I’ve been saying for years now that Apple would never build an “Apple Car”. Not that I think that they couldn’t build a great car. They could. The problem is that the automotive industry doesn’t deserve much R&D. Cars are an infrequent purchase, profit is hard to come by, and the basic value proposition of the car hasn’t changed in a hundred years.
Former Apple executive Jean-Louis Gassee had a great note from a different angle in which he seems to come to the same conclusion as I. Apple isn’t building a car anytime soon.
Given the production system’s preeminence, where are the rumors describing Apple’s plans to build a car factory in Marysville, OH, or elsewhere? Have we heard gossip describing contract manufacturing arrangements with a Magna Steyr subsidiary in Canada or Europe?
A car manufacturing plant is hard to hide. No leaks means no plans, no imminent or medium term Apple Car project.
We now turn to the real killer of hopes for an Apple Battery Electric Vehicle (BEV): profit.
Even before the Covid-19 pandemic, automakers had trouble making good money. After a long struggle, Tesla’s operating margin reached 2.3% last quarter. For conventional automakers such as Ford, GM, and VW, 2019 operating profit hovers around 4%. Toyota does much better with 10%…but Apple’s 2019 operating profit was 29.3%. —Jean-Louis Gassee, 5/24/20
Cars are like mechanical watches. They can be flashy and attract lots of attention. But from a technological standpoint, there’s not much there anymore. Cars are old technology, and they don’t deserve a great deal of investment any more. Even the glorified cruise control which is marketed as “self-driving” is just another incremental step forward.
Tesla is the perfect example that illustrates this point. They are the least profitable car company on the planet and they’re relegated to remaining so. You can’t compare gross margins from a wholesaler like GM to a retailer like Tesla.
And Tesla is stuck in a vicious cycle of needlessly spending money to show that they are offering something new. However, their prices are capped by all the competition. Ultimately a car gets you from point A to point B. This is a solved problem, and any number of cars can cheaply provide that. Technically, cars aren’t that different from horse-drawn wagons. They’re simply much faster and more comfortable.
Apple isn’t in the business of squeezing blood out of turnips. They aren’t going to chase old technologies like Tesla and try to justify the existence of yet another entrant. Apple is on the lookout for the next big thing.
Moving people and packages was the miracle of the 1900’s. Moving data and connecting people in new ways is the miracle of the 21st century. If the Coronavirus scare has shown the non-tech world anything it is this.
As the world has relegated itself to a stay-at-home existence, everyone can see the importance of moving information online and connecting people digitally. From band members jamming from their homes, families having big zoom parties, or even churches conducting services over the web. It is moving information, not people, that is changing society and cities.
And just imagine when the next phase in the digital revolution comes online, augmented reality. How much more will inter-personal relations change with work and entertainment? And thus far, only Apple due to it’s integrated hardware and software platforms, seems able to tackle AR.
Due to Apple’s unique position in the tech world, they will be on the forefront of shaping where AR goes and how people will interact with it. Apple will be molding where the future goes.
Apple is right to leave it to Tesla to struggle to keep it’s head above water in a stale industry. Apple is interested in technology that will shape the future, not refining the horse-drawn wagon.
Given the production system’s preeminence, where are the rumors describing Apple’s plans to build a car factory in Marysville, OH, or elsewhere? Have we heard gossip describing contract manufacturing arrangements with a Magna Steyr subsidiary in Canada or Europe?
A car manufacturing plant is hard to hide. No leaks means no plans, no imminent or medium term Apple Car project.
We now turn to the real killer of hopes for an Apple Battery Electric Vehicle (BEV): profit.
Even before the Covid-19 pandemic, automakers had trouble making good money. After a long struggle, Tesla’s operating margin reached 2.3% last quarter. For conventional automakers such as Ford, GM, and VW, 2019 operating profit hovers around 4%. Toyota does much better with 10%…but Apple’s 2019 operating profit was 29.3%. —Jean-Louis Gassee, 5/24/20
Cars are like mechanical watches. They can be flashy and attract lots of attention. But from a technological standpoint, there’s not much there anymore. Cars are old technology, and they don’t deserve a great deal of investment any more. Even the glorified cruise control which is marketed as “self-driving” is just another incremental step forward.
Tesla is the perfect example that illustrates this point. They are the least profitable car company on the planet and they’re relegated to remaining so. You can’t compare gross margins from a wholesaler like GM to a retailer like Tesla.
And Tesla is stuck in a vicious cycle of needlessly spending money to show that they are offering something new. However, their prices are capped by all the competition. Ultimately a car gets you from point A to point B. This is a solved problem, and any number of cars can cheaply provide that. Technically, cars aren’t that different from horse-drawn wagons. They’re simply much faster and more comfortable.
Apple isn’t in the business of squeezing blood out of turnips. They aren’t going to chase old technologies like Tesla and try to justify the existence of yet another entrant. Apple is on the lookout for the next big thing.
Moving people and packages was the miracle of the 1900’s. Moving data and connecting people in new ways is the miracle of the 21st century. If the Coronavirus scare has shown the non-tech world anything it is this.
As the world has relegated itself to a stay-at-home existence, everyone can see the importance of moving information online and connecting people digitally. From band members jamming from their homes, families having big zoom parties, or even churches conducting services over the web. It is moving information, not people, that is changing society and cities.
And just imagine when the next phase in the digital revolution comes online, augmented reality. How much more will inter-personal relations change with work and entertainment? And thus far, only Apple due to it’s integrated hardware and software platforms, seems able to tackle AR.
Due to Apple’s unique position in the tech world, they will be on the forefront of shaping where AR goes and how people will interact with it. Apple will be molding where the future goes.
Apple is right to leave it to Tesla to struggle to keep it’s head above water in a stale industry. Apple is interested in technology that will shape the future, not refining the horse-drawn wagon.
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