VW chief 'not afraid' of 'Apple Car' entering the market
Apple's entry into the electric vehicle market with the rumored "Apple Car" won't be a problem for VW, its CEO claims, with the well-established car producer "not afraid" of what the Cupertino tech giant can bring to the auto industry.
Apple has long been rumored to have a self-driving electric car in development, and recent reports claim Apple is looking to make it a reality by partnering with an existing car producer. In spite of Apple's size and potential innovation it can introduce to the sector, VW chief executive Herbert Diess doesn't believe Apple will pose a risk to the car producer.
"The car industry is not a typical tech-sector that you could take over at a single stroke," Deiss told Frankfurter Allgemeine Sonntagzeitung in an interview picked up by Reuters. "Apple will not manage that overnight."
While many rumors have hinted at the different ways the "Apple Car" could differentiate itself from other vehicles, Apple has so far been characteristically tight-lipped about its intentions. Still, Deiss believes the car is on the way, as it is a "logical" progression for Apple to take.
This includes its extensive experience in batteries and power management, software, and hardware design that it can draw on for the vehicle. It also has a considerable amount of resources and a hefty war chest to put the car into production in the future.
Even knowing this, Deiss is unrepentant. "Still, we are not afraid," the chief declared.
Though undaunted by Apple, Deiss previously offered comments welcoming firms like Apple that could disrupt the auto industry. In December, he said "We look forward to new competitors who will certainly accelerate the transformation of our industry and bring in new skills."
At the time, Deiss referred to Apple's "incredible valuation and thus the virtually unlimited access to resources," which "instills a lot of respect in us."
Though his stance is defiant in Apple's potential entry into the car market, VW is still a potential partner for Apple to work with on the car, according to a note to investors at Wedbush. VW was alongside Hyundai as the top two choices of automaker for Apple, but it is also reportedly looking into other avenues as well.
VW has also been linked to PAIL, the Palo Alto to Infinite Loop pilot program for ferrying Apple employees between offices. The project allegedly intended to use Volkswagen's T6 Transporter vans, modified to run on electric instead of gas and to use Apple's self-driving system.
Apple has long been rumored to have a self-driving electric car in development, and recent reports claim Apple is looking to make it a reality by partnering with an existing car producer. In spite of Apple's size and potential innovation it can introduce to the sector, VW chief executive Herbert Diess doesn't believe Apple will pose a risk to the car producer.
"The car industry is not a typical tech-sector that you could take over at a single stroke," Deiss told Frankfurter Allgemeine Sonntagzeitung in an interview picked up by Reuters. "Apple will not manage that overnight."
While many rumors have hinted at the different ways the "Apple Car" could differentiate itself from other vehicles, Apple has so far been characteristically tight-lipped about its intentions. Still, Deiss believes the car is on the way, as it is a "logical" progression for Apple to take.
This includes its extensive experience in batteries and power management, software, and hardware design that it can draw on for the vehicle. It also has a considerable amount of resources and a hefty war chest to put the car into production in the future.
Even knowing this, Deiss is unrepentant. "Still, we are not afraid," the chief declared.
Though undaunted by Apple, Deiss previously offered comments welcoming firms like Apple that could disrupt the auto industry. In December, he said "We look forward to new competitors who will certainly accelerate the transformation of our industry and bring in new skills."
At the time, Deiss referred to Apple's "incredible valuation and thus the virtually unlimited access to resources," which "instills a lot of respect in us."
Though his stance is defiant in Apple's potential entry into the car market, VW is still a potential partner for Apple to work with on the car, according to a note to investors at Wedbush. VW was alongside Hyundai as the top two choices of automaker for Apple, but it is also reportedly looking into other avenues as well.
VW has also been linked to PAIL, the Palo Alto to Infinite Loop pilot program for ferrying Apple employees between offices. The project allegedly intended to use Volkswagen's T6 Transporter vans, modified to run on electric instead of gas and to use Apple's self-driving system.
Comments
Just imagine, VW could bring out an OS system, which work for VW, Audi, Skoda and other subsidiaries like Apple is doing with iPhone, iPad, Mac, watch etc.
This network effect will bring VW to the No. 1.
If you sell your VW and buy Audi, your data still exists and you do not have to start from zero because their OS system work for all subsidiaries.
In this case, Apple must speed up to make a common agreement with any other OEMs or Magna.
Apple has no time and time is ticking.
