I still don't understand what's the game that Apple is trying to play here. Manufacturing a car is completely a different business to small digital devices and the existing players are not willing to play nicely with Apple so they need to bootstrap everything from scratch, similar to Tesla. In this context, 2028 is still an extremely aggressive goal even for Apple and I won't be surprised if it's delayed to 2035 or something. Tesla had the advantage of being the first mover in the EV market and Waymo has the most advanced autonomous driving technologies. I don't see any competitive edges Apple has against them.
> I still don't understand what's the game that Apple is trying to play here.
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.
2-3 years ago, I was thinking something similar along the lines of "yeah, why doesn't Apple just stick with computers/phones/peripherals/software." But if anything's become clear in the last few years in the EV market are issues with: reliability, software/firmware, usability, aesthetics, build-quality, and high startup capital requirements. Apple is a perennial expert UX/design/durability/usability. Sure there's been a few boondoggles over slight decreases in QA and quality (butterfly keyboards)--but at the end of the day, most of us still love at least some of their products because they still, usually "just work". Apple is also quite good (whether or not you like it) at building walled gardens. Imagine if Apple released a rock-solid car and an absolutely kick-ass charging network that rivals Tesla's? There's be demand. The biggest, most-obvious reason why Apple could succeed at building a car is that they have massive amounts of cash. The #1 reason these fly-by-night EV startups fail is because they can't handle 5-10 years of negative margins coupled with massive capital costs. Apple could burn billions before their EV division becomes profitable and not even blink.
I wonder if Apple has been secretly acquiring land or negotiating leases for a charging network. That would be a significant chunk of infrastructure to add to their services segment. Apple One -> Now includes charging your vehicle at no additional cost.
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.
"No one knew what the iPod was for either" is a sort of Godwin-for-Apple-speculation. Once you cross the Rubicon where that's invoked, with no other argument provided, it's been signalled it's rational to connect any dot.
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)
Apple already is a major investor and builder of renewable energy farms around the world. They won’t even have to buy the energy, they will already have it.
When it comes to core UX, the current-gen iPhones and iPads are less usable than Androids. For one thing, this whole idea of swiping from beyond the edge of the screen, in many places without even a visible indicator that it's an available gesture, to do the most basic stuff like opening Home, is a severe regression compared to simple buttons; and it's even worse because some of the swipe gestures do different things depending on how far you swipe. To be fair, Android also introduced this misfeature, but at least you get a checkbox to restore the old behavior.
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.
> Assuming he hasn't changed his mind, there may come a day he just calls it quits
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.
Those novel things only matter if there's a large enough, visible, positive difference to the customer. I'm not convinced they have anything like that.
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.
It matters if it makes it cheaper for the manufacturer. Teslas are best selling cars in many places (e.g. Model Y is the best selling car in EU) at the same time while Tesla maintains rather high margins compared to the industry standard.
If the competition forces them to, they have buffer to lower their prices.
> Teslas are best selling cars in many places (e.g. Model Y is the best selling car in EU)
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.
I didn’t get it but I recently did a couple of things that changed my mind. Drove an EV and switched to an iPhone. EVs are not cars as we know them, they are scaled up phones whose only real traditional car bits (tyres, brakes, Air conditioner) the major manufacturers already outsource. Once the engine and gearbox are gone you are only left with one point of differentiation and that is styling/user experience.
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.
> think how good it could be if fancy stylists and designers made it
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.
For fast-charging, the Cybertruck battery is an incremental improvement, not the leap everyone wanted. For longevity and cost? The rest of the market can't come close. Tesla's secret sauce is being willing to do things nobody else will do, change the paradigm, all that stuff MBAs want to do but don't know how to do.
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.
Cybertruck uses the 2.4 4680 without dry coating. We've already seen the CT has amazing thermals, great charging curve, and we haven't even seen the 800v charging yet. We also have a floor on the cost with the range extender, which is the cheapest 50kwh battery I've seen first-party.
Tesla is becoming a commodity and you don't see an advantage?
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.
> Manufacturing of both cars and batteries. That's vertical integration.
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.
Actually, the Gigafactories are operated by Panasonic on behalf of Tesla. Technically the cell production in the Gigafactory is done by Panasonic and the packs then assembled by Tesla.
I don't see that special sauce as ensuring market dominance. The established players can (and do) source their batteries from third parties, and that seems to work well enough.
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.
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.
It's easy to be profitable at the high end, but that also comes with a negligible total addressable market. BMW and Mercedes still have all their R&D work ahead of them to advance their high-cost EV technology to catch up with Tesla.
