It's a fair question, which was also raised when the iPod was introduced. It helps to see Apple as an "affordable luxury smart things" company. Dumb, ICE-based cars were a poor fit, but smart, mostly solid-state vehicles may not be.
Automotive is just another product category large enough to matter to Apple. A possibility not mentioned in the article is that Apple may initially partner, as they did with Motorola for the ROKR (but hopefully more successfully). Sony, the company Apple wanted to be when it grew up, is doing this with Honda for their first car, the Afeela.
> Tesla had the advantage of being the first mover in the EV market…
Apple has gone up against several first-movers that are now gone or are shadows of their former selves. It's neat that Tesla will be remembered as people's first EV, but it's not enough to ensure their market position 20 years from now. Tesla has no special sauce that I'm aware of.
Seems absurd frankly. How would they even approach this task? Something like this is either organic, gradual, and before you are famous or it is stealth and as wide as possible.
I don’t see them pulling something like this off without everyone noticing.
But yeah, it's novel that Tim Cook's Apple would lean into something Wall Street would abhor - a low-margin capital-intensive business - for something that sounds out of date (L2 in 2028, n.b. Mercedes is at L3 on highways, even assumes liability. Elon would tell you Tesla is L3, YMMV)
At first, Musk's stated goal was to make EV's viable. I feel like that Tesla is well on the way to that, in ways nobody thought possible.
Assuming he hasn't changed his mind, there may come a day he just calls it quits.
But to your point, I would agree - Tesla has no particular special sauce. I am waiting until Waymo FSD finds its way into consumer cars you can drive all over the country before I buy one of them.
Tesla is still doing thing in a novel way, things that others follow on. Take e.g. the battery design or gigapresses.
I'm not claiming they will keep that edge.
The battery cells and system in the new Cybertruck has been widely panned.
The industry is now on par and often exceeding Tesla.
And when Toyota releases solid-state batteries it won't even be close.
However, more people are making EVs, so Tesla is using its biggest advantage (supercharger network) to essentially force every other EV buyer to witness what competence looks like. Great move.
Instead they are worse than what we have today and there is no evidence that the costs are lower.
And the supercharger network is no longer an advantage as almost all EVs will now be using them.
[1] https://www.drive.com.au/news/tesla-model-y-cost-to-reduce-4...
Tesla is becoming a commodity and you don't see an advantage?
The Cybertruck was supposed to be a vehicle costing 40k with a range of 500 miles. It's a vehicle costing 100k with a range of 300 miles.
Reality distortion field in effect.
I feel like Apple as a company is great at coming up with those novel things that tend to blow right past the competition. (I don't like the locked-down, walled-garden result of many of those products, but I can't deny they have that special sauce.)
But a car? Computer -> laptop -> music player -> smartphone -> tablet -> smart watch... -> ... car? Not sure I buy it.
If the competition forces them to, they have buffer to lower their prices.
You made me look this up and this is slightly misleading. I couldn't find the full numbers for 2023, but I did find H1 2023.
Yes, Model Y is the best selling car in the EU, but for H1 2023 Tesla is barely the 16th best selling car brand in the EU. The other brands just sell a lot more models, on average.
> at the same time while Tesla maintains rather high margins compared to the industry standard.
I looked this up yesterday, Tesla has similar margins to BMW and Mercedes, because they sell upscale models, just like those. Tesla margins will drop once Tesla starts making cheaper models. For reference, cheaper models in Europe = cars costing 20k€. Not 40k€+ like the cars Tesla is selling right now.
Apple kills it at those things. All the stuff you don’t see will be outsourced. All the stuff you do see could be amazing. I am no Apple fanboy but get in a Tesla and think how good it could be if fancy stylists and designers made it.
I am a car guy but really, now you can’t differentiate on power trains the EV market is ripe for an Apple style product.
I'm thinking about how bad it would be, actually. That's the kind of thing that brings you the infamous steering yoke because it "looks cool". Or touch controls everywhere instead of physical knobs, because the latter are "ugly".
When it comes to cars, I want function over form, especially when it comes to UX.
I have not idea what leads you to that conclusion.
At their last investor day every single department head gave a very detailed presentation about how they're going to 10x their manufacturing from 2M vehicles in 2023 to 20 million in 2030.
I have no doubt they'll do it.
