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  • Do You Really Want to Drive an Apple Car?

    February 18th, 2015

    Recently I spent several hours fiddling with the audio settings on my Kia’s sound system, such as it is. I’ve had a lot of cars over the years, cheap, mid-priced and expensive, and never had the audio hardware that just worked without some manual labor to fix the tonal balance. Not once. The default settings were usually at the extremes of what I can tolerate. Car audio is notorious for boomy bass, and sizzling highs. Impressive in the showroom, but not so impressive when you have to live with those systems day in and day out.

    Maybe it needs an Apple solution, but why just the audio system?

    So there are reports that Apple is making a huge push into getting more involved in the auto industry. A Wall Street Journal report mentions several hundred engineers being involved in an Apple project that’s code-named “Titan,” which may be working on an electric car, shades of Tesla. There are even reports that Apple and Tesla are busy plucking employees from one another, although there’s a natural affinity in a few areas, such as advancing battery and infotainment system technology.

    With $180 billion on hand in banks and investments, it’s not that Apple doesn’t have the cash to create a new car. Typically it costs an auto maker $1 billion to design a new vehicle and bring it to production, although many of the components may be lifted from other models. But they also have the factories and supply chain sourcing to turn the concept into a finished product. Apple certainly has the contract manufacturing resources to build Macs, iPhones and iPads, among other things, but not an entire motor vehicle. At least not yet.

    One auto magazine, which I shall not name, suggested Apple didn’t have the engineering expertise to understand how to make the 10,000 working parts of a new car operate properly together. Other than Tesla, and there are still question marks about its long-term prospects, there hasn’t been a successful new car maker in years. It’s mostly about mergers and acquisitions, and building new versions of existing cars at various price points. So we have a fancy Toyota becoming a Lexus, or a fancy Honda becoming an Acura. It’s as much about repackaging and extending existing hardware platforms as creating new brands.

    Sure, they said Apple didn’t have to expertise to build a smartphone several hundred million units ago. But that’s nowhere near as complex as selling a product that, today, has an average transaction price of $31,252. It’s not that Apple couldn’t do it, but the betting is that it would take years to accomplish.

    Even if Apple were to build a new car, there’d be the matter of setting up production lines, or paying contract manufacturers to handle the chores at the start, and establishing showrooms. It couldn’t just be an expanded version of Apple Store, but a new concept in auto retailing. Apple doesn’t take the sales experience casually, and the usual car buying experience, involving endless haggling and time-wasting nonsense that takes you through several steps from sales to finance, is downright unpleasant for most of you. It is for me.

    Again, Apple could surely build the best car on the planet, though you wonder how much it’ll cost to design, and overhaul the manufacturing, purchasing and service experience. There’s more than enough cash to fund such a project, and Apple does think long-term, so taking such a venture from concept to fruition wouldn’t try their patience.

    But I don’t see why they need to go there. As with TVs, the auto industry is a cutthroat business, and profit margins are far lower than iPhones, iPads and Macs. Is all that pain worth the gain?

    One other possibility is that Apple isn’t so much going after the motor vehicle as the motor vehicle’s dashboard, the brains. If the entire driving experience, from ignition to navigating to a vacation spot in another state, could be controlled via an Apple designed interface, that might have a sizable impact on the industry. Apple has already taken the first steps with CarPlay, which is essentially AirPlay for autos, since it lets you dock your iPhone with your car, which allows it to become the face of the infotainment system.

    There have also been periodic rumors about Apple buying Tesla. Technology synergies might seem logical, with Apple gaining control over the Tesla’s sophisticated computer systems to control the entire driving experience. As the company prepares to build reasonably affordable models, such a merger might seem sensible.

    It would certainly shortcut the process of entering the car market by a number of years, assuming Apple wanted to go in that direction.

    As of the time I wrote this article, Tesla’s market cap was roughly $25 billion. Assuming Apple paid twice that, $50 billion, for this transaction, it would consume a sizable portion of those cash reserves, but Apple would still have $130 billion left.

    The question, of course, is why would they bother? What changes would Apple have to make, if any, to make the Tesla conform to their vision of the ideal car? It’s not that Apple doesn’t buy other companies, though it’s mostly for technology, with Beats being a rare exception. But a car company is something else entirely, and I’m not altogether convince this is a sensible direction for Apple.

    It may well be that Apple is planning on building some car prototypes with which to test dashboard-related technologies. That might be the true source of those rumors. At the end of the day, a new car design could emerge from this rumored project, but I wouldn’t bet the farm on such a prospect.



