Should Tesla Be Concerned Over Apple’s Autonomous Car Ambitions?

3 weeks ago by Steven Loveday 11

Tesla

Image Credit: GoShiftKey

Though Apple seems indecisive and behind in the game, Tesla may want to keep a close eye, according to key Morgan Stanley analyst.

There are few analysts out there as bullish as Morgan Stanley’s Adam Jonas when it comes to Tesla (although he’s also just as vocal about his doubts). Just last month he downgraded Tesla shares, citing increased risk of competition. Jonas was referring specifically to tech giant Apple.

Apple CEO Tim Cook recently participated in a Bloomberg interview, in which he came clean about Apple’s future pursuits. Jonas explained in a note to clients (via Bloomberg):

Apple CEO Tim Cook

“In a recent Bloomberg interview, Apple’s CEO made some of the most candid and direct statements on the company’s position on disrupting autos and transport. Tesla investors must prepare for serious competition for talent and investment capital in this market.”

For some time, Apple was working on a secret project coined ‘Project Titan,’ which was seemingly the tech company’s attempt to bring its own car to market; the Apple Car. The project encountered many “turns” and “bumps” and then fell off the map. Later, it was leaked that Apple was shifting the project’s focus to the technology used for autonomous driving.

Soon after this information went public, Apple applied to the state of California for permits to test self-driving vehicles, and sent communication to the NHTSA and later the California DMV regarding autonomous vehicle rules. Jonas fears that Apple may begin moving forward with other steps as well:

“We believe Apple will eventually move beyond just software into designing a full car and/or launching a platform for third party services and content over time. This is because Apple argues it is most successful when it vertically integrates in a market, controlling the hardware and software and creating a platform.”

Apple is not the only competitor that will attempt to give Tesla a run for its money in the near future. Ride-sharing companies Lyft and Uber are already in the race, along with Alphabet’s Waymo (formerly Google self-driving), General Motors with the help of Cruise Automation and ride-sharing platform Maven, Fiat Chrysler, and BMW, to name a few.

Source: Bloomberg

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11 responses to "Should Tesla Be Concerned Over Apple’s Autonomous Car Ambitions?"

  1. Alltesla says:

    In response, Tesla should go in the cell phone business. Lots if cheap Chinese company in that business, don’t see why Tesla can’t do it

    1. vdiv says:

      Tesla is in the mobile phone business, it includes the phone booth with the 17″ touch screen 😉

  2. James P Heartney says:

    Given the consummate lameness of recent Apple hardware and software (and I say that as a long long longtime Apple user), I’m doubting Tesla (or Waymo) have much to worry about.

    Seriously, any piece of this tech (vehicles, components, software, distribution, support) takes years of testing and practice to get right. Apple’s core strengths (interfaces, tight hardware/software integration) will have only marginal overlap with the needs of this new business. And they’re starting far behind, without their visionary founder to invent new product categories.

    Since Jobs’ departure, Apple has been floundering. Now they’re going to flounder for a bit in the autonomous vehicle space. May possibly be entertaining.

  3. Pushmi-Pullyu says:

    “Later, it was leaked that Apple was shifting the project’s focus to the technology used for autonomous driving.”

    Hmmmm, well I think the “shift” was just the perception by industry watchers who had not actually thought the idea through, not that Apple ever wanted to get into the business of making cars.

    Some of us — including yours truly — thought from the start that the “Titan” project was about Apple developing a suite of hardware and software for self-driving cars, and not about Apple getting into the high-capital-investment, low-profit-margin business of making cars. The heavy industry of making automobiles is waaaaaaaay outside Apple’s comfort zone!

    Did Apple want to build some EVs? Well, likely it wanted to have some prototype EVs built, or modified, for its internal testing purposes, just as Waymo (formerly Google’s self-driving car project) has. Yet nobody is suggesting Google or Waymo want to mass produce EVs!

    “We believe Apple will eventually move beyond just software into designing a full car and/or launching a platform for third party services and content over time. This is because Apple argues it is most successful when it vertically integrates in a market, controlling the hardware and software and creating a platform.”

    I believe that the economic differences of light industry (Apple) and heavy industry (Tesla and other auto makers) isn’t going to magically disappear. Not ever.

    Intel uses the motto of “Intel inside” to indicate its computer chips being used in computers. Apple may well want to get into the business of having “Apple inside” cars made by auto manufacturers, for its suite of self-driving car sensors and software.

    Assuming Apple does get into that business, will this be a real challenge to Tesla? Well, I’m sure that Apple can challenge or even exceed the rapidity at which Tesla is developing its own autonomous driving systems… if Apple wants to spend the resources on that. Heaven knows Apple does have the ready cash to throw at such a project!

    But Tesla’s strength — at least according to one auto reviewer — is how well it integrates everything into its cars so that it all works well together, and to a noticeably greater extent than cars from other auto makers, things work intuitively. Unless auto makers actually do let Apple design the entire car — and the chances of that are, I’d say, slim and none — then “Apple inside” may be nice, but it certainly won’t turn a Chevy or a Toyota into a Tesla!

    1. Roy_H says:

      I couldn’t agree more. Only a few major auto companies will go it alone in terms of designing and developing autonomous driving and the rest will be glad to purchase that capability from Waymo, Apple or whoever.

      1. SJC says:

        Apple could own V2V and vehicle to intersection communications.

    2. James P Heartney says:

      Aside from the abortive Mac OS licensing program in the 90’s, Apple has always been about the tight integration of software and hardware. Whether it’s iPhones or desktops, Apple wants to control both the software and the hardware it runs on. I have a hard time seeing them abandon this to make a software suite to run on automaker hardware.

      1. Pushmi-Pullyu says:

        I would assume an “Apple inside” suite of autonomous driving hardware + sofware would include a computer or microprocessor from Apple to run that software. I agree that Apple would not be likely to try to modify its software to run on the different computers installed by the various auto makers in their cars.

        This is the way electronics are going these days, anyway. A dedicated microprocessor in every electronic device, rather than a centralized computer controlling everything.

  4. Roy_H says:

    I don’t think Tesla is concerned about any competition per se. Their concern is to get their product right, functioning well and reliability.

  5. ENOUGH says:

    NO Tesla doesn’t have to be concerned about any other automaker. PERIOD!!

    How many automakers are making EV’s today because of the fact Tesla released all their patents?

  6. Chris O says:

    Citing Adam Jonas again the guy who predicted that Tesla would sell 2000 Model 3s tops this year?

    These financial analysts aren’t about facts and truth, they are about destabilizing stocks because the profit is in the volatility.

    As for Apple: it certainly has the so very essential cash stack to be successful in the car industry, it should have no trouble financing losses for a decade or so and suppliers won’t hesitate to tool up for one of the biggest cash stacks on the planet. Problem is it won’t be able to bring a unique new ownership experience to the car market like it did in the mobile devices market because Tesla basically already has that very strategy in place. Maybe that’s why Apple is so hesitant to enter the market.

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