Apple Inc. has never made a car. The firm has been making tablets for more than 20 years, and it’s been building PCs since before most of the world knew they existed, but Steve Jobs never put a car on the road. That makes sense. Apple makes computers, Tesla Motors Inc makes cars. Adam Jonas, head of auto research at Morgan Stanley, doesn’t agree.
In a report published on Monday, Mr. Jonas said that he sees self-driving cars, and shared ownership of them, as a $1 trillion market. He said that Tesla Motors, which will bring its first self-driving solution to the road in just a few weeks, is in a strong position to succeed in that market. Tim Cook, and the rest of the team at Apple, may have something to say about that.
It appears that Project Titan, Apple’s secret work on an EV that will drive itself, is more advanced than previously thought, and the firm may be able to compete on a timescale with firms like Google and Tesla Motors. In a recent report on the self-driving market, Goldman Sachs said that Google would be first to the market, with its first shared cars getting on the road in 2017.
Apple Inc. may already have a self-driving car
The Guardian reported on Friday, August 14 that Apple was already looking for secure places to test the Project Titan car in California. The paper said that its info came from a memo from the firm that it had gotten a hold of. Apple execs have also been out and about talking about cars.
Even Jony Ive, who a lot of people are convinced is leaving the firm, took time recently to call modern car design “insipid.”
The Guardian says that a 2,100-acre former naval base in the area will be used by Apple in order to test its EV. It’s not clear what stage of development the Apple car is in, but it is clear that the EV has enough wheels, and the right sensors, to be able to drive itself to some extent.
GoMentum Station is a facility for “testing, validation, and commercialization of connected vehicle (CV) applications and autonomous vehicles (AV) technologies to define the next generation of transportation network infrastructure.”
It sounds an awful lot like Apple is getting ready to sell its own car, but that’s not the only possibility. The firm could be building a software platform that would allow cars made by many other manufacturers to drive themselves.
It could also be, given the run down on GoMentum, looking to test its new Apple Music app for QNX based systems. That seems unlikely given the firm’s ambition in almost all other areas in recent years.
The Guardian backed up an earlier story from 9to5Mac.com which said that Apple was running the Car making business out of a building in Sunnyvale California under an assumed name. The British paper says that the building was leased for the first time in 2014.
Assuming that Apple is going to build a car, and it follows the assumed specs, an EV with decent range, and able to drive itself at a high level, the firm is likely to beat Tesla Motors in the space. Even big Tesla Motors fans will have to acknowledge that it’s difficult to compete against Tim Cook and Jony Ive.
Tesla Motors can’t out-build Apple
The biggest problem for Tesla Motors in recent years has been the firm’s inability to build cars at a large volume or on schedule. This year Elon Musk is looking for his team to build and ship less than 55,000 cars for the full year. Tim Cook, who fixed Apple’s wonky supply chain, must be relishing the chance to compete.
Apple knows how to build things. Tim Cook has a logistics genius that made Apple what it is today. Kulbinder Garcha from Credit Suisse reckons that Apple will make and sell 250M units of the iPhone in fiscal year 2015.
No other firm, bar rice farmers and ball bearing makers, has had to deal with that kind of demand in the history of the world. Apple has risen to the challenge. If Elon Musk really wants to see the EV take over the world, he should want to get Apple on board.
He and Jony Ive are well able to engage in conversation, according to a story from earlier this year, but they may not be so quick to work together. Sean Udall, CIO of Quantum Trading Strategies, thinks that Apple might already be helping Tesla Motors to build the Gigafactory. There’s no way to tell one way or the other right now.
Tesla Motors can’t out brand Apple
Apple is the biggest brand in the world, and one of the most loved firms on earth. That 250M iPhone sale forecast is a little on the high side, but it’s far from an anomaly. Wall Street expects more than 3 percent of the world’s population to buy a new iPhone this year.
The Tesla Motors Model S is a well-known car in certain groups, but people around the world don’t know what it is, and Tesla Motors still needs to fight against wrong ideas about EVs. Apple, lead by Phil Shciller, would be able to brush those issues away.
After being revealed many would simply believe the firm’s claims that EVs are better than ICE-Vs, even though the acronym isn’t quite as cool. That’s the power that the Apple brand has. People trust it, and they view the Apple mark as a stamp of quality assurance.
Tesla Motors, though it has done a great job of selling the Model S, does not have that kind of power. Elon Musk couldn’t out-build Apple, and it couldn’t out-brand the firm.
Can Tesla Motors out-tech Apple?
What Tesla Motors will reveal to the world in the coming weeks won’t be a self-driving car. It will have the power of a Hyundai to drive in a lane by itself. It will also be able to park itself. That’s it for now unless Tesla Motors offers up a big surprise.
Tesla Motors will be able to collect a ton of data from people actually using its cars on the road, but it’s not clear if the firm will really be ahead of Apple when it comes to the tech self-driving cars require. Mr. Jonas of Morgan Stanley thinks so, but James Albertine of Stifel Nicholas reckons that Tesla Motors will be just one of many firms that divides up the $1 trillion pie.
If Apple is able to bring its self-driving tech to the same level as Tesla Motors, and the firm wants to, it can clearly outsell the firm unless something goes quite wrong. It all depends on which firm manages to get the tech up to scratch and the permits up to date.
Tesla Motors can’t even convince state governments to let it sell cars. Apple is more likely able to move laws around to allow its services to operate. The firm deals with that kind of thing every day, while Tesla Motors has a decidedly less battle-worn legal team and culture.
Tesla Motors isn’t fighting Apple Inc.
If Tesla Motors and Apple Inc. both emerge with a self-driving car at about the same time, they still won’t be fighting each other. They’ll be fighting the legal system, the concepts the public holds dear, and technology limits in order to become a success.
If it is a $1 trillion dollar market like Mr. Jonas of Morgan Stanley says, it’s big enough for everyone, Tesla Motors, Google Inc and Apple Inc. There will be some friction as the market grows, and it will become direct competition as the market gets saturated. For now however, it’s all about convincing the world that self-driving cars are safe, and that they’re better than those that need a human hand.