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would lean into something Wall Street would abhor - a low-margin capital-intensive business - for something that sounds out of date (L2 in 2028, n.b. Mercedes is at L3 on highways, even assumes liability.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?
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.