Poor, poor apple. The richest company in the world (it slides up and down, but always hangs at the top) just wanted to find a car manufacturer that would be its dance partner for its autonomous, electric car project. He probably foresaw that Hyundai and Nissan would fall over themselves for the mere opportunity to contribute all their latest technology and manufacturing expertise to a vehicle for which they would get no credit in the market.
Well, what a surprise – it did not happen. After Hyundai with (and leaked) a potential partnership, and then There are rumors about Nissan to do the same, Apple met a handful of automakers without showing anything for it. It now has little choice but to go to a contract maker like Magna Steyr or his famous friends at Foxconn, according to a new Bloomberg report.
It always seemed like things would go that way. This game from Apple that appealed to car manufacturers played out like a miserable season of the Bachelor where none of the contestants wanted to be there, but still showed up anyway. Apparently, Apple met with Ferrari during this exploratory phase, reports Bloomberg, which is tragically funny. There are no details on what the discussion entails, but whatever the topic was: ‘talks have not progressed’.
Hyundai, Nissan and Ferrari are not an impressive start-up – they are multinational companies that make cars longer than Apple computers. I would argue that Apple’s success over the past two decades is due to the surprising lack of hubris. Of course, he talks big, but he mostly stays in his job, suggests nothing until it’s really ready, and does not get into strange corporate ties and acquisitions that everyone can clearly see are doomed from the start. To think that it can essentially undertake an established car brand as a contract manufacturer is not characteristic of Apple, but exactly the kind of hubris you would expect from a company in its position.
Of course, it’s hard and expensive to make cars, and I understand why Apple wanted to give it a try. As Bloomberg rightly points out, this reflects how the company is building its device. Tim Cook’s crew designs the product and someone else builds it.
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But there is a difference between asking Magna Steyr to make your car and asking Hyundai. The latter has his own cars for sale, with his name on them. It probably won’t be as exciting if the result will be a thriving success. A useful analogy from Bloomberg:
A longtime driver of both Apple and Tesla Inc. said it would be like Apple beating the bitter smartphone competitor Samsung Electronics Co. asks to manufacture the iPhone. Apple wants to challenge the assumptions about how a car works – how the seats are made, what the body looks like, the person said. A traditional car manufacturer would be reluctant to help such a competitive competitor, the person said, who asked not to be identified and discussed private matters.
Yes, Apple has a history of emerging industries. It has changed the way record companies distribute music, and the way people buy it (well, until Spotify came along.) It has also changed the way software distributes. But shifting paradigms of how people find and use content is a whole other beast than a new invention of how cars are made – probably the most complex physical “stuff” we buy.
It is also much harder to make money from this gate. “Motor industry the profit margins are lower than Apple’s current model, ” Goldberg analysts said in a recent investment letter.
By opting for a partnership with a firm like Magna, Apple can avoid the inevitable conflict of egos that are likely to unravel if it chooses a factory partner for consumers. There is still a part of me that is shocked that a company with so much experience in selling things like Apple did not just save time and admit it sooner.