By the year 3000s, electric cars and VR spectacles will be the norm. Just like how we got out of the horse carriage to gas fueled cars. I do think electric cars need a third party assistances for it to be reliably autonomous. LiDAR and camera alone just don't cut it. Something else is needed to be in place and it has to be something economical and easily implemented. I have to give Elon credits for getting us this far. Especially his Space X that puts U.S. back to #1 spot in space program. "The Men Who Built America" documentary should include him and Steve Jobs.
100% against Apple becoming a carmaker. History suggests that virtually ALL carmakers in America fail sooner or later, usually sooner (There are literally hundreds of dead American automakers, some really really great, like Auburn, Cord, Duesenberg, Packard, Studebaker, Nash, American Motors to name just a few). Sure, there are exceptions, but the investment required to pull off a successful launch and sustain sales is in the tens of billions of dollars, possibly hundreds. I've been a fan of Apple, a former Apple professional employee, and an Apple-driven entrepeneur. But this venture is, IMHO, an enormous mistake.
Apple should continue to focus like a laser beam on core competencies in hardware, software and services, and ignore the siren call of diworseification (apologies to Peter Lynch). Leverage what you do right for maxmimum growth, rather than a futile effort to grow through acquisition.
What's important is why they went out of business, not that they went out of business. A lot of companies are like PC box and Android phone companies where they buy the parts and just assemble them. They have very little USP. If you don't have good design, marketing, ecosystem, support, then you are competing on price and margins, which will inevitably lose the more that people can afford the products from companies that do have all those things. Apple's used products are more appealing than brand new products from low margin companies.
Most of the car companies were also making combustion engine vehicles. If Apple was making a combustion engine vehicle, they'd likely need to get an expensive engine from a 3rd party and setup a network of maintenance shops. Electric engines change the whole game.
Apple also has hundreds of billions of dollars. Investing $100b would allow them to build over 1m vehicles.
I agree that most (actually ALL) of those failed car companies were making ICE engines. Since aside from the Stanley Steamer, that was the tech in those times. BUT:
Your analysis, assuming that Apple could build a car company from the ground up and manufacture "over 1 million vehicles" for $100 billion is serioiusly flawed. Investing $100 billion would allow them to break ground on an assembly plant, hire executives and workers, pay for infrastructure, and build about 10 prototypes for reviewers. Apple cannot use those cash reserves without paying income taxes on the proceeds, so 25% would be gone before the first shovelful of dirt was moved. Instead they would go to banks to get loans based on that money as collateral (as all big companies do) and then pay interest on it.
And have you considered how large the market for "under $100,000" (meaning $99,999.99) vehicles actually is? I live in Chicago, and I can tell you I see about 2-3 of them a day. Out of thousands. Would you spend that much on a car? Not me. Not even for an Apple car. If Apple is determined to enter this sector, a wiser plan would be to acquire an existing EV automaker (Lordstown, Rivian or Fisker could be bought for pennies on the dollar they spent in their buildouts) and put their unique stamp on the product. Polestar makes some of the very best EVs, and buying it from Volvo/Geely might be a possibility, if a remote one.
Remind me: how many factories does Apple own and operate that make computers and iPhones?
A person living in Chicago could see nothing but $100,000 cars all day long depending where they live. I'm pretty sure the economics of EVs is a tad more complicated. Apple made $14,000 watches too. Wonder where those are these days?
I really don't know what the future holds for this kind of tech; I'm dubious that Apple can be involved in making a car at a profit.
100% against Apple becoming a carmaker. History suggests that virtually ALL carmakers in America fail sooner or later, usually sooner (There are literally hundreds of dead American automakers, some really really great, like Auburn, Cord, Duesenberg, Packard, Studebaker, Nash, American Motors to name just a few). Sure, there are exceptions, but the investment required to pull off a successful launch and sustain sales is in the tens of billions of dollars, possibly hundreds. I've been a fan of Apple, a former Apple professional employee, and an Apple-driven entrepeneur. But this venture is, IMHO, an enormous mistake.
