I Regret to Inform You, This is the Apple Car
The Apple Car rumors are back after Apple's most recent developer conference.
Based on Apple's history, the Apple Car seems unlikely, but it will be a major player in the automotive industry.
Where I think Apple will make its move into the auto industry, and why it's better than manufacturing a car.
After Apple’s Worldwide Developer Conference, where Apple ($AAPL) showed off updates to its CarPlay service, investors and others are hoping that the demonstration Apple gave is a peak into the beginning of the Apple Car. I regret to inform you that what we saw is the Apple Car.
I know that Apple has filed patents for new aged door hinges, and advanced defrosting systems, and a suspension and haptics system, but I still think none of that results in an automobile made by Apple. My thoughts have been, and remain, that Apple is vying to be the brains of cars, not to make the car itself. I don’t have the connections into Apple as someone like Mark Gruman of Bloomberg does, my thoughts are just a guess based on Apple’s past and its business DNA.
Apple has a history of zigging, when people are expecting it to zag. When people expected an iPhone with a physical keypad, they got an iPad. When people thought Apple would make a laptop with a touch screen to combat Microsoft’s Surface, Apple made better laptops and a better iPad. People thought the Beats By Dre acquisition was about Apple's need to be a part of the cool headphones trend, we found out later it was to help the company change from being a music seller to a music streamer. People wanted a television made by Apple, they got an updated version of Apple TV.
Three years ago, Apple acquiring Netflix ($NFLX) was a rumor / idea that people much smarter than me ran with. But if you've paid attention to how Apple has gone about building the Apple TV+ library, you'd see the Netflix acquisition rumor never made sense. Apple has cherry picked content for Apple TV+ like they’re curating a museum of fine art. There was no way that Apple was going to buy Netflix, a company that throws content at the wall with the rapidness of a humping rabbit.
Looking at Tesla ($TSLA), Ford ($F), GM ($GM) and Apple's capital expenditure-to-revenue over the last 10 years, building a car and all that goes along with supporting a car would pull Apple out of a zone it has been comfortable in. With all the money spent by Tesla, and with more than a decade into making cars, Tesla is still struggling with the fit and finish of its cars, as well as other aspects of manufacturing and selling cars at scale. I don’t think Apple is looking for hurdles that big to jump over.
The Apple Car speculation is playing out a lot like Apple TV, which is one of the more underrated creations that has come out of Apple. Today, we link smart TVs and flat screen TVs as being one and the same, but it wasn’t always so. The first flat screen TVs or TVs that could be hung on a wall were not smart, they were digital, and thinner versions of the previous TVs. The Apple TV device turned dumb TVs into smart TVs.
Apple is doing it again. They’re helping auto manufacturers create a product that feels like it’s been made by a tech company. On the list of companies Apple has partnered with, you may have noticed that none of the companies are of the new breed of automakers. Companies like Tesla, Rivian ($RIVN), Lucid ($LCID), and Fisker ($FSR) have been created with tech in their DNA, they don’t need what Apple is offering, yet.
To The Apple Investor
I know you wanted a car. An iPhone on wheels that you could own or rent, and talk shit to your Android friends from, but that’s not happening. What you saw at Apple’s latest developer conference is the Apple Car, but don't be disappointed. With time, Apple’s offering should morph into something that will come equipped with an NFC chip to make the car a moving Apple Pay, that will communicate directly with toll booths and gas pumps, and with some luck, Apple will also provide the hardware and software needed for autonomous driving for its automobile partners. Why does Apple need a little luck? Autonomous driving is a software and hardware problem, Apple's strength has always been hardware, not software. For the Apple die-hard that doesn't want to believe it, compare Siri to Google Assistant. Would you trust a vehicle controlled by Siri to drive you anywhere? This is why I think Apple is going to need a little luck with the autonomous driving aspect of this plan, but if they figure it out, hold on, Apple's valuation will skyrocket.
Investors shouldn’t be disappointed that they’re not getting a car, they should rejoice. There's no need to find a building to manufacture cars or a manufacturer to build the cars for you. No need to traverse the globe establishing relationships with body shops and leather makers, and no need to set up service centers. Apple will comfortably do for cars what they did for televisions, while still pumping out iPhones and professional tools for creatives. It’s not a car, but it’s still a win.