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- The much-discussed, mainly invisible Apple Car yet again broke cover last week, in a Reuters report that has some sort of Cupertino-created wheeled conveyance hitting the streets in 2024.
- Apple has allegedly been working on a car — codenamed “Project Titan” — for years, but the undertaking has gone through numerous iterations and leadership changes, with little thus far to show for it.
- For ultra-secretive Apple to suddenly leak a production plan for the iCar is suspicious — and no threat whatsoever to Tesla, which as we also learned last week from CEO Elon Musk tried to sell itself to Apple.
- More likely is that Apple wants to unload Project Titan, as an acquisition frenzy has heated up in the electric- and self-driving vehicle worlds in 2020.
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In the annals of the electric-car and self-driving-vehicle era, which kicked off in earnest about two decades ago, Tesla has been the dominant story. Apple has been a footnote.
Consider the contrast: Apple has become one of the most valuable companies on earth thanks largely to the iPhone and the ascent of mobile computing. Tesla has rewarded investors with a better-than-10,000% stock-market return since 2010 and now dominates the luxury EV market as the most valuable carmaker in the world.
But in the automotive world, Apple is known primarily for two things: Apple CarPlay, a useful but modest infotainment-system app; and Project Titan, Cupertino’s ballyhooed but mostly invisible car program.
Every year or so, Titan emerges from hibernation — sorry, “stealth mode” — to make some news. That happened again last week, when a Reuters report, citing unnamed sources, indicated that Apple was preparing to maybe, possibly launch a car that could perhaps be electric and, you know, might drive itself in 2024 or thereabouts.
A frenzy of speculation about what Apple, a company legendary for secrecy except when it has a deliberate plan to make some news, could be up to. Cue the hoary “Apple should buy Tesla” case, followed by an Elon Musk tweet revealing that he did pitch Tim Cook on the idea a few years back, only to be ignored.
Stock Market What is Apple really up to here?
The twist this time around was that Apple, with exactly zero experience designing, engineering, or assembling an automobile, would probably need a partner to get some iRubber on the iRoad. The usual suspects cropped up: contract manufacturer Magna, reportedly a one-time candidate as an Apple Car constructor; VW, which has developed an EV platform that it intends to market widely; and, yes, even Tesla, because nobody ever seems to tire of imagining Apple and Tesla in the same post-industrial, Silicon Valley dreamscape.
Lost in all this was Apple’s motives. Why, after years of silence, were we hearing about the Apple Car again? When last we checked in with Project Titan, it was being substantially dialed back, with layoffs and intentionally diminished expectations.
What’s changed since then is that the electric car is back in the wider conversation about the future of transportation, after having its thunder stolen by ride-sharing companies such as Uber and a gaggle of self-driving startups: Waymo, Cruise, ArgoAI, and others.
There’s also some notable financial buzz around EVs. Onetime Tesla competitor Henrik Fisker has returned with a new company, Fisker, Inc., which debuted on the public markets about a month ago via a $3-billion SPAC deal.
Another EV startup, Nikola, also went public through a SPAC, with General Motors initially taking an equity stake that it later jettisoned when Nikola’s founder, Trevor Milton, endured a bout of negative scrutiny from a short-selling research firm.
Professional investors like SPACs because they can raise a lot of money, and they like transportation opportunities because the electric-vehicle market could be on the verge of massive growth, especially if an incoming Biden administration pushes a lot of green-economy incentives and the China market doubles annual sales on the shoulders of EVs.
Stock Market Putting a for-sale sign on Project Titan
In this context, it makes perfect sense that Apple would want to put Project Titan back in the picture — not to do anything so stupid and cash-incinerating as creating an actual car, but to sell Project Titan and be done with it forever.
To borrow a poker term, what are the obvious tells?
The most glaring is that Apple’s reported timeline would have some sort of vehicle arriving in about three years. In the auto industry, concept-to-production can happen quite fast. GM was selling the Chevy Bolt EV at the end of 2016 in limited US markets, about a year after the car was greenlighted.
But GM had an entire factory in Michigan that was running at reduced capacity where it could build the car, and it had a relationship with a battery supplier, LG, and it also had a small hatchback platform, developed by its South Korean subsidiary, to take care of the engineering.
Starting from scratch, Apple would require anywhere from 12-18 months to produce an all-new vehicle, and that’s if it went with a contract manufacturer to handle all the heavy lifting. The 2024 date that was wagered last week is clearly too ambitious for reality. We would have seen some sort of concept by now. That we haven’t does not suggest a Steve Jobsian “one more thing” revelation for 2021 — even if Titan were a thing, it would be staggeringly costly for Apple to ram it through this late in the game.
Stock Market Apple can’t actually afford Project Titan
But Apple could afford it, right? Well, no. Apple has approximately $200 billion in cash on hand, and while that looks like a serious pile of money, GM just committed to spending $27 billion to bring 30 electrified vehicles to market by 2025 — a company that’s been making cars for over 100 years and has an electric history that stretches back to the 1990s. And GM doesn’t need any new assembly plants, which call for a free billion or two.
A run-of-the-mill compact SUV requires a cool billion to develop from a clean sheet, with internal-combustion technology that was perfected in the 1980s. Tesla has burned through many billions more to produce … four vehicles in 17 years. And to sell, if all goes according to plan, 500,000 in 2020.
Project Titan’s vehicle would need to be, to use the term that’s been bandied about since the news of its resurrection broke, “game-changing.” All-electric, with some type of radical new battery tech, as well as autonomous and conjoined with the Apple software ecosystem. All this from a company that couldn’t bring itself to take the risk of making a television.
Does something smell rotten in the realms of Apple HQ? Methinks it does. A vast amount of capital has been pumped into the world’s financial system since the Great Recession, but it’s having trouble finding anything major-league to invest in. The SPAC craze has created a way to gather up lots of cash to buy something, and the track record for these deals is impressive early returns, as investors look for something — anything — beyond Tesla to bet on that isn’t trapped inside the pokey economics of a legacy automaker.
There are some other factors to consider, chief among them the misinterpretation of the Project Titan leaks. The whole thing could just be another impending foray into an Apple takeover of the dashboard, something that several Big Auto executives over the years have told me would be fine with them, as they balk at investing in their vehicles’ user interfaces.
Stock Market You got to know when to walk away and know when to run
But let’s separate history from fantasy on the “Apple is going to sell a car!” front and consider Project Titan for what it has been: high-class vaporware. The nothing-burger of nothing burgers, starring, at best, some minivans driving around the Bay Area with the kind of self-driving sensors strapped to the roof that Waymo dispensed with years ago. And at worst, a sort of CarPlay on steroids, the automotive equivalent of AppleTV.
If I’m Tim Cook and reluctant to start a bonfire with Apple’s cash, at a time when the iPhone has gotten rather long in the tooth and the latest innovations from Cupertino have been a glorified fitness tracker and some expensive headphones, I’d like nothing more than to have somebody named SPAC show up with a few billion to take the hilariously misnamed Project Titan (Project Albatross?) off my hands.
If I’m special projects lead (and Tesla veteran) Doug Field and I could run Titan as a 2020s version of Tesla in 2010, I’d sign up for that potentially exhilarating equity event.
And what if I’m Elon Musk?
I’m feeling the sweet satisfaction of going begging to Cook, being rebuffed, and now having raked all the chips to my side of the table while Apple has folded.
As far as Project Titan goes, you got to know when to walk away. And if you’re Apple, you got to know when to run.
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