Apple should continue to focus like a laser beam on core competencies in hardware, software and services, and ignore the siren call of diworseification (apologies to Peter Lynch). Leverage what you do right for maxmimum growth, rather than a futile effort to grow through acquisition.
What's important is why they went out of business, not that they went out of business. A lot of companies are like PC box and Android phone companies where they buy the parts and just assemble them. They have very little USP. If you don't have good design, marketing, ecosystem, support, then you are competing on price and margins, which will inevitably lose the more that people can afford the products from companies that do have all those things. Apple's used products are more appealing than brand new products from low margin companies.
Most of the car companies were also making combustion engine vehicles. If Apple was making a combustion engine vehicle, they'd likely need to get an expensive engine from a 3rd party and setup a network of maintenance shops. Electric engines change the whole game.
Apple also has hundreds of billions of dollars. Investing $100b would allow them to build over 1m vehicles.
I agree that most (actually ALL) of those failed car companies were making ICE engines. Since aside from the Stanley Steamer, that was the tech in those times. BUT:
Your analysis, assuming that Apple could build a car company from the ground up and manufacture "over 1 million vehicles" for $100 billion is serioiusly flawed. Investing $100 billion would allow them to break ground on an assembly plant, hire executives and workers, pay for infrastructure, and build about 10 prototypes for reviewers. Apple cannot use those cash reserves without paying income taxes on the proceeds, so 25% would be gone before the first shovelful of dirt was moved. Instead they would go to banks to get loans based on that money as collateral (as all big companies do) and then pay interest on it.
And have you considered how large the market for "under $100,000" (meaning $99,999.99) vehicles actually is? I live in Chicago, and I can tell you I see about 2-3 of them a day. Out of thousands. Would you spend that much on a car? Not me. Not even for an Apple car. If Apple is determined to enter this sector, a wiser plan would be to acquire an existing EV automaker (Lordstown, Rivian or Fisker could be bought for pennies on the dollar they spent in their buildouts) and put their unique stamp on the product. Polestar makes some of the very best EVs, and buying it from Volvo/Geely might be a possibility, if a remote one.
These numbers being talked about are crazy, from the both of you.
100b investment allowing Apple to build 1 million $100k vehicles? Uh, If they actually sell 1 million vehicles at 100k, that's 100b dollars in revenue! That's doesn't make sense. So, obviously, the money from sales of cars is reinvested to make more cars. The initial investment is going to be 1b to 10b for the first 1000s to low 10000s of cars. If they are successful, the business enters a virtuous cycle of revenue from sales sustaining the business, with perhaps occasional funding rounds for capital investments, especially if they can't attain a profit margin per car after a few tens of thousands of cars sold.
Something like 1b will allow a company to hire a team, build 10 prototypes, set up a supply chain, and get a start on manufacturing. Probably will need 5b to 10b to get plants to output 100k+ cars per year. Just look at the budgets and funding rounds from Tesla, Rivian, Lucid. FOXCONN even got Lordstown Motors across the finish line and they are shipping their EV trucks now. A trickle, but I don't think they have spent more that 1b so far. All these new car companies spend about 1b to 10b for their first 10k+ cars.
Apple has probably spent 5b over the last 7 years on the car project if rumors are true. Something like a 1b per year run rate. They have nothing to show for it. Perhaps it was a figurative vehicle to keep Jony Ive happy and at the company, but given the history so far, it's been one of Cook's poorer decisions. He should have shown Jony the door in 2015 after Jony lost the Watch fight, and found it less fulfilling to work on computers.
An interesting bit of minutia. I tracked Apple's Wearables revenue and Tesla revenue for awhile from about 2015 to 2018. During that time period, Apple's wearables category had as much revenue as Tesla. So, that's either a message about Apple's size or that cars aren't that huge of market.
Anyways, almost anybody can build a set of prototype cars on a shoe string budget of 10s to 100s of millions of dollars, just like it is with a phone. The issue for both nascent car companies and nascent phone companies is all the soft stuff. The go-to-market strategy. Who's going to build the car. Who's going to sell the car. Who's going to service the car. How will the supply chain be acquired for 1k, 10k, 100k cars? How will the car be charged? This is where profit margin has to be attained. Not a lot of new cars companies can even get to this point, before folding.
