly ridiculous. Pay attention now: ITS NOT GOING TO HAPPEN.
If Apple is working on a car, my strong suspicion is that it would be a driverless, fleet-vehicle car. So, for example, Uber buys 1000 iCars, deploys them in San Fran, and people order them up via a smartphone. In this version of the future, you don’t own a car anymore, you just rent one for as long as you actually need to commute.
This future is at least 10 years away, but would require a *massive* amount of lead-up time. Google, Tesla, and Uber are already working on this problem. Apple is one of the few companies who could afford to throw a few billion dollars at a problem like this, with the hopes of owning a large chunk of the world’s transportation needs between, say, 2030 and 2060.
So far Uber hasn’t bought any cars and they are not likely to do so. As soon as they start owning cars and paying drivers they become a cab company, subject to a whole other world of regulation.
“The willingness to blindly leap to conclusions in stunning.”
This pretty much describes all of this breathless reporting about the so-called Apple Car.
From the Office of Internet Rumor Control (IRC): we are very disappointed lately in the quality of unsubstantiated rumors about a possible Apple Car. Typical rumors: that Apple will buy-out Tesla, install Apple tech to produce an Apple Car. That said car will be powered by battery, fuel cell, or hybrid technology. That’s the best they can come up with!? A much better rumor: Apple will buy-out DeLoren Motor Company of Humble, TX. Apple Auto will be powered by Cold Fusion Generator. In the works is a Flux Capacitor that will allow spacetime travel through hyperspace; although travel through space only, will be allowed initially. Come on people (analysts, journalists, pundits) use your imagination if you’re going to report unsubstantiated rumors!!! 😀
I’m amazed at the number of Apple commentators that still don’t ‘get’ the company. Their thinking is so far outside of any box that a successful car or any other product is a distinct certainty. Their ability to generate huge profits from their product line is also well documented. Jeff Reeves needs to get real.
The headline sounds good. The follow up of course is bunk. The hot air about electric cars is having a wild impact on Apple’s bottom line. I mean the media is having a piss festival over it. All those car articles, from all those arrogant self promoting jouranalists vying for speculation into the future:
“Pick me pick me I said the mouse would never work but the car will. Honest this time I’ll get it right.”
“I try to ensure any narrative is rooted in hard facts instead of a land full of gumdrops and puppy dogs. I never succeed but I try.”
“We’ve learned and struggled for a few years here figuring out how to make ideas not worth a fart appear to be tech articles full of facts. Honest people are just going to walk in and not figure out that we are just pumping our egos.”
I wonder how Jerk Reeve would speculate an investment into journaltech… something like “if you want to invest in jouranalism, makes sure you believe you are buying a lot of hot air. Or make sure it’s because you are that gullible. Oh and if you haven’t already, leave your soul at the door.
Bottom line is electric cars suck. If they didn’t, everyone would be driving them already and the infrastructure would be everywhere. They don’t and it isn’t.
What if they’re not building a car, just trying to improve the way a car is operated!
What if they have a version of our fav operating system that could control a car, connect to the Internet and your home network!
What if the system could send instructions to all the components via Bluetooth and alleviate the need for wires and cables!
What if this is the Project and not to actually build a car of their own, just make all the cars available in the market now much better and have them work together with your iDevices!
An Apple System that fits all cars. Manufacturers simply purchase the system from Apple and value add with their own Apps etc.
I love the rumour mill, not because of its proliferation of facts – almost the opposite – because it shows you what IDEAS are out there. And Apple has more or less always attempted to bring those dreams to fruition… People said computers could change the world – along comes the Mac – people said the Internet would change the world – along comes the iMac a revolutionary design optimised for Internet. CDs were old fashioned – along come mp3s and the iPod; People looked at the iPod and dreamed of an Apple phone – along one came… But why can’t a pc be more like a phone – here comes an iPad. An iPhone on our wrist – here’s an Apple Watch. An Apple house – well to start with we can give you HomeKit… But for now that’s kind of a big ask 😉
An Apple TV/entertainment system? Well we can make a set top box, but an Apple TV really is just a display in a connected infrastructure, you give us connected ovens, microwaves, showers, heaters, lights disco balls and we’ll talk to people about the games and content you want on your big screen…. So we’re still working on it!!
An Apple car? Well for now here’s an Apple in car system we think you’ll like but we’ll get on it. Cars don’t use renewable energy, they don’t talk to each other, they don’t connect to the Internet, their design could be Jony Ive’d and in a few years you shouldn’t have to drive them. Apple would LOVE to solve all of those problems and it’s got a few years until driverless cars are going to try to disrupt the industry, personally I think a public ‘network’ of driverless cars like the Internet could change the world as well but that’s just me atm… And I have no clue how anyone could go about making that happen. I’m sure they’ll design a car, they might as well build some prototypes, will they manage, who can say, but if people are talking about it Apple will be three steps ahead…!
You will find this interesting…
I did not find it interesting — I found it damned impertinent that you post something that begins auto-playing sound. A serious breach of accepted internet politeness protocols. What about the people who are still forced to use a dial-up connection, or who have d data cap, or who were quietly listening to music when so rudely-interrupted, or who were engaged in a serious business conversation in the office.
let people decide for themselves what, if anything, they want to listen to and watch.