I've long thought Apple's best play was to provide OEMs some kind of "VehicleOS" stack, enabling them to compete with Tesla. I doubt most OEMs can build the necessary stack in-house.
Then Apple sells some hardware, some software, takes a cut of some services bundles. A fresh new revenue source, without taking on the all risks of making actual cars.
If we follow your analogy, Apple provides both hardware and software value. In the case of Tesla, IMHO, the value is mostly hardware as in the core technology, not, IMHO, in the car/controls/screen/ that they put around.
Again, as a thought experiment: Would customers not like a Mercedes/BMW/Lexus/Audi/Jag... with Tesla battery/drivetrain/superchargers but in a Mercedes/BMW/Lexus/Audi/Jag... car shell(for lack of a better word).
I think I would love that, especially since (disclaimer: I do not own a Tesla), the Model S and 3 that I've sat in, seem very spartan from a luxury vehicle standpoint.
Moreover, to my other point: this will free Tesla to innovate like crazy on battery, charger, motor and drivetrain technology and perhaps attain a monopolistic lead , while in the car business I the competition is beginning to creep up.
From a traditional car manufacturer's standpoint, this may allow them to stop spending on battery/drivetrain/superchargers/... technology and focus on making the car shell.
On the one hand, Apple has a lot of experience in domains where Tesla has been less than great (supply chain, manufacturing) and software is slowly becoming a key differentiator for the automobile industry so I can somewhat see where synergies might exist.
On the other hand, automobile is quite far from Apple core business. I know that there is not much growth remaining in Apple key markets but still if I were a shareholder, I'm not sure I would be comfortable with Apple making such a move.
I guess we are entering a new golden age for conglomerates.
I mean, given Tesla's market cap I think similar expected long-term profitability is Apple's game here. And yes, bootstrapping everything from scratch is exactly what Apple has to do.
The competitive advantage Apple would have is simply in the car's design -- reimagining cars from scratch based on not just batteries but especially interface technology. And nobody has a proven track record of profitable consumer design at the level of Apple's.
Just brainstorming, everything from heads-up displays for driving directions and safety alerts, to eye tracking to determine whether the driver has seen an upcoming sudden obstacle detected by LIDAR, to who knows what manufacturing and materials innovations they can come up with. A lot of individual elements that other manufacturers can provide as well, but Apple manages to make them seamless and natural and "just work" for the average person.
Let's not discount Apple's history of entering and quickly dominating huge established markets.
Also, Tesla already makes and sells pretty great cars. Customers are happy. The cars are incredibly safe. What do they need now that they've successfully built the parts of the business that are outside of Apple's core competencies?
The complexity is still vastly different with cars than any electronic device Apple builds. All those individual items you list are likely in your future car if not already there buried among a hundred to thousand more such complex items.
While Apple may be supply chain wizards in electronics they would need to replicate it many times over to build cars and even then create a whole new distribution and support system.
I think their best bet is to be the smarts of all cars, why restrict themselves to just their own cars. Just launching one car would cost them a sizable chunk of their money trying to launch more than one would be many times more difficult, just ask Tesla. Tesla isn't out of the woods because unlike Apple they don't have the reserves to spend; assuming Apple stock holders would go along with the idea of spending tens of billions to start yet another car company.
No, I think Apple is better at being another supplier and getting everyone into their game. That gives them more flexibility and more penetration for a lot less. They are likely also the only company that could get their logos on the screens of all cars
That's an interesting point. I was wondering how Apple could get anywhere with no car experience but I guess if they had fairly generic cars manufactured by some outsourced company but with a better electronics/software and a better sales and service experience that could work.
Apple does do this, just not for cars. They have a massive and fine tuned global supply chain for all their hardware devices.
I imagine some of that expertise would play well in the car market, but I'm certain much as Tesla did, they may hit road bumps along the way, however its not completely out of their DNA to handle this sort of thing.
I still think it's only a matter of time before Apple takes another bite at Tesla. They want into the space, and are just too far back on the technology curve. They could engage someone to build the car for them, ala what they did for Foxconn, but they are not going to deliver better technology then what Tesla already has. There is a insane amount of overlap between Tesla owners and Apple's most lucrative customers, and Tesla's owner satisfaction is through the roof. It would be pricey, but I can see Apple making a huge bet there.
This maybe a ridiculous idea. But if Apple do want to acquire their way in to the Automobile industry, wouldn't it make sense to buy Tesla right now, at about $25 billion market cap.
One big hindrance that I see is Elon Musk, who IMO would not play second fiddle to anyone else.
A traditional automobile company might be a better solution, I would think. Someone like Jaguar-Land Rover given Jony Ive's background. Their market cap seems to be around $15 billion and they seem to lack an electric vehicle program (this could be where Apple comes in, with their battery expertise), unlike BMW, Daimler etc. who already have an electric cars in development/production.
