Reuters has an interesting exclusive today, as Tesla joins the S&P 500:
Apple Inc is moving forward with self-driving car technology and is targeting 2024 to produce a passenger vehicle that could include its own breakthrough battery technology, people familiar with the matter told Reuters.
Reuters
Could include a breakthrough battery? If it’s not going to be ready until 2024 (!), it better be the most incredible battery ever conceived of. Cars will literally be flying by then.
The iPhone maker’s automotive efforts, known as Project Titan, have proceeded unevenly since 2014 when it first started to design its own vehicle from scratch. At one point, Apple drew back the effort to focus on software and reassessed its goals. Doug Field, an Apple veteran who had worked at Tesla Inc, returned to oversee the project in 2018 and laid off 190 people from the team in 2019.
Reuters
You know it’s getting close when they lay the whole team off. Just ten short years to start producing their first vehicle, and only four more years to go!
Making a vehicle represents a supply chain challenge even for Apple, a company with deep pockets that makes hundreds of millions of electronics products each year with parts from around the world, but has never made a car. It took Elon Musk’s Tesla 17 years before it finally turned a sustained profit making cars.
Reuters
Seventeen years might sound like a long time, but Apple has already been working on Titan for seven. If you look at it that way, Tesla only has a ten year head start.
It remains unclear who would assemble an Apple-branded car, but sources have said they expect the company to rely on a manufacturing partner to build vehicles. And there is still a chance Apple will decide to reduce the scope of its efforts to an autonomous driving system that would be integrated with a car made by a traditional automaker, rather than the iPhone maker selling an Apple-branded car, one of the people added.
Reuters
So they might make a vehicle in four years, but maybe they won’t? And if they decide not to, the plan is to try to provide another commodity autonomy stack without designing the vehicle? That sounds very un-Apple.
Two people with knowledge of Apple’s plans warned pandemic-related delays could push the start of production into 2025 or beyond.
Reuters
Pandemic? You mean the 2020 pandemic? Classic case of “pandemic ate my homework”, the quintessential excuse for every business fail in 2020.
So 2024 isn’t even for sure, it could be 2025 or even further into the future. This announcement is a game changer!
Apple has decided to tap outside partners for elements of the system, including lidar sensors, which help self-driving cars get a three-dimensional view of the road, two people familiar with the company’s plans said.
Reuters
LIDAR?!? In 2024?!? If you see a LIDAR, they blew it.
As for the car’s battery, Apple plans to use a unique “monocell” design that bulks up the individual cells in the battery and frees up space inside the battery pack by eliminating pouches and modules that hold battery materials, one of the people said.
Apple’s design means that more active material can be packed inside the battery, giving the car a potentially longer range. Apple is also examining a chemistry for the battery called LFP, or lithium iron phosphate, the person said, which is inherently less likely to overheat and is thus safer than other types of lithium-ion batteries.
”It’s next level,” the person said of Apple’s battery technology. “Like the first time you saw the iPhone.”
Reuters
Sounds interesting, but is it next level for 2020 or next level for 2025?
Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said Apple has a history of higher margins than most automakers.
“My initial reaction as a shareholder is, huh?” Eddins said. “Still don’t really see the appeal of the car business, but Apple may be eyeing another angle than what I’m seeing.”
Reuters
Investors still haven’t woken up to the enormous value that will be realized as software eats the car. Amazon gets it, with their investments in Zoox and Aurora. Google gets it, with their investments in Waymo and Android Auto. Apple gets it, with Project Titan and Carplay. Tesla, of course, is leading the way. But investors probably won’t get it until they see it hit the bottom line.
Apple seems more likely than not to fail here. If they knew what they were doing, they would have bought Tesla for $30 billion last year. They missed the opportunity of a lifetime not scooping the company up when they could. Still, I’d love to see the two work together somehow. Tesla’s technology better integrated with Apple’s hardware and software ecosystem would be unstoppable.
UPDATE: Elon Musk says he asked Apple to meet about acquiring Tesla in 2018, but they weren’t interested:
During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value). He refused to take the meeting.
— Elon Musk (@elonmusk) December 22, 2020
Apple’s first car will likely be a high priced relatively low volume car, competing with the BMW 7 Series, Mercedes S-Class, and Tesla Model S. Comparisons will be drawn between the Apple Car and Tesla, but the real story here is what happens to legacy automakers.
The story so far has been “Tesla vs Legacy Auto”. Some people have their money on Tesla and disruptive innovation, others have their money on legacy auto and their decades (centuries?) of experience. Each side has their advantages. But what happens when legacy auto has to fend off not only Tesla, but electric vehicles from Apple, Google, Amazon, a hundred Chinese startups? The probability that legacy auto survives this shakeup has just fallen significantly, especially since the incumbents seem paralyzed by internal bureaucracy as they try to navigate this transition.