Why Would Apple Bother?

By Gary S. Vasilash

The 23rd KPMG Global Automotive Executive Survey—some 900 execs in 30 countries surveyed—includes an array of findings that should be of startling interest to OEMs, particularly those vehicle manufacturers that are, as they sometimes say, “all in” on electric vehicles.

For example, in the 2021 survey the execs predicted that by 2030 EVs would be 52% of the U.S. market.

A year later that number is down to 29%.

Quite a tumble.

Remember: these are execs in the auto industry, people whose livelihoods depend on how vehicle sales play out.

(Do some of those people look at that 29 and think about the billions being invested in EV assembly plants and battery facilities?)

Another question was about what companies would be market leaders in electric vehicles by 2030.

The top three are Tesla, Audi and BMW.

The fourth is somewhat of a surprise: Apple.

While the rumors of an Apple entry into auto have been rife for a number of years, the question as to why the company would want to get into what is a low-return space should squelch said rumors.

Vehicle manufacturers aren’t doing particularly well from a Wall Street valuation point of view.

Here is a list published today by CNBC of the performance of OEMs over the past year:

  • Ferrari (RACE): -18%
  • Stellantis (STLA): -25%
  • Toyota (TM): -26%
  • Nissan (NSANY): -35%
  • General Motors (GM): -43%
  • VW (VWAGY): -46%
  • Ford (F): -46%
  • Fisker (FSR): -57%
  • Tesla (TSLA): -68%
  • Nio (NIO): -68%
  • Lordstown (RIDE): -69%
  • Nikola (NKLA): -75%
  • Rivian (RIVN): -82%
  • Lucid (LCID): -83%
  • Canoo (GOEV): -86%

Yes, every single one of those companies with a minus sign in front of two digits.

Would It Be Called the “iCar” or “Apple Car”?

That assumes it (1) is a car and not a different type of vehicular architecture and (2) comes to exist

By Gary S. Vasilash

Apple’s head Tim Apple Cook talked with the New York Times’ Kara Swisher earlier this week and had some interesting comments about what is reportedly known as “Project Titan,” the Apple vehicle project that seems to be one of those on again, off again undertakings.

There is something, based if nothing else than the fact that there are Apple-owned vehicles that are racking up miles in California, according to the state’s DMV.

Three interesting quotes from Cook:

  1. “An autonomous car is a robot.” Generally we think of robots as things that have arms, not tires. But in terms of the sensors and processors and the fact that it is meant to perform specific tasks under various conditions, that is indeed the case.
  2. “We love to ingrate hardware, software and services, and find the intersection points of those because we think that’s where the magic occurs.” Perhaps this indicates that if there is going to be a vehicle, there is going to be some serious vertical integration going on: Apple doing most of it. (Which leads to the question about producing the vehicle, because this is a difficult thing to do. Of course, there are no capital constraints that Apple would face in terms of facilities, resources and people, so maybe it could pull a DIY.)
  3. “We investigate so many thinks internally. Many of these never see the light of day. I’m not saying this one will not.” Of course, he’s also not saying this one will. For some reason motor vehicles (that’s motor as in “electric motor”) have become interesting things to all manner of tech companies. Remember when Detroit was dismissed as the “Rust Belt”? Now it seems that vehicle development and manufacturing—although not necessarily being done in the Rust Belt—seems to be an appealing thing for tech companies large and small, from lidar companies none of us have ever heard of to, well, Apple.

Will Apple Get into the Automobile Business?

Although it is no secret that Apple had been operating a secret “Project Titan,” which was imagined to be its electric—and probably (at least semi-) autonomous—vehicle program, although it was said to have been disbanded, although it was said to be restarted after Doug Field was rehired, a Reuters’ report has gotten legions of Apple fanboys—to say nothing of the investment community—giddier than they already are when it comes to all things Apple.

The vehicle is back, it seems. Launch date: 2024.

Could this happen?

Apple CEO Tim Cook. (Image: Apple)

If so, they’d better start rethinking the Genius Bar and figure out how to install hydraulic lifts in the back of the stores.

As Elon Musk discovered—and it should be pointed out that he has Tweeted that he once wanted to sell out to Apple but couldn’t get a meeting with Apple CEO Tim Cook—building cars is hard.

And this is a challenge whether you’re a long-time manufacturer or someone who has just started within the past few years, trying to take advantage of the “simpler” production requirements of an electric vehicle, compared to one that has an internal combustion engine.

However, as Darren Palmer, global director, Battery Electric Vehicles, a Ford recently told me, “80% of a car is not the drivetrain.” Meaning that it is a challenge to make sures the doors fit, the plastic materials on the inside have consistent coloring, the fascias don’t fall off. And on and on.

Yes, hard.

Apple doesn’t manufacture its products. That is done for it by companies including Hon Hai Precision Industry (a.k.a., Foxconn), Wistron, Pegatron and so on.

So the likelihood of it building its own vehicles is non-existent.

It would have to work with a company that knows how to make things.

In the auto industry there are companies like Magna, which produces vehicles for companies including BMW, Mercedes, Toyota and Jaguar—and for Jaguar it manufacturers the electric i-Pace. Magna has recently entered into an agreement with Fisker. It is working on the engineering of the Fisker Ocean right now and will be performing the manufacturing when it is ready to go.

What’s interesting about Magna is that most people have no idea that it has manufactured so many vehicles.

That is the kind of company that Apple would need to work with.

It knows that building cars is hard (you can see an interview with Magna’s just-retired CEO Don Walker here, where he talks about how tough the task is). It knows how to build them with the highest levels of quality. And it does so while remaining discrete.

Let’s face it: It is one thing if someone has a problem with an iPhone that bends as it shouldn’t or a battery that doesn’t have the life it should and it would be something else entirely were that to be a full-size car or SUV.

Will Project Titan come to fruition?

If it does, Tim Cook will have his hands full. Just ask Elon.