I have a hard time believing that Apple will ever ship an “Apple Car”, Project Titan not withstanding. I don’t doubt that they’re working on a car or something automotive related, but in the end Apple will conclude that shipping an Apple branded car is not the business for them.
Every time people get wind of a potential new technology, they always skip to 10 years down the road and start talking about grand social change. Everyone was expecting artificial intelligence when Siri was introduced. We got basic voice command. Everyone was expecting an Apple-branded TV set that would revolutionize media. We got a set-top box that does basic functions and works with all televisions. Now people with no experience in automotive are throwing around potential goals of Apple changing the automotive world as if it were as easy as launching the Apple Watch.
I’ve worked in the automotive industry, and I’ve seen the sheer size of the apparatus required to manufacture automobiles. It will boggle your mind. To give you an example of how many people are involved, the company that I worked at was a supplier of automotive sensors and accelerator pedals with about 2000 employees. Over 2000 people who worked on a few select parts of an automobile. Entire cities in Michigan where I grew up revolved around automotive manufacturing with dozens of companies that produced seats, plastic trim parts, bumpers, etc. The rumored 600 people that Apple has working on an automobile seems like a drop in the bucket.
Granted, if Apple was to make their own car, they wouldn’t be manufacturing everything themselves; they’d partner with others. They actually don’t even manufacture their iPhones. But designing a product still requires a huge time investment from the parent company. I know because we always had engineers from Honda, Toyota, and Ford walking our halls.
Did you know that part of what makes the seat in your car comfortable is how well it can dissipate heat? Automotive companies employ interior engineers who do nothing but measure heat dissipation and weight distribution of the human body on proposed seat designs. Auto companies will also team up with tire companies to design tires for their vehicles that use the latest compounds to improve fuel mileage, enhance handling, and reduce noise.
I bring these two examples up because automotive manufacturing is full of the mundane. Everyone gets caught up in the sexy stuff like how the car looks or how quick it’ll run 0-60, but meanwhile there are 2000 people working on creating a cheaper mass air flow sensor or gas pedals that won’t get caught under your floor mats.
I just have a hard time believing that Apple wants to hire people to design a heating and cooling system or better car seats. Even if the car was electric, there are still a myriad of items that need a lot of attention. Just look at Tesla struggling with basic quality control of door tolerances, buggy software, even carpet installation.
As new vehicles become more technology-laden to provide entertainment and communications, the automotive companies find themselves in a situation converse to Apple’s. Automotive engineers working on a music interface are like Apple engineers designing seat cushions. Something they’d rather not be doing.
As the automotive customer’s expectations for what the in-car entertainment center should be rises, auto companies are getting pulled into an area they may not want to be. In the past, auto companies could stick a basic modular radio in the vehicle and call it a day. But times have changed. The Apple Watch has more power and capability than the average car stereo, and something about that seems off.
If you think about the principle of expanding into complementary businesses, I could see Apple becoming a top tier automotive supplier. There would be much overlap in the capital spending required to build and design Apple TVs, iPhones, and Macs and some kind of new hardware that you would sell to GM. Don’t forget that software coding is capitalized. This isn’t just about processors and circuit boards. All the time and effort into making software fluid and secure cost a lot of money. That money is capitalized and allocated back to the hardware devices as they’re sold.
And on the flip side, the auto companies don’t necessarily have the cost structure to invest into entertainment centers and software interfaces. They could. However, they are going to be at a cost disadvantage compared to a company like Apple. Apple can spread their capitalization costs amongst hundreds of millions of similar products. Someone like Honda has just over 3 million vehicles a year globally to spread their costs over. That's a tiny fraction compared to Apple’s volume.
Even if Honda wanted to make a huge financial commitment to being self-sufficient and decided to create “Honda OS” as a platform for the future, who would they hire? The best people are heading to Silicon Valley, and there’s already a vicious bidding war for the current talent without the Fords and Toyotas getting in on the action.
There’s also the issue of Apple competing with other automakers. This is the same delicate situation that Microsoft has had to deal with for decades with their PC manufacturers. If Apple ever wants CarPlay to take off, it seems like offering an Apple Car would effectively kill any hope of that ever happening.
Speaking of CarPlay, this seems to be the one fly in the ointment for my assessment of Apple’s direction. If Apple was about to get serious about automotive partnerships, I would have expected a much more robust CarPlay by now. To be honest, I’ve never used it, so I could be speaking out of turn here, but I haven’t heard much praise for Apple’s first foray into automotive technology. But if Apple was about to get serious about cars, I would have expected CarPlay to be a higher priority than it appears to be now.