For EVs, car dealers in certain states had their state legislators make it illegal to sell cars directly from the OEM. It all had to go through the dealer. How does a new car company deal with things like that? The car market is not a hardware or technology problem. It's all in the soft stuff. Theoretically, Apple can deal with that.
100% against Apple becoming a carmaker. History suggests that virtually ALL carmakers in America fail sooner or later, usually sooner (There are literally hundreds of dead American automakers, some really really great, like Auburn, Cord, Duesenberg, Packard, Studebaker, Nash, American Motors to name just a few). Sure, there are exceptions, but the investment required to pull off a successful launch and sustain sales is in the tens of billions of dollars, possibly hundreds. I've been a fan of Apple, a former Apple professional employee, and an Apple-driven entrepeneur. But this venture is, IMHO, an enormous mistake.
Apple should continue to focus like a laser beam on core competencies in hardware, software and services, and ignore the siren call of diworseification (apologies to Peter Lynch). Leverage what you do right for maxmimum growth, rather than a futile effort to grow through acquisition.
What's important is why they went out of business, not that they went out of business. A lot of companies are like PC box and Android phone companies where they buy the parts and just assemble them. They have very little USP. If you don't have good design, marketing, ecosystem, support, then you are competing on price and margins, which will inevitably lose the more that people can afford the products from companies that do have all those things. Apple's used products are more appealing than brand new products from low margin companies.
Most of the car companies were also making combustion engine vehicles. If Apple was making a combustion engine vehicle, they'd likely need to get an expensive engine from a 3rd party and setup a network of maintenance shops. Electric engines change the whole game.
Apple also has hundreds of billions of dollars. Investing $100b would allow them to build over 1m vehicles.
I agree that most (actually ALL) of those failed car companies were making ICE engines. Since aside from the Stanley Steamer, that was the tech in those times. BUT:
Your analysis, assuming that Apple could build a car company from the ground up and manufacture "over 1 million vehicles" for $100 billion is serioiusly flawed. Investing $100 billion would allow them to break ground on an assembly plant, hire executives and workers, pay for infrastructure, and build about 10 prototypes for reviewers. Apple cannot use those cash reserves without paying income taxes on the proceeds, so 25% would be gone before the first shovelful of dirt was moved. Instead they would go to banks to get loans based on that money as collateral (as all big companies do) and then pay interest on it.
And have you considered how large the market for "under $100,000" (meaning $99,999.99) vehicles actually is? I live in Chicago, and I can tell you I see about 2-3 of them a day. Out of thousands. Would you spend that much on a car? Not me. Not even for an Apple car. If Apple is determined to enter this sector, a wiser plan would be to acquire an existing EV automaker (Lordstown, Rivian or Fisker could be bought for pennies on the dollar they spent in their buildouts) and put their unique stamp on the product. Polestar makes some of the very best EVs, and buying it from Volvo/Geely might be a possibility, if a remote one.
These numbers being talked about are crazy, from the both of you.
100b investment allowing Apple to build 1 million $100k vehicles? Uh, If they actually sell 1 million vehicles at 100k, that's 100b dollars in revenue! That's doesn't make sense. So, obviously, the money from sales of cars is reinvested to make more cars. The initial investment is going to be 1b to 10b for the first 1000s to low 10000s of cars. If they are successful, the business enters a virtuous cycle of revenue from sales sustaining the business, with perhaps occasional funding rounds for capital investments, especially if they can't attain a profit margin per car after a few tens of thousands of cars sold.
Something like 1b will allow a company to hire a team, build 10 prototypes, set up a supply chain, and get a start on manufacturing. Probably will need 5b to 10b to get plants to output 100k+ cars per year. Just look at the budgets and funding rounds from Tesla, Rivian, Lucid. FOXCONN even got Lordstown Motors across the finish line and they are shipping their EV trucks now. A trickle, but I don't think they have spent more that 1b so far. All these new car companies spend about 1b to 10b for their first 10k+ cars.
