Apple Car Dreams
by Jean-Louis Gassée
How could Apple not make an autonomous electric car someday? It has the money, the patience and a huge number of potential customers who would love to own something like the iPhone of automobiles. Easier said than done.
We recently looked at Tesla’s fantastic FSD tales on May 19th, and explored Waymo’s business model questions on May 26th. But, as readers noted, nothing on the heavily rumored Apple Car.
Heavily rumored is right. A Google search for “Apple Car” yields 2.55 billion hits, so many stories that both 9to5Mac and MacRumors have provided neat summaries of “what we know so far”.
While we must keep in mind the high-gain (pun intended) echo chamber, the endemic click-baiting, and the Reality Distortion Field that emanates from Cupertino, we can’t ignore the dream of an autonomous electric car (EV) designed by Jony Ive’s team, with a clean modern user interface, sold in Apple Stores and serviced (brake fluid and pads, tires, lamps) by approved auto maintenance shops. All backed by a company with deep pockets and, rare exceptions aside, a reputation for reliable products.
Reality quickly kills the warm feeling. There’s trouble with the autonomous part of the dream: Sober people (see last two weeks’ Monday Notes) agree that full “Level 5” automation — no need ever for human intervention, from arbitrary point A to point B, in any weather — is decades away. Like anyone else’s EV the Apple Car will feature a mix of driver assistance services with no clear way to get to full autonomy, particularly when compared to Waymo and Tesla with their millions of test miles and mountains of real world data.
We ought to stop. Or, rather, we shouldn’t have started. Apple’s gross margin is consistently in the 38%-39% range; that’s twice the margins of GM (19%), Ford (15%), and FCA Chrysler (14%). Mercedes and the Volkswagen Group do no better. Why would Apple join such an industry? And consider the product itself: A car’s physical size (tens of feet) and price (tens of thousands) is far outside of Apple’s experience zone.
Let’s dispense with the fantasy and examine what Apple could do in the automotive space short of a “Tesla done right” magical machine.
Software comes to mind. Maybe not for the entire car, but perhaps a command, navigation, monitoring, and entertainment system, a fourth generation expanded CarPlay.
No. We already see the trouble CarPlay gets into when trying to run on an incoherent range of so-called entertainment systems built by the lowest bidder. Trying to make a more complex system with more tendrils work with large numbers of makes and models is hopeless. Too much work — and for what? Licensing revenue? Not in Apple’s DNA.
Perhaps Apple is working on car-specific services. After all, Apple Services has been a fast-rising revenue and margins engine for the past three years.
Again, no. Apple doesn’t create services (or apps) for a “minority device” and then try to spread it to the broader population. As an example, iPhone apps get extended to the Watch, not the other way around. Apple’s Marzipan is a way to spread services running on hundreds of millions of iPhones to the much smaller but still valuable Mac installed base. So, little likelihood of car-specific services.
Hardware? I don’t think Apple would be interested in developing aftermarket devices such as a 360º camera, but how about a better communication hub that lets drivers and passengers share a connection to a broadband provider? A growing number of car manufacturers offer a shared cell connection — actually, just an embedded smartphone — for a price at purchase time, and a monthly fee later.
Surely, Apple could make a better device and do so without taxing passengers’ cell budgets. Perhaps Apple could make a carrier deal with Amazon after the latter buys Boost Mobile as part of its negotiations with the DOJ to allow Sprint and T-Mobile to merge…
I’m joking about Boost, of course, but an Apple in-car web hub isn’t technically absurd. However, Apple would be trying to undercut the already marginal margins of a secondary offering in the car industry. For example, Audi charges $199 for six months ($499 for 18 months) for its Audi connect® (in-car Wi-Fi with Internet radio, parking info, Twitter, and many more. Audi seems to remix and resell Internet content available elsewhere). That’s not enough revenue to budge Apple’s needle.
At the bottom of the barrel, we have Data. Apple is alleged to have deployed a fleet of cars bristling with sensors. This is obviously targeted at mapping streets and roads to improve the company’s Maps app, as opposed to (ahem) paving the way for autonomous vehicles. This allows Apple’s mapping app to stay in the race, but doesn’t justify Apple Car rumors.
The above leaves us with two possible conclusions:
First, there’s nothing there, no Apple Car, no hardware, no software. The self-driving car project called “Titan”, started in 2014, was disbanded earlier this year. An early rumor that Magna Steyr, an Austrian manufacturing contractor, would build the Apple Car is long dead. Clearly, Apple execs have decided against getting into the electric car business. Improving Maps, sure, but no EV.
Alternatively, there must be something. Apple has spent a nontrivial amount of money hiring and firing automotive teams and renting huge facilities — a research lab in Sunnyvale, a test track in Arizona. The company has filed a number of (possibly) car-related patents, including one for an “Autonomous Navigation System”. What is Apple doing if they’re not creating a self-driving car?
Research, that’s what. Apple conducts hardware and software experiments to keep abreast of industry activity. From these experiments they sometimes file defensive patents. This is better than relying on published or leaked reports from other companies. The company could even run an experimental autonomous shuttle inside its gated campus as part of its research. Rumor sites would extrapolate, but small scale experiments don’t make a product.
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Family friend and académicien Michel Serres passed away yesterday June 1st. Next week, I'll publish a personal eulogy remembering a grand epistemologist and earthy teller of dinnertime tales.
— JLG@mondaynote.com
