Quoted: On Apple, Tesla and making electric cars

“If Apple was going to make a car, it would be ten times easier to just buy Tesla. But Apple doesn’t want a single branded experience, it wants Apple in many, many cars.”

Tim Bajarin, analyst with Creative Strategies, on reports that Apple is working on an electric vehicle. Bajarin tells USA Today it makes more sense that Apple is instead working on owning the car dashboard — by integrating an iPhone-like platform in different makes and models of vehicles.

Last week, the Wall Street Journal reported that hundreds of Apple employees are working on an electric car. The report came after other speculation along the same lines, which Troy Wolverton wrote about. Friday, Julia Love quoted a couple of analysts, including Bajarin, who rejected the idea.

Although Apple extended its iOS software to the car with CarPlay last year, analyst Jan Dawson of Jackdaw Research said much of auto manufacturing is foreign to the company. He finds it unlikely the disciplined firm would veer so far from its strengths.
“The parts of the car that Apple is good at are a tiny fraction of the experience,” he said.

Other naysayers point to the fact that making cars is a low-margin business.

  • “This is a business with 5% to 6% margin,” says Richard Wallace, director of transportation system analysis for Ann Arbor based Center for Automotive Research, according to USA Today. “That’s not what Apple and Google see with their products. If I was an Apple or Google shareholder, I’d demand they not become an automaker and lower my returns.”
  • “For Apple, the problem isn’t paying to build the car, its getting a return on the investment,” Erik Gordon, professor at University of Michigan’s Ross School of Business, told Bloomberg. “Shareholders and analysts will hate the margins and the distraction. They’re not even the cool, first player. They are following Tesla and Google.”
  • “Yes, Apple has plenty of money, but the century-old auto industry doesn’t seem like a good way to make more of it. Ford, the healthiest US car company, made $835M in net income last quarter, less than 4% of their $34B in sales. Compare that number to Apple’s record-breaking $18B profit. Tesla, Apple’s supposed rival in the fantasy blogs, pulled in a little less than $1B last quarter, and it lost about 10% of that. There isn’t an inkling of an explanation for why and how a superior product designed and built by Apple would bring superior returns.” — Jean-Louis Gassée, former Apple, Be and PalmSource executive, blogging on Monday Note.

 

Photo: Apple’s CarPlay system running in a Ferrari, which USA Today says is the only one of 31 auto manufacturers cited by Apple that’s offering the system in new cars. (Sandro Campardo/EPA)

 

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  • vicweast

    Sounds less as thought Apple were building a car than Apple are learning how to bring the Apple experience into multiple aspects of the car. In that kind of scenario, the Apple registered vans in Silicon Valley might simply be real world instrumentation platforms to gather real-world data to be used as part of an investigative phase of a new Apple project centered on Apple-in-your-car.

    • 97point6

      Your comment makes more sense than anything I’ve read in the WSJ and other such ‘news sources’ in the last couple of weeks. I would love to see an Apple systems approach between car and driver.

  • dj160

    If Apple wants to
    put a dent in the universe right now they should partner with BYD Company. They
    make solar panels ,battery storage, affordable EV’s with long range,
    electric buses, solar street lamps,LED’s etc. The complete Green Company. They
    have built the model home/community in Lancaster,CA. This is what every
    community should be striving for. With a company like Apple it could transform
    our country now. The sooner the better. BYD is everything Musk is trying to do only
    under ONE company.(except the Mars thingy)

 
 
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