Manufacturing of both cars and batteries. That's vertical integration. While I think their current overselling of Autopilot is going to be a folly for them, their assistive driving suite alone would be a multi billion dollar business. They have taken on a ton of risk, and they certainly have their problems, but their successes are substantial and are nothing to wave away.
Tesla is building their own battery packs, but they're still buying the cells from Panasonic, just like everyone else (Apple included) has the option to do.
And their first gigafactory in Nevada as far as I know has been producing cells for years. I suspect they stopped buying cells from Panasonic years ago.
[0]https://www.tesla.com/blog/panasonic-enters-supply-agreement...
https://asia.nikkei.com/Business/Automobiles/Panasonic-to-bo...
If that vertical integration translated to a marked, obvious benefit to customers, then I'd agree. But I don't think it does. Certainly your average EV buyer is not going to say "I bought my Tesla because Tesla makes their own batteries". Why would a customer care about that? I certainly wouldn't.
Not when you look at their margins.
Tesla's special sauce is that they can make a profitable, desirable EV at scale. The established players can't ramp their EV programs -- they'd go bankrupt! I wouldn't call that "working well enough."
The dinosaurs failed to innovate for decades, while Tesla sat down and did hard engineering.
Look at BMWs and Mercedes margins. They're quite comparable with Tesla margins.
Let's see Tesla margins once they grow to try to match that insane market valuation that only makes sense if they sell 10+ million cars per year, most of which will have to be cars costing 20k€ per year, not 40k+€ per year.
The key words that you missed are "at scale."
It's easy to be profitable at the high end, but that also means a negiligible total addressable market. BMW and Mercedes still have all their R&D work ahead of them to scale their high-cost EV technology to a mass market car.
BMW/Mercedes also didn't do the engineering legwork (like other dinos), they just use a slightly different strategy to conceal the deficiency. Those two companies use "make EVs that won't get popular" instead of "quietly lose money on EVs."
I find especially US folks (sorry) very un-informed about non-US car companies regarding EV technology.
Also, Mercedes sold ~250k EVs last year and BMW sold about ~380k. Yes, Tesla sold 1.8 million or something, but you're acting like Tesla is some hyperscaler. And this is in a context where both BMW and Mercedes sell more cars overall, than Tesla, so they have to take care of the going concern, too.
A lot of wishful thinking in that comment.
Doing some quick googling I could not find any source for margins of BMW / Mercedes on their EVs. I remember EVs fron GM / WV being mostly unprofitable, but maybe those are old news.
Can you please share some links for those who want to be more informed?
Of course I know they "have" platforms, but look at the price of the actual cars. They're at least a generation behind Tesla on platform cost.
Legacy automakers' dirty little secret is that their cheap EVs aren't profitable, and their profitable EVs aren't cheap. They failed to invest in lowering EV build costs.
I find non-Tesla/non-China automakers (including Europe) very in denial about how far behind they are.
I don't know. Benefit of hindsight, but you can see the line between computers and iPod. The line from selling iphones and rent seeking on casinos for children to CAR seems less clear to me.
Our "dumb" Audi A6 ICE vehicle has just as good or better self driving and parking as most EVs on the market, so not sure why we are coupling these together.
Couldn't disagree more. Again, our Audi A6 is much more advanced feature-wise than any Tesla on the market. That can continue to be true as the software, torque vectoring, AWD, air suspension, MPGs, assisted driving, etc all improves.
You might really like your Audi and think its advanced features are much better than what you'll find in a Tesla, but the market couldn't disagree more with you about which company is more "innovative".
And yeah, the fact that my car feels like I am driving on a cloud in a quiet cabin versus a rickety Tesla is innovative and equally important to a lot of people.
Building an electric vehicle does not mean you need to be like Tesla in other ways. Apple doesn't want to be a Tesla clone, they want to do their own thing. I'm sure the bigwigs at Apple would balk at panel gaps or whatever more than you do. But Apple releasing an ICE vehicle in 2028 would not be in line with their brand and market positioning at all.
As an aside, if you'd like to see a vehicle that is both electric and superior to your Audi in terms of comfort, check out the new Rolls Royce Spectre. RR also feels that the best way for them to innovate is by electrifying their vehicles, and I think you'd be hard-pressed to find a car maker further from Tesla (in terms of ethos) than RR.
It’s one thing to compete with iOS and Android, where the combined market share is nearly 100%. It’s another to compete with players who don’t add up to 10%, the market is still wide open.