BMW/Mercedes also didn't do the engineering legwork (like the other dinos), they just use a slightly different strategy to conceal the deficiency. They chose "make expensive and unpopular EVs" instead of "quietly lose money on EVs." Same shit different shovel!
At this point, I doubt they'll even try to catch up on technology. They'll retreat behind "we don't make cheap cars so why lift the cost curve with R&D," meaning they'll never contribute more than a rounding error in the EV transition.
It's doubling down on buggy-whips in 1905. It won't be pretty.
Both BMW and Mercedes have EV platforms, have you done your homework?
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.
> Both BMW and Mercedes have EV platforms, have you done your homework?
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.
> Both BMW and Mercedes have EV platforms, have you done your homework?
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?
It translates to price, speed of innovation, and overall quality. Tesla beats everyone at $-per-mile of range, there are no refresh cycles, and the cars, ignoring fit and finish, are phenomenal. Adds up to a serious advantage.
Apple will never build cars. Each dollar of car revenue will hurt their margins. It doesn't matter how lux the car is or the target market, it isn't going to happen.
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.
Also of note: while Tesla sells half of EVs, that’s still a small share. It’s not hard to imagine EVs as a whole still being at single digit market share in 2028.
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.
> It's a fair question, which was also raised when the iPod was introduced.
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.
It’s much simpler to me than all that. To maintain the growth percentages that Apple has seen, there are only a few markets that Apple can enter to make enough money to keep growing at the same rate. Otherwise growth stops and then the stock price tanks. So Apple needs to get into American healthcare, cars, or housing.
The fact they chose cars is not that it’s a natural fit. It’s that it’s the only fit.
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.
The point is that Apple is all about coming across as innovative and trailblazey while also being premium. Smart features and build quality is the premium half of the equation, being an EV is still innovative/trailblazey. Your car isn't gonna feel innovative in 2028 if it is an ICE vehicle.
> Your car isn't gonna feel innovative in 2028 if it is an ICE vehicle
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're talking about incremental improvements, when I say innovative I mean Apple wants more Blackberry -> iPhone moments, not "our car has better suspension".
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".
Oh, so like going from physical buttons on a console to a massive iPad? Some may call that innovation, and that many now consider a regression in terms of usability. Thankfully the market doesn’t purchase cars purely for the sake of “innovation” or whatever your biased interpretation of that is.
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.
You realize we're actually talking about an Apple Car, right? Not Teslas. You're making points about why you think Teslas are shit, but I merely used them for illustrative purposes. Again, regardless of how much you like your car, it is not seen as "innovative", in large part because it is an ICE vehicle. Quality control, individual components, and decisions about the best way to interface with a car are secondary to that. In fact, you're only helping make the point. The fact that Teslas have a number of clear issues (including a founder many people like to hate) and yet still win the hearts and minds of people as an innovator in the car space speaks volumes.
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.
You’re right that it’s unfair to exceptions, of which there aren’t many in terms of cars on the road. My point was just that the combination of spatial computing + EVs is where an Apple entry starts to make sense.
The "special sauce" for Tesla is in the manufacturing, or as Elon Musk likes to say, "the machine that built the machine." Musk has built a corporate culture that drives innovation and change at breakneck speeds. Seek out a few Joe Justice videos to dive deeper into this.
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?
Modern cars are largely undifferentiated mechanically, whether ICE or EV. Every auto manufacture assembles a car from primarily third-party parts plus a dwindling number of semi-custom assemblies. These are skinned with a look and feel appropriate for the brand. It has never been easier to build an automobile manufacturing company from scratch. You don't have to build much yourself. It is primarily a problem of managing the complex global supply chains. And of course the branding and marketing to penetrate an already saturated market.
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.
How do you come to the conclusion that traditional OEMs are terrible at the sensors, software, and UX?
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.
Agree. "software is eating the world" someone once said a decade ago, and yet most car companies still didn't get the memo. MBux, anyone?!?
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.
I agree with the sibling; I think Apple's attention to UX is going to inform them that physical controls are good on a car, even if physical controls on the front of a phone (a la earlier iPhone models) are unnecessary.
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.
Given Apple's emphasis on UX and UI: 100% across the board. Ask any Tesla Model 3 Owner what they like the least about their cars, and you'll hear a lot of them complain about the touchscreen-only (sorta) interface. There's some levers and thumb wheels, sure, but I abhor my touchscreen-only interface. Love the car. Hate the UI.
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.
This misses the point of the Tesla UI, which is to not be needed. Everything Tesla does is calibrated to minimize interaction with the perfectly functional UI.
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.
As a big Apple user, I think all three are very possible.
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.
Obviously they want 30% of every place the car takes you because you're "their customer" and "their car delivered you". Don't pay the 30%? No problem, the car won't drive customers there.
