When the first report came out a little over a week ago that Apple has an internal team working on an Apple-branded electric car — that might or might not actually launch one day — it was easy to avoid weighing in. Apple no doubt has a lot of teams that work on new ideas and it’s no secret that tech giants like Apple and Google, which have transformed the cell phone market, have been eager to play a role in another screen in our lives: the auto dashboard.
But then more specific details emerged: A reported launch year for an Apple electric car (2020) and reports about specific employees that Apple poached for its electric car team — including people from Tesla, car battery maker A123 Systems (which is now suing Apple), several big auto makers and a series of auto supply firms. And then this weekend I finally got a chance to read the long New Yorker profile of legendary Apple designer Jony Ive, which referred to Ive and recently hired Marc Newson (who previously designed a Ford concept car) as “car guys” who “feel disappointed with most modern cars.”
While many of the media reports seem a bit over blown (a minivan, guys?), clearly there’s something going on. It’s not that surprising that Apple would be so interested in investigating and internally building — and spending a decent amount of cash on — electric car technology. Whether the company will actually launch an Apple-branded electric car in 2020 is an entirely separate issue.
I would guess that Apple itself doesn’t yet know if it really wants to be an independent auto maker. That will probably depend on what Apple’s code-named “Titan” project actually produces.
But Apple probably has a variety of projects around electric vehicle technology, battery innovation, self-driving car software and more sophisticated car navigation tools. And investing substantially in exploring electric car technology could be highly beneficial to Apple is a variety of ways. Here’s why:
1. Battery tech needs: With the emergence of electric cars, automobiles are essentially large consumer electronic devices. Battery technology that works in consumer electronics can either work directly in electric cars (as Tesla showed) or strongly influence the batteries used by electric cars. More than anything, battery development has been a pain point for Apple’s devices, and that will be increasingly true as Apple launches even smaller form factors that have less room for batteries, like wearable devices.
Apple has actually been aggressively amassing battery talent and intellectual property for quite some time now. Last summer, when I was thinking about this topic and I did a search, Apple had over a dozen openings listed for battery experts across battery chemistry and materials, battery management systems, battery system design and even battery manufacturing and supply chain.
I once heard a rumor that Apple had acquired some of the patents (like this one) and some of the team from a now defunct thin battery startup called Infinite Power Solutions. I wasn’t ever able to confirm that as more than a rumor, but Apple has scooped up talent from other ailing battery startups over the years.
Former executives from Leyden Energy (which seemed to have wound down last year) and even Envia (which struggled mightily) now work at Apple. For folks who work in the difficult battery startup world, it’s clear that Apple has long had an oversized interest in recruiting.
A123 Systems has now filed a lawsuit about Apple’s poaching practices, and Tesla’s Elon Musk has complained that Apple has been offering Tesla employees $250,000 signing bonuses and 60 percent salary increases. That’s a suggestion that Apple has become somewhat successful at getting the talent it wants.
2. Keeping current talent inspired: The Wall Street Journal noted in its initial report that “Titan” “has persuaded many Apple employees who were thinking of leaving the company to stay and work on an exciting new endeavor without the pressure of churning new products every year.” The New Yorker profile of Ive quoted musician Bono as saying “What the competitors don’t seem to understand is you cannot get people this smart to work this hard just for money.”
The same type of engineers who work at Tesla work at Apple: They’re interested in mission-driven, globally important and difficult projects. That’s one reason why it’s been so important for Apple CEO Tim Cook to embrace the company’s 100-percent-clean-power mission. As Apple matures, it will have to keep finding these new points of inspiration for some of the smartest and hardest-working thinkers in the world.
Members of Apple’s design team, in particular, have backgrounds in design. Besides Ive and Newson, there’s Julian Honig, a respected former senior designer at Lamborghini and Audi, and Jim Cuseo, who led work at Ford, MIT Motorosports and MagCanica.
3. Tesla isn’t Apple’s competition, Google is: I think that Apple’s interest in electric car vehicle tech — from batteries to self-driving software — is more inspired more by arch competitor Google than Tesla. For years, Google has been building its own electric cars, electric car software, and self-driving cars (which will be electric). Google also had a much earlier lead on building mapping and vehicle navigation systems, and look how that turned out for Apple. Apple needs more Google-style deep-tech R&D to maintain its growth in the future and get ready for the next waves of computing, from devices on the body to devices we drive.
4. The market for electric cars is early: If Apple plans to launch its own electric car some day, now is the time to get in. Tesla proved that there is an appetite for a user-centric, well-branded, well-designed high-end electric car, and Elon Musk has followed the Apple play book for many decisions, from launching Apple-style retail stores to maintaining a hardcore focus on product for the Model S. It’s almost as if Musk has been acting like a mini Apple testing the waters to see how some Apple-style car would fare in the world.
Of course, beyond the similarities, Tesla has loads of electric car intellectual property amassed over the years. Musk says he wants to be more open source about Tesla’s patent portfolio. I wonder how he’d really feel about Apple using his patents to build its electric car, while it’s offering his talent $250,000 signing bonuses. Or maybe he wouldn’t see that as using Tesla patents “in good faith.”
Musk ultimately “opened” up Tesla’s patents because he knows that the electric car market needs to grow on its own for Tesla to do well. The company made 35,000 cars in 2014, an impressive feat, but the market is still tiny. If Apple did one day launch an electric car, it would no doubt help to grow the electric car market considerably. In that sense, it could be a good thing for Tesla.
What would be really cool — but doesn’t seem probable — is if Tesla and Apple actually worked together. Tesla worked with third-party car companies regularly in the past, but in recent years it has moved on from those projects in order to focus on the Model S, X and 3. Tesla could provide the “Intel-inside” for Apple’s car hardware and software designs. Now, I would buy that.
5. Self-driving cars and transportation software: Beyond electric cars, there’s no doubt that transportation in general is changing, and Apple and Google are prime companies to own future transportation operating systems. Someday self-driving cars will be much more common, and they’ll be driven by software, leveraging sophisticated data sets.
The Googles, Amazons, and Ubers of the world are already getting ready for this type of ecosystem, not the Detroit automakers. Apple most likely has projects in this area, even if it doesn’t involve electric cars. But having its own hardware to test out in these environments could be beneficial.
6. Now for the speculation: O.K., say Apple does launch an electric car in 2020. No way it’s going to be a minivan. Apple designers would never be inspired by launching a minivan, and I would guess it’s being confused with this Apple minivan project.
I think that Tesla probably inspired Apple, but Apple probably doesn’t fear competing with Tesla. Apple has $178 billion in cash and a market cap triple that of Toyota’s. Musk said on Tesla’s most recent earnings call that Apple spends money like it’s water. He also said that Tesla could be as big as Apple in a decade if it hits the milestones he expects. Looking back at Tesla’s earnings call, come to think of it, there was a lot of Apple talk.
The really exciting part about Apple launching an electric car would be what the company could do to speed up the adoption of electric cars, pushing the fossil-fuel car into the past. Apple and Google singlehandedly changed the cell phone industry, so why not the car industry? To maintain its current crazy growth trajectory, Apple needs entirely new markets — like the trillion-dollar auto industry.