We shouldn't be surprised that Apple may be hitting a road block with its car project
Mike Nudelman/Business Insider
I don't think we should be surprised that the Apple Car is in trouble (if in fact it is - these are just reports, after all, and the real story could be something different).
The whole way Apple has gone about developing its foray into mobility has been, in a word, weird.
For example if you figured that Apple was hiring aggressively to bulk up its car team ahead of taking on Tesla, Google, and the traditional auto industry, then the news that the tech giant had hired former Chrysler quality czar Doug Betts last year should have struck you as confusing.
Betts joined Chrysler in 2007, brought on by then-CEO Robert Nardelli, who is now generally regarded as if not exactly responsible for Chrysler's slide into a government bailout and bankruptcy in 2009, then at least for lacking a meaningful vision for the company under its ownership by private-equity firm Cerberus. Prior to Chrysler, Betts was at Nissan.
He left Chrysler last year after the automaker, never known for the quality of its cars and trucks relative to its peers, was clobbered by Consumer Reports, with numerous Chrysler, Dodge, and Jeep vehicles finishing well down the publication's reliability list. At the time, Betts said he was pursuing other interests, but the speculation was that Fiat Chrysler's Fiat 500, relatively newly arrived in the US, was considered such a reliability disgrace by Consumer Reports that Fiat Chrysler boss Sergio Marchionne was calling for a head.
Although there's been buzz around Apple's hiring of folks who have experience with battery development, electric propulsion, and hybrid drivetrains - not to mention some chatter about a talent war between Apple and Tesla - Apple has yet to bring on a single executive with either a significant electric vehicle background or a truly major-league auto industry background. By which I mean someone who has at least supervised the development of an important vehicle, or who has held a car job that parallels some of the bigger roles at Apple.
Mostly, Apple is bringing on relatively obscure people. Betts is something of an exception because he's distinguished, frankly, by not delivering quality products at Chrysler, although he did have a decent track record pre-Cerberus.
This contrasts with Google's hire of John Krafcik to run its self-driving car project. Krafcik, who worked at Ford, GM, and Hyundai is an important figure in the global auto industry, as we noted at the time he made the jump to Google.
But of course maybe Apple doesn't want people coming in with baggage. For example, Tony Posawatz left his CEO gig at Fisker Automotive, a bankrupt Tesla competitor, and moved into a role with an "EV advocacy group," according to Autoblog. Prior to Fisker, Posawatz was a longtime General Motors executive who led the development of the Chevy Volt hybrid-electric car - one of the few electric-tech vehicles that can give Tesla's cars a run for their money. He knows how to run an electric-car program.
Perhaps he's talked with Apple. But my point is that auto executives at that level aren't currently on the Apple "Project Titan" roster. Worst case, this means that Apple isn't really all that serious about cars and is simply maintaining an exotic side project to avoid being outrun by Google, which after all has been developing a driverless car for years, and Tesla, which consistently presents itself as a tech company as much as a car company.
It's of course tempting to say that Apple needs to make a big, showy hire to prove that it truly wants to disrupt the auto industry - and that temptation could be exactly what Apple wants to avoid. Sure, Apple hired Johann Jungwirth from Mercedes in 2014, and he was a guy who was supposed to be thinking about the Car of the Future and was based in Silicon Valley. But both those are effectively cul-de-sacs; in the US, the industry is based in Detroit and those who rise work on vehicles that can sell over half-a-million units per year.
I have the sneaking sense that Apple is really interested in making manageable hires in the auto industry space, so that the Apple leaders who've expressed opinions about cars won't have to be told that they would be nuts to pursue this or that strategy.
Is it electric?
One extremely difficult call on that front would be to inform Apple that electric cars aren't actually gaining much ground with consumers, Tesla notwithstanding. It's widely assumed that if Apple is planning to build a car, then that car must be electric. However, all the car makers currently selling EVs see them as a virtuous, largely experimental sideline. In the US market at the moment, big trucks and SUVs are where the action is at, even if GM made a splash at the recent Consumer Electronics Show in Las Vegas with its Bolt EV, now heading for production.
Apple, however, can't avoid building an electric car, even if the market doesn't want one. Would you buy an Apple Car that you need to gas up with, you know ... gasoline?!?! Would you buy a diesel Apple Car?!?!
Nothing to disrupt
Apple's legendary secretiveness is an asset here. No one expects to get any clarity on the car project, so it's all just thrilling free media for Cupertino as everyone ponders what the people who gave us the iPhone would do if they tackled the challenge of mobility.
That said, there really isn't a mobility challenge. Apple designer Jony Ive may dislike modern cars - and if reports are accurate, be displeased with what he's seen so far of the Apple Car project - but the bottom line is that most people can get exactly what they want when its comes to personal transportation.
The globe's automakers do a fairly good job of providing abundant choice - far more than what people can get when it comes to smartphones and laptops, all of which essentially do the same thing. If I have less then $20,000 to spend, I can buy a Toyota Prius and have a perfectly good mode of affordable, reliable, environmentally friendly transportation. If I have more than a million, I can buy a Ferrari LaFerrari and go from 0-60 in a claimed 2.6 seconds and feel like an astronaut being blasted into space.
The question then becomes: Is there anything here to disrupt?
If you assume that the world is moving inexorably toward autonomous fleets of networked cars that drive themselves, then yes. But Google is already way ahead of Apple with this theory. Tesla has shown that there's a limited market for all-electric luxury cars. But that's not really a massive disruption, just a different choice.
And even if Apple makes a car, who would it be sold to? If you're on your fifth BMW 3-Series and have considered and rejected the Model S for whatever reason, why would you take the leap on an Apple Car? This is the buyer Apple needs to capture, if it hopes to mimic its device profit margins with a car. Otherwise, Apple is doing fleet sales, a low-margin business. Fleet sales, it should be noted, to fleets of driverless cars that don't yet exist.
Bottom line: Apple has never done anything resembling a car before, so we should expect there to be some extremely high hurdles for the company to overcome. But Apple hasn't made the moves so far with the project that would fill anyone with confidence that the Apple Car will be a huge success.