Apple is exploring development of its own car, according to multiple reports.
CEO Tim Cook approved development a year ago, according to Daisuke Wakabayashi and Mike Ramsey at The Wall Street Journal. Steve Zadesky, an Apple VP, has permission to hire 1,000 people to build an electric car.
This is fairly stunning news.
Apple makes high-margin computers that are replaced every 2-5 years. When people buy a car, they can own it for 10 years or more. (Though, leases are changing this, we suppose.)
The car business is not a great business. Tesla, the only company in the world making an electric car like Apple reportedly plans, reported a $US108 million net loss for the fourth quarter of 2014.
So, why would Apple do it?
The best way to figure this out is to look at Cook’s quotes. While Apple is largely a secretive company, its executives are refreshing honest, forthright, and thoughtful when they speak in public.
For instance, in 2013, speaking at the D Conference, Tim Cook was asked about Google Glass. He was largely dismissive of it, but he said, “I think the wrist is interesting. The wrist is natural.”
He then added, “For something to work here,” gesturing at his wrist, “you first have to convince people it’s so incredible that they want to wear it.”
A little over a year later, he revealed the Apple Watch.
So far, Cook has not said anything we can remember about the automotive industry. Nobody has really asked him since it seemed so far fetched.
In fact, the closest we may have to Cook alluding to an Apple Car, is when last September he said, “There are products that we’re working on that no one knows about. That haven’t been rumoured about yet.”
However, just because he hasn’t directly talked about an Apple Car, that doesn’t mean he hasn’t given hints about why Apple would be interested in doing a car.
The best way to think about this is to look at what he has to say about the TV industry.
In December of 2012, Cook was asked about the TV market. He said, “When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years. It’s an area of intense interest. I can’t say more than that.”
He reiterated that feeling last September saying, “TV is one of those things that is stuck back in the 70s. Think about all the things that have changed …and TV almost feels like you’re rewinding the clock, the interface is terrible. It’s awful.”
What would happen if you were to replace “TV” with “Cars” in those quotes? Would what Cook is saying make sense?
“[A car] is one of those things that is stuck back in the 70s. Think about all the things that have changed …and [a car] almost feels like you’re rewinding the clock, the interface is terrible. It’s awful.”
And here’s the other quote, changed up.
“When I go into my [garage] and turn on the [car], I feel like I have gone backwards in time by 20 to 30 years. “
Do those quotes make sense with car instead of TV in there? Definitely. In some ways, they make even more sense. It’s 2015, and our cars are still running on gasoline. At least TV is now delivered through the internet, and there are video apps changing things.
There’s been very little change for the car, a product that people use on a daily basis. It’s the perfect target for a visionary company like Apple to attack.
In 2012, the White House started to increase fuel standards. Here, according to the White House, is what the auto industry was doing on its own:
Thanks to their poor fuel standards, cars are big polluters. Cook has repeatedly shown an interest in environmental issues.
“We know, in Apple, that climate change is real. And our view is that the time for talk has passed, and the time for action is now,” said Cook this week at the Goldman Sachs technology conference.
He then announced plans to invest $US850 million in a solar power plant that will power all of Apple’s California operations.
An electric car would help cut back on pollution. (Yes, some people will say that an electric car will be powered through dirty sources of energy, but that’s silly. An electric car can be powered by solar energy. There is no solar-like alternative for fueling a gas-powered car.)
Then, there’s the technology and design aspects of making an electric car.
The interfaces for dashboards on cars today are a mess. Even Tesla, which is a Silicon Valley company with good design skills, has weak software.
The interiors on many cars are designed in a haphazard way that makes no sense. There’s fake wood here, then silver lines there, then a perforated plastic over there.
Former Apple board member Mickey Drexler said, “Steve Jobs, if he had lived, was gonna design an iCar. I think cars have an extraordinary opportunity for cool design.”
He also said that near the end of Jobs’ life, they were talking about the Tesla Roadster, Tesla’s first car. Jobs thought it was really cool. Drexler, however, was dismissive of the design. He said Jobs set him straight: “Steve said, you just don’t get it. The insides and the engineering of that car are brilliant. Anyone can design a great car, but they have the platform to do it.”
At 1 hour, 17 minutes he talks about it:
It’s not just Jobs’ that had an active interest in cars.
Apple’s SVP of internet services, Eddy Cue is on the board of Ferrari, which is getting ready to go public. Cue has been able to get a first hand look at how the high-end auto industry works.
Apple’s SVP of marketing, Phil Schiller, loves cars. He lists “cars” as one of his top interests in his Twitter bio, and for a long time pinned a tweet of a car to the top of his profile.
Jony Ive, Apple’s head of design, has a fleet of cars including Bentleys and Land Rovers.
So, clearly there is interest there from Apple.
Eventually, someone is going to ask Cook about the auto industry. And he’ll probably give a fairly honest answer.
Until then, this is our best guess: He thinks cars are still stuck in the past, and Apple has an opportunity to change the world for the better by making an electric car.