Apple has probably spent 5b over the last 7 years on the car project if rumors are true. Something like a 1b per year run rate. They have nothing to show for it. Perhaps it was a figurative vehicle to keep Jony Ive happy and at the company, but given the history so far, it's been one of Cook's poorer decisions. He should have shown Jony the door in 2015 after Jony lost the Watch fight, and found it less fulfilling to work on computers.
An interesting bit of minutia. I tracked Apple's Wearables revenue and Tesla revenue for awhile from about 2015 to 2018. During that time period, Apple's wearables category had as much revenue as Tesla. So, that's either a message about Apple's size or that cars aren't that huge of market.
Anyways, almost anybody can build a set of prototype cars on a shoe string budget of 10s to 100s of millions of dollars, just like it is with a phone. The issue for both nascent car companies and nascent phone companies is all the soft stuff. The go-to-market strategy. Who's going to build the car. Who's going to sell the car. Who's going to service the car. How will the supply chain be acquired for 1k, 10k, 100k cars? How will the car be charged? This is where profit margin has to be attained. Not a lot of new cars companies can even get to this point, before folding.
For EVs, car dealers in certain states had their state legislators make it illegal to sell cars directly from the OEM. It all had to go through the dealer. How does a new car company deal with things like that? The car market is not a hardware or technology problem. It's all in the soft stuff. Theoretically, Apple can deal with that.
"Something like a 1b per year run rate"…You did mean $1B per year BURN rate, didn't you?
Yes, burn rate. Run rate. Use whatever term you like for how much Apple is spending on its car project per year. Rumors are that it isn't small. There's a good book or at least a long chapter on the car project. Perhaps they never pulled the trigger because they could not find a company to assemble the cars for them. Lots of rumors of them talking to this or that company.
Now, they mind as well wait on FOXCONN to do the contract assembly, which could well be another 5 years before they are ready.
I am highly confident that Tesla will be at SAE International Level 5 by 2026. If you watch the YouTube videos then you will see how super close they are. All without LiDAR or radar sensors. If Tesla never existed then you would not be seeing any, much less most car companies going electric. They are doing it because they feel they have to in order to not be left behind.
Tesla isn't "super close" to Livel 5. They are at Level 2 and aren't considered leaders in autonomous driving.
Still, one has to admire Elon for shipping and selling beta hardware going on 7 years now with FSD "just around the corner". Fraud comes to mind, as does a future class action lawsuit.
Can you name any other car company where the car drives by itself through city streets? Tesla is the only car company that I’m aware of that does that. 2026 is 3 to 4 years from now. I would be shocked if they don’t make it by then. Level 2 just means that the car can make mistakes and you have to be ready to take over at a moments notice. But if you watch the latest FSD videos you will see that the car is very competent. It can stop at a stop sign in front of a four lane road and make an unprotected left turn by itself. That is very impressive in my judgement.
By the way two of my favorite videos I like to watch are Chuck Cook and Dirty Tesla. I find them to be quite informative and thorough. Chuck Cook for example goes through the same run several times to get a gauge of the consistency of the car’s behavior. Also Chuck Cook is somewhat famous for his Unprotected Left Turn. Dirty Tesla is out of Ann Arbor which is my home state and since it’s winter now it should be interesting to see how the car behaves in snow.
I am highly confident that Tesla will be at SAE International Level 5 by 2026. If you watch the YouTube videos then you will see how super close they are. All without LiDAR or radar sensors. If Tesla never existed then you would not be seeing any, much less most car companies going electric. They are doing it because they feel they have to in order to not be left behind.
Tesla isn't "super close" to Livel 5. They are at Level 2 and aren't considered leaders in autonomous driving.
Still, one has to admire Elon for shipping and selling beta hardware going on 7 years now with FSD "just around the corner". Fraud comes to mind, as does a future class action lawsuit.