Tesla’s special sauce, currently, is their charging network. I’ve driven both Tesla’s and non-Tesla EV’s. The public charging experience for Tesla is considerably better. I guess when everyone adopts NACS in the next year that may change though.
Tesla isn't going to be able to hold their margins, either.
It's going to be more like Nvidia - Nvidia captures all of the margin in the servers - with some going to Intel or AMD - and SuperMicro, Lenovo, HPE, etc. eke out their existence on the low value chassis.
The stuff you’re listing, other than CPUs, which I explicitly called out as going to Intel and AMD, is ultra low margin.
The fact they chose cars is not that it’s a natural fit. It’s that it’s the only fit.
Tesla has upended the way cars are being built with mega casting and structural battery packs. Their next-gen car will be another step change with the "unboxed" method.
The odds of anyone catching Tesla is about nil. Apple's chance may be less than that. Are they going to pay BYD to make cars for them and lose that margin?
But I can't help thinking back to 2007 when so many were saying how hopeless breaking in to the very competitive and competent cell phone industry would be.
– Palm CEO Ed Colligan
"We've learned and struggled for a few years here figuring out how to make a decent computer," he said. "Mobile phone guys are not going to just figure this out. They're not going to just walk in."
- Imaginary Steve Jobs
With the physical parts of the car commoditized to oblivion, the primary opportunity for product differentiation is in the sensors, software, and UX. All the automotive OEMs know this. For better or worse, the traditional automotive companies are terrible at this part of the business and they do it reluctantly. It isn't in their DNA, and their traditional production processes are unsuited to it.
When the two big execution problems of building a modern automotive company are "software, sensor, and UX design" and "efficiently managing complex global supply chains", it is easy to see why Apple might be uniquely positioned to be successful at it.
Personally, if Apple creates a standard car simply with a great software experience (I'd expect at least a few small novelties), and not too expensive, then I am totally in.
a) You can operate it without talking to it
b) It has dedicated knobs/levers/switches for primary essential controls.
c) It doesn't require internet connectivity, continual tracking/telemetry etc.
Apple knows how to build interfaces. Including interfaces outside of software. I suspect it'll be the primary thing they focus on in the product launch video, how they didn't screw up the UI and there will be knurled titanium wiper speed ring switchy things and tactile feedback in the damn mushroom leather wrapped heated steering wheel and Jony Ive whispering directions, seemingly inside of your head.
I don't want Apple forcing their excellent design sense down my throat, I'd much rather have decent design I don't have to use.
I do assume it'll be a locked-down, walled-garden experience, only serviceable at Apple Stores (which will open garages at some locations), assuming they can get away with that legally. They'll reject any non-Apple-genuine part, of course.
But to your point about voice control, I do expect Apple will try to make that really good. Touchscreens suck for keeping your attention on the road when you want to change the heat temperature or change songs or stations. Physical controls are better. But good, painless, non-frustrating voice control is by far the best option for avoiding distractions and keeping your eyes on the road.
Just one tiny example: see the manual dial or “crown” on Watch, AirPods Max, and now Vision Pro. You could easily imagine those products without an unnecessary manual “dial” when there is both voice (Siri) and software controls. But, you still have a “dedicated knob”.
Not sure which iteration of it you have, but I've actually found the software on my 2022 E-Class to be surprisingly decent. I generally prefer plugging in my phone and using Android Auto, but if I don't need Google Maps to get where I'm going, I usually don't bother with it and the car's own system is fine.
You ever heard about Autosar as a software middleware that is in use for years by most of the OEM to decouple software and hardware development?
For example, Daimler/Mercedes is developing for years toward self driving cars. They had working prototypes in the 1970s with "electronics" based on analog designs that was working as good as a modern Tesla FSD, with the exception that it required lots of space. Mercedes/Daimler is the reason why we have cheap ultrasonic sensors in modern cars. They developed that in the 1990s together with then Temic. They had a working self-driving prototype during that time. All that lead to cheap sensors we use today daily for adaptive cruise control in every modern car by any OEM. Mitsubishi had for sometime the best in class safety system with sensors able to detect pedestrians, like kids, and bicyclists.
MobilEye is now developing self-driving capabilities for years, and IRC first used by BMW for safety features in their models. Only later Tesla used the system in ways which were never consumer ready. That'S why they finally split.
The things is OEMs are conservative introducing features to consumer. Because nobody wants to risk its brand to devalue. Its not only that, if there are too many accidents that would mean that the insurance will have an extra premium, which would lead that consumers don't buy such cars.