Based on what I’ve seen in my time in the automotive industry, there won’t be full fledged Apple cars in 2020. Maybe down the road. It would make a lot more sense for Apple to consider branching out into their own car after exploring automotive partnerships for a few years to get their feet wet. But an all-aluminum car with glass wheels and a glowing Apple logo on the hood? Not happening.
I’ve worked in the automotive industry, and I’ve seen the sheer size of the apparatus required to manufacture automobiles. It will boggle your mind. To give you an example of how many people are involved, the company that I worked at was a supplier of automotive sensors and accelerator pedals with about 2000 employees. Over 2000 people who worked on a few select parts of an automobile. Entire cities in Michigan where I grew up revolved around automotive manufacturing with dozens of companies that produced seats, plastic trim parts, bumpers, etc. The rumored 600 people that Apple has working on an automobile seems like a drop in the bucket.
Granted, if Apple was to make their own car, they wouldn’t be manufacturing everything themselves; they’d partner with others. They actually don’t even manufacture their iPhones. But designing a product still requires a huge time investment from the parent company. I know because we always had engineers from Honda, Toyota, and Ford walking our halls.
Did you know that part of what makes the seat in your car comfortable is how well it can dissipate heat? Automotive companies employ interior engineers who do nothing but measure heat dissipation and weight distribution of the human body on proposed seat designs. Auto companies will also team up with tire companies to design tires for their vehicles that use the latest compounds to improve fuel mileage, enhance handling, and reduce noise.
I bring these two examples up because automotive manufacturing is full of the mundane. Everyone gets caught up in the sexy stuff like how the car looks or how quick it’ll run 0-60, but meanwhile there are 2000 people working on creating a cheaper mass air flow sensor or gas pedals that won’t get caught under your floor mats.
I just have a hard time believing that Apple wants to hire people to design a heating and cooling system or better car seats. Even if the car was electric, there are still a myriad of items that need a lot of attention. Just look at Tesla struggling with basic quality control of door tolerances, buggy software, even carpet installation.
As new vehicles become more technology-laden to provide entertainment and communications, the automotive companies find themselves in a situation converse to Apple’s. Automotive engineers working on a music interface are like Apple engineers designing seat cushions. Something they’d rather not be doing.
As the automotive customer’s expectations for what the in-car entertainment center should be rises, auto companies are getting pulled into an area they may not want to be. In the past, auto companies could stick a basic modular radio in the vehicle and call it a day. But times have changed. The Apple Watch has more power and capability than the average car stereo, and something about that seems off.
If you think about the principle of expanding into complementary businesses, I could see Apple becoming a top tier automotive supplier. There would be much overlap in the capital spending required to build and design Apple TVs, iPhones, and Macs and some kind of new hardware that you would sell to GM. Don’t forget that software coding is capitalized. This isn’t just about processors and circuit boards. All the time and effort into making software fluid and secure cost a lot of money. That money is capitalized and allocated back to the hardware devices as they’re sold.
And on the flip side, the auto companies don’t necessarily have the cost structure to invest into entertainment centers and software interfaces. They could. However, they are going to be at a cost disadvantage compared to a company like Apple. Apple can spread their capitalization costs amongst hundreds of millions of similar products. Someone like Honda has just over 3 million vehicles a year globally to spread their costs over. That's a tiny fraction compared to Apple’s volume.
Even if Honda wanted to make a huge financial commitment to being self-sufficient and decided to create “Honda OS” as a platform for the future, who would they hire? The best people are heading to Silicon Valley, and there’s already a vicious bidding war for the current talent without the Fords and Toyotas getting in on the action.
There’s also the issue of Apple competing with other automakers. This is the same delicate situation that Microsoft has had to deal with for decades with their PC manufacturers. If Apple ever wants CarPlay to take off, it seems like offering an Apple Car would effectively kill any hope of that ever happening.
Speaking of CarPlay, this seems to be the one fly in the ointment for my assessment of Apple’s direction. If Apple was about to get serious about automotive partnerships, I would have expected a much more robust CarPlay by now. To be honest, I’ve never used it, so I could be speaking out of turn here, but I haven’t heard much praise for Apple’s first foray into automotive technology. But if Apple was about to get serious about cars, I would have expected CarPlay to be a higher priority than it appears to be now.
Based on what I’ve seen in my time in the automotive industry, there won’t be full fledged Apple cars in 2020. Maybe down the road. It would make a lot more sense for Apple to consider branching out into their own car after exploring automotive partnerships for a few years to get their feet wet. But an all-aluminum car with glass wheels and a glowing Apple logo on the hood? Not happening.
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