> I still don't understand what's the game that Apple is trying to play here. Manufacturing a car is completely a different business to small digital devices
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". ?
Apple has enough cash on hand to purchase a major car company outright. I don't think "existing players don't let us in their sandbox" is likely to be a major hurdle.
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).
Generally what happens in things like these is that the existing company would continue function as it is, just there will be a new shiny department which has maximum funding and ability to make decisions.
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.
> “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.”
I've always thought this statement rephrased makes more sense:
"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."
It's the new Apple Pippin. If Apple wants to win at personal transportation game it needs to skip a generation ahead and offer something vastly different than the old car platform loaded with the latest tech packaged in the sleek Apple look.
The current ICE-age (pun intended) Auto OEM dinosaurs are struggling to transition themselves from metal benders, to software innovators.
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.
To be fair, there's still a lot of metal-bending (or carbon fiber forming, which the old dinosaurs learned quickly enough) going on when you make an EV. After all, you're still trying to move two tons of sprung mass over a bumpy surface as smoothly as possible, without any of the thousands of individual parts rattling or letting in water.
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.
Apple already have a global scale mesh network that's used for e.g. AirTags. iPhones are just absolutely everywhere, they have the true internet of things.
I imagine that could be very interesting for self driving technology.
This is already standard in upscale new cars. My 3 year old Subaru SUV has this built in to the Subaru Mobile app. GM OnStar has been doing this for a decade plus.
Apple is big in sub-contracting manufacturing for all there products. And there are thise shops for cars as well, e.g. Magna. And those are really good at that. Same goes forbdesign and development, if you want.
Still surprised Apple is really doing it so, the automotive market is cut throat, mostly low margin. But we will see.
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.
I would assume that they have known Elon Musk is a fraud longer than the general public, and want to position themselves in the market before Tesla inevitably collapses.
if apple starts doing the massive capex investments to try and build an auto manufacturing plant, investors should sue to stop the from taking such an enormous risk.
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.
Perhaps those investors should sell their shares instead.
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.
> 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.
Apple doesn't care at all. Why should they? It's normal to have internal research projects that don't go anywhere. We also don't know almost anything about the project other that it probably exists.
Back in 2018, when Tesla was still worth $55B and Apple had more than $100B in the bank, they could've acquired Tesla in an all cash deal, but for some reason didn't. I think they would've made a great match.
Because Tesla was, is, and will continue to be overvalued as a car company. Why pay the “tech premium” for a manufacturing firm when you already have all of those core competencies in house?
Pffft. They have done over 10 billion net in the past couple years. High ROE. They have a big, durable competitive advantage with their buying process v other companies (just go through the buying process across a number of car types). They have a big competitive advantage in staff capabilities, also in the ability to actually produce software.
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.
But they don’t have all the core competencies in house. I don’t think manufacturing a small, mostly solid state rectangles with maybe one major stress bearing hinge is the same as manufacturing a highly dynamic multi-ton steel machine that is meant to transport people 200,000 miles over a decade or two any more than an aluminum smelting firm could suddenly dominate glass manufacturing if they decided to.
I don’t think it’s really Apple’s MO to outsource product design to any significant extent, though they do use a lot of contract manufacturing, my understanding is that they dictate how a lot of that’s done. Their brand is all about quality and seamless integration between everything, you don’t get that without being involved in every aspect.
They won't outsource design, but they can outsource the engineering needed to make that design safe. Its not like the "boutique car from a consumer electronics" market is saturated, they can take more risks in regards to info leaking.
I agree with you, but Tesla did get things in gear fast enough to ship cars, early. If Apple's car ships in 2028 (and that's optimistic), then they'll be 20 years late to Tesla's party. The early mover advantage is worth something, not what investors value it at but still a hefty sum.
Apple could spin up a joint venture with, say, Rivian or even Ford for 1/10th of that tomorrow.
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.
But isn't the Apple way to combine hardware and software better than anyone else?
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.
Tesla is now moving into making their cars cheaper, with exceptional results. That's leveraging your first mover advantage: compete where others can't, because your manufacturing process is mature.
You don’t have to look any further than the Cybertruck to see evidence that Tesla builds cars it wants to build, not what the market wants. This worked to their advantage when no one else was building an EV but now it’s their biggest liability. They could have captured a highly valuable truck or even light pickup market if they just produced something practical. Instead, they launched something like what you see as a concept at the Detroit Autoshow. It’s an art project, and a vain one at that.
They created a sex symbol which manages to include surprising practicality and insane technology. I've been excited about many concept cars, and now I get to buy one, and I know I'm not alone. It's a halo product, but a good one.
I don't think it's an execution problem: it's a product design problem.
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.