The automotive area is the most conservative sector, where you will never see another Foxconn.
Apple will have a difficulty to finde one car maker, who is willing to make cars for Apple. I highly doubt it.
However, the strategy of OEMs would be to reject Apple as long as Apple gives up.
If they are not willing to make Apple cars, Apple would be out of the competition by assuming that Apple will not buy an OEM.
As I said, time is running and ticking at the moment. The time is against Apple.
I currently work in the automotive area and I cannot imagine that Apple will find one OEM, which is willing to make cars for Apple.
The automotive market is a completely different animal and there will be no next Foxconn.
I am excited to get some "official" news in the future how Apple would handle this challenge.
Oh wait. He would know what he is talking about.
VW Group is one of the three largest auto manufacturing groups in the world, and will ship near 10 million vehicles this year. VW Group has made a very fast correction in their market to BEV, from diesel vehicles, and have the ability to match and exceed Tesla unit sales this year. That isn't what happened with Nokia or Blackberry in the smartphone market.
Apple has a chance for disruption in mobility, changing the focus of private ownership of cars to public use, and of autonomous vehicles. Pretty much what Waymo is doing, but with 1.6 B existing Apple users for those same vehicles and services.
Also, please note that the only thing that you are able to do this with is the iPhone (even though it is FALSE). Why? Because Apple hasn't allegedly driven anyone out of business with anything else.
PCs? Dell, HP, Lenovo, Acer and Asus are still around. Had record years last year.
Smartwatches? Samsung, Garmin, FitBit and Fossil are still around.
Headphones? Sony, Bose, Samsung, JBL etc. still doing great despite competition from AirPods AND Beats.booksApple TV? Roku, Fire TV and - when smart TVs are included - Android TV crush it in market share.
Apple TV+? Has fewer free signups in a year than Disney+ gets PAID signups in a month.
Apple Arcade? Even if you argue that Stadia is a failure - due to Google being Google - Nvidia GeForce now is doing good and xCloud is doing great.
iPad? Samsung sells more of them a year than Apple sells Macs. Despite claims otherwise, Apple has only 35% of the tablet market, and that doesn't even count 2-in-1 Chromebooks - which also outsold MacBooks last year - that people buy to use as tablets.
There has never been any evidence of Apple driving anyone out of markets because - apart from smartwatches - Apple never gets anywhere near the market share required to. Again, even with the iPhone, it was ANDROID that got the market share that drove everyone else out of business. Nokia had a 30% market share as late as 2010! But in 2011 when Samsung introduced the Galaxy Note - the device that the iPhone and all other modern smartphones copied - and the LeBron James ad campaign shortly after, it was all over.
1. Apple wants someone with real expertise to help them build a cutting edge car using difficult to get or even custom made components. White box car manufacturers make generic automobiles using standard parts.
2. Apple wants to pay their "car partners" the same that they pay their electronics partners: barely enough for them to eke out a profit even under the most ideal circumstances. As I mentioned earlier, that would be fine for Toyota, Kia and the rest if they were allowed to benefit from Apple's technology or marketing: if they could take things from the Apple Car and to use in their own vehicles to compete not so much against Apple but Ford, GM etc. But Apple won't allow that.
Apple could find a partner tomorrow if they were willing to either pay more money or share their tech. Otherwise, Apple's only takers will be desperate entities looking for any ray of hope to avoid going out of business. While such entities exist similar to 1. they would be unable to help Apple build the sort of car they want to make anyway.
At this rate you should wonder if Apple's best bet wouldn't be to just buy Tesla. The antitrust types shouldn't care: Tesla doesn't sell very many cars and have never turned a profit on automobile sales alone. They can just buy Tesla while leaving SpaceX, the battery stuff, the hyperloop idea and all of the other moonshot ventures with Musk.
1. It would be collusion, which is very illegal.
2. They wouldn't boycott Apple just to maintain their existing customers. They would avoid a business relationship that would provide all the benefits to Apple while practically none to the OEMs.
I will state it again: the car industry is not the electronics industry. While the electronics manufacturing industry has shifted almost entirely to Asia, automobile companies still make most of their cars in their country of origin. That means profit margins, supply chains, economics, labor union issues, environmental regulation issues, local politics and even nationalism/national pride are totally different for the automobile industry than they are for the electronics one. Where it is easy to find a ton of foreign partners willing to put up with Apple's treatment in electronics - which often are only possible because the workers get very low wages AND the foreign partners get significant government subsidies - that doesn't happen in automotives. The only way to get automobile companies on board is to give them money. Lots of it.