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    3 Responses to “Do You Really Want to Drive an Apple Car?”

    1. Yacko says:

      “One auto magazine, which I shall not name, suggested Apple didn’t have the engineering expertise to understand how to make the 10,000 working parts of a new car…”

      I think Apple is more likely to ask the question as to why there are 10000+ parts necessary to make a car. If we are heading to an all-electric, self-driving future with a limited number of models and styling, then Apple could certainly have the strong design sense of simplification, which is the company mantra. Whether this extends to only the lower voltage electronics or to the whole vehicle, it will take years before we know. There are only three consumer-only areas, your personal web of things, that Apple needs to address now and in the future. Your body and its wearables/luggables, your car and your home. Would you trust a bunch of various competing and barely compatible companies or one company that provides the homogenous infrastructure with other smaller entities piggybacking on it?

    2. John says:

      For the moment this is all fun and speculation. We have no idea what Apple is really doing.

      My guess is that they will not make just another car. They did not make just another MP3 player, phone, tablet, watch so why just a slightly better car?

      I think they will go off in a totally new direction. For example, they could sell just to fleet operators, not to individuals. No need for warranty, dealers, marketing, etc. The interior of the car could be configurable. Maybe there would be no model years. If the electric motors or brakes or whatever become old then update them, like getting new tires.

      If the car were modular Apple could contract out the manufacture of each part to the best vendor rather than building all the parts themselves.

      If the vehicles are owned by the fleet then there are new possibilities. With an electric, self driving car the car would return to the depot when it needed charging. Here the batteries could be swapped out in minutes so the car would be back on the road quickly. This would open the door to using things like aluminum/air batteries. These are reloadable but not rechargeable. Not suitable for individuals but fine for a fleet. Some vehicles would be configured for luxury and comfort, others for economy.

      You could summon a car with Siri and pay with Apple pay. Apple might still get a slice of the payment. Instead of a rental car you would just summon a self driving car when you needed it. As long as you were within some defined, metropolitan area that would be great. No parking fees. No fussing with directions. You could sit in comfort, sip your cappuccino and get some work done while the car takes care of traffic.

      It is hard to imagine how this would play out. We do a lot of things with cars now because of the possibilities they afford. If the cars behave differently that will change our behavior.

    3. dfs says:

      The idea of Apple going into the car business is a hoot (one fantasy sketch of the kind of car Apple might make circulating on the Web looks suspiciously like the chassis of a Morgan Three-Wheeler with a “futuristic” pod-like body sitting on it which looks more suitable for carrying Lady GaGa around than anything else). What might not be so crazy is the idea of Apple partnering with one or more mfrs. to supply the onboard electronics. At the moment I have a car play head unit to handle CarPlay installed in a car with its own onboard computer. The two of course don’t talk at all. Imagine an integration of the two so that I could tell Siri to turn on the headlights, or Siri couid tell me that my oil is running low. Or, digging a little deeper, that I could tell Siri to adjust the shift points for my transmission or make the my suspension a little harder.

      There’s a problem here. My car puts up warnings if it thinks my tire pressure is too high or too low. I’m not able to negotiate this with my car: if I put on a set of aftermarket tires that take a different pressure than my original factory ones, I have to go into the dealership to have even this most minor of adjustments made in my computer. Which is exactly what Detroit wants. They see a totally closed computer as a way to make me show up at that dealership and maximize their profit. Probably it’s very hard for a non-franchised mechanic to get his hands on the proper diagnostic electronics too, for the same reason. Detroit wants to keep me tied to their dealerships and keep me away from the competition, and sees their model of closed computing as a way of achieving this.

      Which is the exact opposite of the goal of personal computing (pursued by Apple and also — sorry have to say this, Gene — by Microsoft, which is to empower the individual user. It wouldn’t be easy, might even be impossible, to wean Detroit away from its own philosophy. The major mfrs. might even see the personal computing model as a threat. I can scarcely imagine how Apple could budge them away from their entrenched mode of thinking.

      Tesla just might be another story. The idea of Apple somehow partnering with Tesla, maybe even buying a chunk of the company, is intriguing.

      In any event, I strongly suspect that that Dodge minivan that has been spotted driving arouind the San Francisco area is simply a vehicle bought off some lot and converted into a testbed for prototype electronics that Apple might or might not put into production. It doesn’t tell us anything very substantial about Apple’s future plans.

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