So I was driven in car in the early 2000s with features that are rolled out just recently, like the level 3 by Mercedes on highways.
The things is, most just don't see how much things are going on under the hood. They just see the MMI/entertainment system. Yes, that was for long not as high value proposition.
I imagine that could be very interesting for self driving technology.
... in the US. iPhone market share is much lower in other countries. I do wonder if it's low enough to affect things like their Find My network.
I'm not going to pull up the rules, but this breaks at least one. Please argue in good faith.
https://www.investors.com/news/tesla-earnings-slide-40-next-...
I agree 100%, and I don't think it makes any sense for Apple to manufacture cars in any way similar to the way legacy automakers do it now. That is old-school. Slow, expensive, capital and resource intensive.
I don't think Apple have any interest in having enormous factories churning out massive vehicles that have tens of thousands of parts, long-tail warranty and repairs, etc. etc.
If Tesla have taught the industry, it's that the way legacy automakers build vehicles is archaic, and there are much faster/cheaper/better ways.
As much as Apple want their vehicle to be self-driving, the fact they're willing to down-rate it to a Level 2+ makes me think that isn't actually the focus.
What if Apple start building vehicles on an scale and in a manner than has never been conceived before?
Tesla currently have the best in the industry having a Model Y come off the line every 40 seconds [1], and they've said they want to halve that with their new "smaller vehicle" coming soon (TM).
Hypothetically, what if Apple's play here is not to "re-invent the car", but more-so "reinvent the way cars are manufactured". ?
[1] https://www.torquenews.com/15475/tesla-gigafactory-shanghai-...
It will be incredibly interesting to see if Apple really are working on new manufacturing techniques.
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.
I think the game is simply that they don't want to admit it's a stupid idea and so they're keeping it on life support.
And Apple doesn't have to admit anything. They have never promised a car, they don't even have to acknowledge such a project ever existed if they cancel it.
I'll know. You'll know.
Elon is no dummy. He targeted fat tired old industries to attack. It was brilliant. He now faces possibly the weakest competition in large business.
Suggesting it's worth less than $55 billion is silly.
Well, doing it in house doesn't seem to be working out for them.
When/if they figure out what they want to build, I expect they're leverage their existing expertise in partnering with third parties to churn out product.
I’ll be honest, I think the whole Apple car thing is a pipe dream. Apple doesn’t have some sort of magic that is two decades beyond anybody else driving in circles underneath their weird spaceship campus. If they have their own full self driving, it doesn’t matter who assembles the car. They can sell the tech to everybody.
I've only ever bought an Apple tableet for my wife, so I've got no bias here. But I'd be keen to see what they can produce. If only to differentiate the market up a bit ... it's as boring as hell at the moment and why I haven't pulled the trigger on one.
I suspect they're much more interested in what's happening with the Chinese manufacturers.
There is no being late.
People buy multiple cars in their lifetime and new car companies will come and go.
iPod -> Nope, there were lousy players out before it.
iPhone - > Nope, smartphones were around before 2007.
iPad -> Nope, tablets, ugly ugly tablets were around too.
Tesla does everything in house because they need to keep costs low to stay profitable. Apple doesn't.
Muskeeter wanted Apple CEO position in return
> I think they would've made a great match.
Ask that to Mr. Cook :-)
That said, even Tesla spent ~4 years manufacturing and selling a very-low-volume hype car before they attempted to move towards the mass market (and that mass-market product has taken a decade thus far to approach Apple's reputed standard for quality).
I'm only half joking.
Gone are the days where the complexity was in building complex Internal combustion engines (ICE), with associated complex mechanical drive-train.
EV technology has reduced the bill of materials to mostly batteries, motors and tons of software. The batteries and the motors (essentially the "skateboard" in EV parlance) can be sourced externally. The key differentiator is the software defined innovation. Everything from the connected mobility application, to AV/ADAS, the in-cabin UX, etc. And Apple already has most of the pre-cursors (chatbot, maps, CarPlay, OTA, iCloud for CDP, telemetry systems, etc).
Only thing not quite in place is the AV and ADAS systems. Which is where Apple is focusing their R&D.
The Germans pretty much dropped the ball on software and UX from the very beginning. But they're still decent enough at bending metal around batteries and electric motors, and that seems to be enough for huge profits.
Still surprised Apple is really doing it so, the automotive market is cut throat, mostly low margin. But we will see.