Should Apple Make Cars?

On Monday, Reuters reported that Apple’s self-driving car unit, in the shadows for years, is revving up to produce an electric passenger vehicle by 2024. The Silicon Valley colossus reportedly plans to implement innovative new battery tech to maximize range and minimize cost.

The takes were swift and they were hot

The bears were perhaps best summed up by Barron’s Senior Writer Al Root, who wrote, “making cars is hard.” The iCar haters say no amount of sleek minimalism can make up for the vast capital and manufacturing capacity it takes to churn out automobiles.

  • It took 17 years for Tesla to turn a profit making cars.
  • Skeptics of the move also pointed to the lower profit margins and valuations in the auto industry compared to tech.

Root suggested it would be wiser for Apple to pursue the route Alphabet’s Waymo has taken: developing self-driving tech to sell to automakers. Apple hasn’t ruled out that approach.

The bulls argue that while auto manufacturing takes a lot of cash, Apple is the rare company that has…a lot of cash ($192 billion at last count). Also, Apple investors are used to eye-popping growth—to keep its stock price on a roll, Apple needs to pursue new markets.

  • As for manufacturing logistics, Apple has managed to reliably move its products from factories to consumers, the bulls say, while Tesla hasn’t always checked that box.
  • Plus…you know you want to see what that design team comes up with.

Zoom out: While we don’t have a final verdict on the Apple car, we know it would be a challenge to Tesla. The EV maker’s shares slid in its first two days in the S&P 500 index, and Morgan Stanley analysts wrote that the news of Apple’s entry was “perhaps the most credible/formidable bear case for Tesla’s stock that investors have had to consider for some time.”

Tesla CEO Elon Musk seems ready for a fight. He tweeted yesterday that when the Model 3 was floundering, he approached Apple CEO Tim Cook about an acquisition at about 10% of Tesla’s current price. Cook “refused to take the meeting,” Musk said.

Full Article by Eliza Carter

 

Published by howard rudzki

Howard Rudzki HOWARD RUDZKI Howard Rudzki has turned his passion for bike riding, dogs and education into vehicles to help for good. He started out bike riding when he was 20 for the pleasure and enjoyment that a good ride provides and has been a committed cyclist ever since. Rudzki rides every week either by himself or as part of group and annually participates in fundraising rides. For the last three years, he has ridden in America’s Most Beautiful Bike Ride, raising money for The Leukemia & Lymphoma Society, whose mission is to find a cure for leukemia, lymphoma, Hodgkin’s disease and myeloma and improve the quality of lives for their patients and families.When he is not riding, Rudzki spends his time going to animal shelters across the L.A. Basin rescuing older dogs. He is committed to saving displaced, unwanted canines and rehabilitating them with proper medical and nutritional care so they can thrive in safe and caring homes where they will be a loved family member.In addition to helping animals, Rudzki believes he has an obligation to give back to underprivileged communities so that all children are able to receive a good education. Over the years, he has donated computers, printers and software to schools to help develop the future leaders of our city.