Another thing: electronics companies are able to operate on low margins to make it up on volume. Remember: this was literally Apple's "defense" against Qualcomm ... we sell 200 million iPhones a year so you should be making plenty of money off us no matter what licensing rate we choose to pay you. Would even 1 million Apple Cars sell a year? Not every car company killing it ... that is all the more reason to avoid arrangements where you have to expend a ton of resources and effort in return for peanuts. As for contract manufacturers ... the issue is that none of them have the expertise required to help build an automonous electric car that is totally reliant on Apple hardware, software and services. You need to have SOME background in AVs, EVs and smart car platforms, including but not limited to some of your own products or patents in the area. Otherwise, Apple would wind up having to R&D, license and build everything from scratch, which would delay things by years and cost a ton of money. Apple was able to take the core of what they accomplished with the iPhone and reuse it for the iPad, Apple TV, Apple Watch and M1 Mac. Imagine how much time and money it would have taken if they had to do all those products separately.
Apple will eventually get this done but only when they realize that it is only going to happen when they come around to the carmakers' terms. Of course, when it happens they will spin it as "carmaker X knew that it was either get behind or get left behind" ... and you guys will believe that spin as always (and because the terms will be kept secret).
The core features of cars are well established and fully covered by all manufacturers.
Anything Apple or anyone else can bring to market will sit above the core functionality. As you move into the self driving capacity, certification will be required and that (in time) will also become a core feature but anyone with certification will also have exactly the same baseline capacity.
The differentiation will be in line with what we have now. More features (but non-core) and at a higher price. The higher the price, the smaller the potential market.
The article mentions extensive experience in batteries and power management but I haven't seen much evidence of this, much less in the car realm. I can say there are plenty of car manufacturers already shipping battery and power management systems and they aren't sitting still either. Then there are specialist battery makers also developing and bringing new technologies to market.
As a new entrant to the car market Apple would have a ton of inconvenients to overcome. They can cut out a niche but in the current market the big players (there are a lot of them too) will hold all the cards.
If Apple were to try a different business model that might be different but it would still have an uphill struggle ahead of it.
The real threat to VW is that consumers will stop buying automobiles entirely.
1. If Apple is successful, in some measure, at making cars, will Google join the party and follow-up with their own car? (Maybe calling it "Andrive"?)
2. Would Apple need to create some sort of third party service network, or would it set up its own service shops? Service is important and expensive/profitable.
3. Would Apple be able to sell its cars in its existing Apple stores? Or online? Even Tesla has faced many legal challenges selling online since most US states have strict laws that cars must be sold through dealerships and not directly to customers. Tesla is still engaged in legal battles trying to get free speech laws to overturn local economic laws which promote local sales retailers. It's not clear Tesla will win.
4. Will Apple manufacture its cars before they are ordered, like most auto manufacturers do, or will they only manufacture after a customer orders one? Will customers tolerate a 30-day delivery for Apple cars? (Tesla builds your car after your order arrives, and it usually takes 6 weeks to get your car. But Tesla has a generous return policy if you don't like it. Will Apple have a generous return policy?)
For those who don't know, Samsung tried and failed in the 1990s to make a business of manufacturing cars. Their slogan was "Discover the Difference." They sold 81% of their company to Renault in 2000, although Samsung still has a 19% stake in it, so technically Samsung is still making cars. Here's an actual photo of one of the Samsung branded cars from 1999. The logo is an oval with a small outward notch at the top and bottom, making it look a little bit like a hurricane. You can still buy the cars made by this company, with this logo, although the underlying tech appears to be 100% Renault now. Some of these cars are still sold in Korea and are still branded as "Renault Samsung". https://www.koreatimes.co.kr/www/tech/2021/01/419_299895.html <--
Three car companies are introducing level 3 cars in 2021: Daimler, Honda, & BMW. Note that Tesla isn't even listed there.
Each of the six levels (five if you don't count level zero) is useful. I think it starts to get fairly helpful at level 3, where you could probably read a book while driving, but level 4 and up is required if you want to be able to be in the back seat while driving.
In 2019 Tesla promised that they would have level 5 autonomy by the end of 2019. But they still aren't at level 3. I wish someone would hold Musk responsible for breaking this promise.