6 ms·

ICE cars are more complicated than phones, but I'm not sure pure-electric cars are that much more complicated. One of the nice things about the electric car bu

ICE cars are more complicated than phones, but I'm not sure pure-electric cars are that much more complicated. One of the nice things about the electric car business is the the part count is a lot lower, they are basically much simpler devices, and thus should be able to be made much more cheaply. We may see a Yugo level electric car for $10,000 in a few years. This would allow for margin expansion, especially if Apple can innovate in the manufacturing side (eg: go one better on automating the factory) Plus since currently a Toyota RAV4 level vehicle goes for $30k-$40k, if Tesla gets down to the low $30k, Apple could produce a car for the $40k price point and be making $10k-$15k profit on each one. Lower gross margin than the phone business, but offers the opportunity of significant revenue upside. Plus with Apple there would be follow on revenue as well. Since people are in the habit of paying mid $30k for a car right now, while there will be cheaper electric cars at the lower end of the market, Apple wouldn't require people to change behavior to be able to afford a car that gives Apple the kind of margins it wants. Plus I expect there will be several innovations that are things "only apple can do" that add value-- the interiors of cars and especially the electronics and instrumentation of modern cars are terrible. Even the Tesla which tried a new approach, I think has bad usability. There's a lot of opportunity there.

aetherson 10y ago
The fundamentals of electric engines aren't very complicated. Manufacturing an actual all-the-bits modern luxury electric vehicle is way, way, way more complicated than making a phone, and also hard in a very different way than making a phone. One of the things that has made me never really believe in Apple's competitive advantage with cars is that beyond an ultra-high talking points level ("design!"), I don't see any reason to believe that Apple has relevant expertise.
- Retric 10y ago
  Apple can flat out buy a huge car company. Ford is worth 47.26B, GM 50B apple could buy both with less than 1/2 of their cash on hand. Now buying Ford is probably not the way to go. But, Apple can skip a lot of the 'ramp up' if they ever wanted to get into the car business.
  - aetherson 10y ago
    I agree, Apple could skip a lot of ramp-up if they buy a car company. But, then, what are they bringing to this hypothetical scenario? Does buying an existing car company make it easier for them to bring some kind of distinctive iCar onto the market? If so, what do we imagine is the distinctive iCar-ness that they're bringing? There are two things that I hear people say Apple is notably good at: 1. "Design." 2. Controlling a complicated end-to-end extremely high-quality manufacturing process. For 1, I'm not sure I believe that there is a transferable organizational expertise between designing phones and designing cars. For 2, I'm not sure I believe that there is a transferable organizational expertise between manufacturing phones and manufacturing cars, and I'm definitely sure that I don't believe that they can transfer organizational expertise to manufacturing cars if they purchase an extant manufacturing process/organization.
    - Retric 10y ago
      What Apple does well is integrating hardware and software. I recently drove a car with lane following and adaptive curse control and it kind of sucked. Lane following needed great road conditions so it failed miserably. But, while adaptive cruse control was nice in heavy traffic, it was also clearly tacked on. The acceleration and deceleration was felt jerky. People can generally drive really smoothly in traffic so why suffer a machines erratic behavior when you need to focus in case it fails. Sure, do the same thing but better seems obvious but iPhone was more a response to poor completion than a truly innovative product.
      - aetherson 10y ago
        I'm also not sure that I believe that there is a transferable organizational expertise between integrating hardware and software on mobile phones and integrating hardware and software on self-driving cars. Seriously, what does that look like? What are the attributes of a person who is good at integrating hardware and software on a phone, and who also is good at integrating hardware and software on a self-driving car? Your example was jerkiness in acceleration and deceleration. The people who are good at mitigating jerkiness in acceleration and deceleration are presumably mechanical engineers and roboticists/AI guys. I don't think that any of those people have been involved in Apple's flagship, reputation-making products so far. As you allude to, it's easy to say "do the same thing but better." If all you needed was a product guy who was like, "Hey, we should make this better," then it would already be solved.
ufmace 10y ago
They would have to figure out distribution though, which Tesla has been having a few problems with lately...

aetherson 10y ago

The fundamentals of electric engines aren't very complicated. Manufacturing an actual all-the-bits modern luxury electric vehicle is way, way, way more complicated than making a phone, and also hard in a very different way than making a phone. One of the things that has made me never really believe in Apple's competitive advantage with cars is that beyond an ultra-high talking points level ("design!"), I don't see any reason to believe that Apple has relevant expertise.

Retric 10y ago
Apple can flat out buy a huge car company. Ford is worth 47.26B, GM 50B apple could buy both with less than 1/2 of their cash on hand. Now buying Ford is probably not the way to go. But, Apple can skip a lot of the 'ramp up' if they ever wanted to get into the car business.
- aetherson 10y ago
  I agree, Apple could skip a lot of ramp-up if they buy a car company. But, then, what are they bringing to this hypothetical scenario? Does buying an existing car company make it easier for them to bring some kind of distinctive iCar onto the market? If so, what do we imagine is the distinctive iCar-ness that they're bringing? There are two things that I hear people say Apple is notably good at: 1. "Design." 2. Controlling a complicated end-to-end extremely high-quality manufacturing process. For 1, I'm not sure I believe that there is a transferable organizational expertise between designing phones and designing cars. For 2, I'm not sure I believe that there is a transferable organizational expertise between manufacturing phones and manufacturing cars, and I'm definitely sure that I don't believe that they can transfer organizational expertise to manufacturing cars if they purchase an extant manufacturing process/organization.
  - Retric 10y ago
    What Apple does well is integrating hardware and software. I recently drove a car with lane following and adaptive curse control and it kind of sucked. Lane following needed great road conditions so it failed miserably. But, while adaptive cruse control was nice in heavy traffic, it was also clearly tacked on. The acceleration and deceleration was felt jerky. People can generally drive really smoothly in traffic so why suffer a machines erratic behavior when you need to focus in case it fails. Sure, do the same thing but better seems obvious but iPhone was more a response to poor completion than a truly innovative product.
    - aetherson 10y ago
      I'm also not sure that I believe that there is a transferable organizational expertise between integrating hardware and software on mobile phones and integrating hardware and software on self-driving cars. Seriously, what does that look like? What are the attributes of a person who is good at integrating hardware and software on a phone, and who also is good at integrating hardware and software on a self-driving car? Your example was jerkiness in acceleration and deceleration. The people who are good at mitigating jerkiness in acceleration and deceleration are presumably mechanical engineers and roboticists/AI guys. I don't think that any of those people have been involved in Apple's flagship, reputation-making products so far. As you allude to, it's easy to say "do the same thing but better." If all you needed was a product guy who was like, "Hey, we should make this better," then it would already be solved.

ufmace 10y ago

They would have to figure out distribution though, which Tesla has been having a few problems with lately...