Can you name any other car company where the car drives by itself through city streets? Tesla is the only car company that I’m aware of that does that. 2026 is 3 to 4 years from now. I would be shocked if they don’t make it by then. Level 2 just means that the car can make mistakes and you have to be ready to take over at a moments notice. But if you watch the latest FSD videos you will see that the car is very competent. It can stop at a stop sign in front of a four lane road and make an unprotected left turn by itself. That is very impressive in my judgement.
This is another company but this example is on a HD-mapped city. Nevertheless, it's quite impressive considering the turns, pedestrians cars and scooters in its path.
The video is over a year old now and, AFAIK, the car wasn't equipped with Huawei's new 4D vision system or its latest AR-HUD.
Now that Tim and Elon have kissed and made up, why not seal the deal and merge? Apple will have a difficult time catching up to Tesla’s tech lead.
There are approximately 75 million cars sold each year globally. Tesla sold a little over 300,000 last year. I think there is no race to catch up to anybody, and there is a massive amount of headspace in the market.
Now that Tim and Elon have kissed and made up, why not seal the deal and merge? Apple will have a difficult time catching up to [company or industry's] tech lead.
How many times have we head that over the decades? If Apple decides to enter a new computer-based market for a consumer good it's historically likely that they'll exceed at it.
Comments
A person living in Chicago could see nothing but $100,000 cars all day long depending where they live. I'm pretty sure the economics of EVs is a tad more complicated. Apple made $14,000 watches too. Wonder where those are these days?
I really don't know what the future holds for this kind of tech; I'm dubious that Apple can be involved in making a car at a profit.
100b investment allowing Apple to build 1 million $100k vehicles? Uh, If they actually sell 1 million vehicles at 100k, that's 100b dollars in revenue! That's doesn't make sense. So, obviously, the money from sales of cars is reinvested to make more cars. The initial investment is going to be 1b to 10b for the first 1000s to low 10000s of cars. If they are successful, the business enters a virtuous cycle of revenue from sales sustaining the business, with perhaps occasional funding rounds for capital investments, especially if they can't attain a profit margin per car after a few tens of thousands of cars sold.
Something like 1b will allow a company to hire a team, build 10 prototypes, set up a supply chain, and get a start on manufacturing. Probably will need 5b to 10b to get plants to output 100k+ cars per year. Just look at the budgets and funding rounds from Tesla, Rivian, Lucid. FOXCONN even got Lordstown Motors across the finish line and they are shipping their EV trucks now. A trickle, but I don't think they have spent more that 1b so far. All these new car companies spend about 1b to 10b for their first 10k+ cars.
Apple has probably spent 5b over the last 7 years on the car project if rumors are true. Something like a 1b per year run rate. They have nothing to show for it. Perhaps it was a figurative vehicle to keep Jony Ive happy and at the company, but given the history so far, it's been one of Cook's poorer decisions. He should have shown Jony the door in 2015 after Jony lost the Watch fight, and found it less fulfilling to work on computers.
An interesting bit of minutia. I tracked Apple's Wearables revenue and Tesla revenue for awhile from about 2015 to 2018. During that time period, Apple's wearables category had as much revenue as Tesla. So, that's either a message about Apple's size or that cars aren't that huge of market.
Anyways, almost anybody can build a set of prototype cars on a shoe string budget of 10s to 100s of millions of dollars, just like it is with a phone. The issue for both nascent car companies and nascent phone companies is all the soft stuff. The go-to-market strategy. Who's going to build the car. Who's going to sell the car. Who's going to service the car. How will the supply chain be acquired for 1k, 10k, 100k cars? How will the car be charged? This is where profit margin has to be attained. Not a lot of new cars companies can even get to this point, before folding.
For EVs, car dealers in certain states had their state legislators make it illegal to sell cars directly from the OEM. It all had to go through the dealer. How does a new car company deal with things like that? The car market is not a hardware or technology problem. It's all in the soft stuff. Theoretically, Apple can deal with that.
Now, they mind as well wait on FOXCONN to do the contract assembly, which could well be another 5 years before they are ready.
The video is over a year old now and, AFAIK, the car wasn't equipped with Huawei's new 4D vision system or its latest AR-HUD.