Apple has been flirting with this topic for quite long and are obviously not succeeding in hitting a formula that makes sense for them, which would be a mass produced premium priced vehicle that people with too much money would prefer over the likes of expensive sports cars, teslas, and what not. It's both obvious and stupendously hard if you've never produced a car before. Tesla is basically the Apple of cars already. They raised the bar quit high for Apple to break into that market and not look like an also ran type product (i.e. like most of Tesla's competition right now).
Rumor has it they were talking to Kia at some point. That does not instill a lot of confidence. Fine cars, but sort of the equivalent of the beige boxes that Apple once competed against when IBM PCs were a thing. Munro did a review on a Kia the other day and the lack of enthusiasm for it was quite obvious. It's not that it was a bad car (he actually liked it, just not for himself) but just a bit boring, bland, and cheap. Alright if that's what you can afford. But kind of not the market Apple is after. Partnering with Kia would be the equivalent of letting Compaq or Dell take care of producing the imac in 1999. It took Steve Jobs to figure out that mess. Better beige boxes weren't the answer and he pretty much axed that first thing into his second round at Apple and rebooted what is now the most valuable company on the planet.
You can see the dilemma here. They basically lack internal skills/knowledge for building a car manufacturing operation and partnering is alien to them. So, how do you create a car with a screen and some fancy Apple experience when you've basically never build a car and your entire vision revolves around what's on that screen? Perhaps they should just outright buy their own car company and get it over with. They are certainly rich enough and there's no lack of suitable companies struggling to survive but yet still competent enough to innovate. I'm surprised they haven't already. Allegedly, they opted out of acquiring Tesla when they had the chance.
This makes sense to me, think about all the car related electronic components Apple can sell once cars start driving themselves. There are lots of opportunities.
When watching the CarPlay part of the most recent Apple event, I was struck by Apple's current approach vs. Tesla's.
Apple wants to be the operating system for all cars/hardware (ala Microsoft Windows) and Tesla is trying to be the Apple of cars (integrated hardware+software).
Not a perfect comparison but if Apple dominates the entire industry, there will be space for a premium alternative (even if it's not Tesla).
It's not really a standard Apple play - take a new-ish technology and commoditise it, while wrapping it in pretty design and marketing glitter.
Making pocket/rucksack electronic doodads is one thing. Cars are on a completely different level of industrialisation, supply chain management, dealer networking, service support... and existing competition.
And the plausible market capture is much smaller.
It would be like Apple trying to compete against NEC, Fujitsu, and IBM with a commercial mainframe project. They could surely get a product out. But why? And then what?
I really like this idea. A range of cars from Tesla, deeply integrated into the Apple ecosystem, would seem like a pretty sweet place to be.
Apple can certainly solve Tesla's cash problem. Distribution probably takes care of itself when you put those two names together, in the sense that it's two exceptional brands that people will actively seek out, regardless of what their local dealers are trying to push.
Apple entering the space would benefit consumers, but if Apple can't deliver a simple power mat (Airpower), it is hard to believe that they would be able to develop a car. Doug Field left Tesla probably because he couldn't scale the manufacturing plant for them. Apple doesn't build the hardware themselves but hires third-parties to do it, like Foxconn. It would be hard to imagine a company designing cars and letting third-parties build for them
It would be great for Tesla's mission if a company like Apple becomes a player in this space. We definitely need more manufacturers. But just based on the incremental engineering expertise Tesla has acquired over the years in manufacturing - especially now with the diecast, the data the hundreds and thousands of Tesla cars are capturing everyday, the increasingly vertical integration of their process, a decision maker like Musk, and most importantly, Apple's history with Project Titan (which I happen to know something about), I'm not too optimistic of much happening in this direction. There is still nothing out there to indicate Apple can handle it when the rubber hits the road at 80 mph. One area where I am slightly optimistic about Apple doing something potentially significant is in the battery space, in which case, it would compete with the likes of QuantumScape, and not Tesla, per se.
I still think it's reasonable to have Apple consider building a car. Their core competency is in design, integrated platforms/ecosystems, and outsourced manufacturing.
Assuming that they could use their supply chain expertise to simplify and outsource manufacturing, the cars of the future likely looks more like a software enabled consumer electronics device than a consumer mechanical device, and there are some really neat things you could do in that ecosystem that only apple could pull off (cutting edge design coupled with high end finishes, and a software ecosystem with a self-driving car as a new platform).
That said, it's likely not the right market timing for Apple to bring an electric car to market.
Then Apple sells some hardware, some software, takes a cut of some services bundles. A fresh new revenue source, without taking on the all risks of making actual cars.
reply