Based on a few rumors, reputable news publishers are claiming, with certainty, that Apple is working on an electric car. Despite the hype, Apple is not developing an automobile.
February 23, 2015 at 6:48 p.m. PST
Let’s face it, the Internet is full of misinformation. It used to be true that one could trust the online presence of a major publication. This is no longer true. Formerly trustworthy news agencies now seem to eschew fact checking and honesty. After a few reputable news publishers have gone in the direction of wild speculation, others have been forced to down to the lowest common denominator in order to compete.
Recently, the Internet has been flood with news stories about an Apple car that will debut in 2020. This is highly unlikely. Let’s take a look at the “facts” as well as the motivations for creating a mythical product.
What We Know About the Apple Car
The Apple car has been completely fabricated out of a few flimsy rumors. These are not even facts, but supposed leaks from sources. Since journalists often do not reveal their sources, we have no clue as to the validity of these facts.
One supposed fact is that Apple has a few hundred employees working on an automotive product with the code name “Titan”. The company has also hired several employees from the automotive industry. From these vague facts, major news publications and agencies, such as the Wall Street Journal, Reuters, and Bloomberg, have created a myth that Apple is working on an electric car. They even have a date when the car will go into production — 2020.
Another claim is that Apple engineers are working on new battery technologies. There is some speculation that these new batteries are intended for automobiles. This may be true, but it doesn’t mean that they will power an electric car. If Apple’s goal is to add their devices to your car, these technologies will need power. A car equipped with Apple products may very well need a dedicated battery to operate these gadgets.
If you own a car with a lot of built-in electronics, you probably know that it is rough on the battery. Many of the devices operate even when your car is turned off. Indeed, many new cars need to be driven at least once a week or they will not start. The electronics deplete the car battery, even when the car is parked and turned off.
There have been sightings of Apple minivans loaded with electronic gear. Many writers have come to the conclusion that this means Apple is working on a minivan. One might as well conclude they are developing a jalopy! These minivans are clearly working to improve Apple Maps. The notion that they are developing a minivan is ludicrous. This ridiculous speculation is all the more reason to doubt an upcoming Apple Car. This is simply digital pseudo-news garbage. It’s click bait.
Why There Won’t Be An Apple Car
It takes well-established car manufacturers about 5-7 years to design and manufacture a car. This takes into account that they have been doing this for decades and often base a new car on an existing model. Auto manufacturers also have a well-established supply chain and manufacturing facilities. They have a network of dealerships. Next to jets, spacecraft, missiles and ships, cars are some of the most complicated products to create.
Apple has absolutely no expertise when it comes to developing cars. In fact, they don’t even excel in many areas of computing. For example, Apple has no enterprise products. They do not make an enterprise database, like Oracle, IBM and Microsoft. They don’t make application servers either. Even when it comes to computing, Apple has a limited niche. They make devices, operating systems and applications for consumers and audio/visual professionals. Apple doesn’t even make video games. It is a quantum leap for Apple to get into car manufacturing, when they have been so careful to stick with what they are good at.
Steve Jobs, although deceased, still defines Apple’s corporate culture and operating values. One of his main criticisms of rival tech companies is that they lack focus. Apple has been successful because they don’t take on products that are beyond their expertise. They don’t have an Internet search engine, social network or enterprise products, unlike their competitors.
Apple focuses on creating personal computing devices, such as the iPod, iPhone, iPad and Macintosh. I think it is more likely that Apple will move away from the Mac Pro and other professional products, folding them into their personal products. After all, as computing power increases, devices like an iPad or low-end Macintosh are now more suitable for professional media production.
Most automobile manufacturers make very slim profit margins. It is common for automotive companies to make 1-2% in profit per vehicle. It is unlikely that Apple would get involved in any business with such slim profit margins. Each iPhone yields a whopping 69% in profit. Not even Porsche can achieve this kind of profitability. Apple would never get into an industry with such paltry profit margins.
If the rumors are true, Apple is working on expanding CarPlay and possibly offering other technology to auto manufacturers. Two hundred employees cannot create a car. Even if they are at the earliest design phase, two hundred employees working on “Titan” is evidence that they are not creating a car. This is total hype that has taken on a life of its own. It has made me lose faith and trust in news agencies that I once considered responsible. It seems that if the content is digital, it can be speculative and doesn’t need to be based on any facts. The Internet has descended to the lowest common denominator of dishonest, hype-mongering bloggers.
Apple Car Hype is Profitable
News agencies and publishers have a lot to gain by creating hype. If we look at the time this rumor has surfaced, it is during the slowest Internet traffic month of the year — February. Anyone who runs a website knows that February is a slow month. The holidays are over. Students are back in school. Employees are back at work. After the more relaxed months of December and early January, people are spending less time online. Digital media publishers get eyeballs on websites and videos by manufacturing hype. Unfortunately, they are rewarded for lying to the public.
Apple’s stock is one of the most valuable holdings an investor can possess. The moguls who own media companies also have a stake in Apple. Their stock is a staple of most portfolios. The hype generated by the Apple Car has caused Apple’s stock to skyrocket.
Unfortunately, the ones who created the myth may very well sell their stake before the hype bubble bursts. They will be the ones popping the hype bubble. Don’t expect to see these major digital media publishers admit they were wrong. It will be much more Orwellian. They will insist they always knew there would never be an Apple car. They may even delete any evidence that they speculated on this matter. The individual investor, relying on “news” for investment advice, will lose in the long run.
Apple Car Rumor Harms Car Manufacturers
Investors aren’t the only ones who may be harmed by false rumors of an Apple Car. This may put a dent in sales for auto manufacturers. Consumers who are considering purchasing a new car may wait. After all, they may want to see what Apple will unveil. In the meantime, they will make do with the car they have. The automotive industry is just recovering from the great recession. Reckless rumors could jeopardize their road to recovery.
An Apple Special Edition Car is Possible
Although Apple doesn’t have the expertise, capabilities or dedication to create a car of their own, the company is excellent at partnering with other ventures. “Titan” may very well be a partnership between Apple and several car manufacturers. We may see Apple editions of popular cars. This is only speculation, however, based on CarPlay and their ability to partner with other corporations (iTunes, ApplePay, Apple TV), this is far more likely than an Apple Car. When Apple has only dedicated 200 employees to “Titan”, it simply can’t be a car they build from scratch.
Apple Won’t Buy Tesla
Apple acquiring Tesla won’t help the Cupertino tech giant remain profitable. Tesla has yet to make a profit. If Apple were to acquire the car maker, it would reduce their overall profitability, which would affect their stock price.
Tesla couldn’t produce the quantity of cars that would meet the demand for an Apple Car. They are only using a fraction of the former NUMMI plant in Fremont. Unless Apple wants to make old Toyotas they need to retool and modernize the remaining factory.
Apple is sitting on a massive pile of cash, but that doesn’t mean they will spend it foolishly. It would make much more sense for them to invest in vertical integration — buy their suppliers or manufacture their own components.
Apple is Working on CarPlay
If it is true that two hundred employees are working on an automotive product, it is most likely CarPlay. Two hundred employees is not enough to build an entire car. In fact, this is a skeleton crew, even for a product like CarPlay. The problem is, CarPlay is just not sexy enough to get eyeballs on websites, videos and manipulate stock prices. Don’t believe the hype. Apple is not building a new electric car. If the rumors are true, they are not even taking CarPlay seriously. This is wild speculation with the intent of getting a few people rich. It actually hurts Apple. When the Apple Car bubble bursts, expect to see Apple’s stock price take a dive.