Apple's car-making plan confirmed: self-developed chips, fully driverless, to be released in 2025

According to a report by Bloomberg on November 18th local time in the United States, the Apple car project "Titan", which was launched in 2014, has experienced several strategic swings on whether to build a car or not and has changed five persons in charge. It has finally been made clear that it wants to build a fully driverless car without a steering wheel, and plans to launch it within four years, which means that the Apple car will be officially released in 2025.

According to Apple's consistent product strategy, release is delivery. Of course, whether it is fully driverless depends on the legal situation at that time and the progress of autonomous driving technology. At present, Apple has developed a high-computing chip for autonomous driving and is ready to use it in its test fleet in California.

For the entire automotive industry, Apple, a complete outsider, is a potential player that cannot be ignored. If Tesla defined electric cars and popularized them, then Apple is the chosen one who can define smart cars and popularize them.

What should consumers expect from Apple Car? What will Apple's business model look like? And what will the arrival of Apple Car change for the automotive industry?

01 Abandoning mergers and acquisitions and developing its own cars

Let me first talk about the latest news about Apple Car: 

1. A fully autonomous car without a steering wheel, with a spacious interior and seating similar to the one launched by Canoo;

2. The in-car operating system will be similar to iOS, and there will be a large iPad-like display screen in the car. It is highly likely that Apple will develop its own in-car operating system;

3. In terms of charging, Apple cars will not have a proprietary charging port, but will launch a combined charging system or CCS standard compatibility. After all, charging electric vehicles is not as convenient as mobile phones.

So, how will Apple build such a car?

Apple's involvement in the automotive industry has started with CarLife, a mobile phone-car interconnection, and the well-known 72 self-driving test vehicles in California, and then the much-talked-about car-making plan. Apple's strategy in the automotive industry has actually fluctuated several times, and it has been undecided about whether to make cars or not. This has also led to the delay of Apple's cars several times. Che Zhijun speculates that the person in charge of the previous Titan project was unable to come up with a product that defines smart cars. 

During Tesla's most difficult years of 2017-2018, Musk also wanted to visit Apple CEO Cook to seek an acquisition. Cook said in an interview this month that he did not remember this. In addition, Apple was also reported by The Verge this year that it wanted to acquire electric car startup Canoo, and eventually recruited Canoo's co-founder. Earlier in 2019, Apple acquired autonomous driving startup Drive.ai for the same purpose of talent.

In fact, according to Apple's usual practice, it is unlikely that it will acquire a company to enter the car manufacturing industry. Apple still has to develop its own car. The latest person in charge of Apple's car Titan project is John Giannandrea, a senior executive of artificial intelligence. John replaced Doug Field, who went from Apple to Tesla for further studies and was responsible for Tesla's car manufacturing. The industry once believed that Doug Field was the most suitable person to lead Apple in car manufacturing. After all, he left Apple and went to Tesla to learn, and his experience of returning to Apple is very suitable.

However, this may be the most important reason for Doug Field's departure. His traditional brand prevented him from coming up with Apple-defined smart car products, and he could not come up with products that would make consumers "Wow". In addition to Titan, John was also responsible for Siri and machine learning technology throughout Apple's product line. This may be an important measure to make Apple Car a part of Apple's hardware ecosystem. Apple's smart car must be a product that is deeply integrated with Apple's existing hardware and software products.

In order to build cars, Apple has also poached a large number of people from car companies, including Tesla's software talents such as Stuart Bowles, the head of Tesla's autonomous driving, who was poached last year, and Christopher Moore, the software development director, who was poached this year. It also poached Porsche's vice president of chassis development Manfred Haller in February this year, and BMW's electric vehicle executive Ulrich Kranz in June.

With such a lineup, it is imperative for Apple to develop its own cars. The only uncertainty is whether Apple's cars will be produced by OEM or self-built factories. Previously, media reports said that Apple has been negotiating production matters with global automakers, and Foxconn has also actively entered the automotive industry, released its own models, and established an OEM joint venture with Geely. 

It is worth mentioning that Apple has been looking for automotive suppliers, the so-called "Double A Plan". Amazon and Apple are both looking for automotive suppliers in China. Apple has also negotiated with CATL, BYD and others in the battery field, and is also looking for other parts suppliers in China, including Taiwan Province.

02 Will Apple Car be priced to compete with Porsche?

In the latest report on Apple Car, Bloomberg said it has not yet confirmed whether Apple will sell vehicles to C-end individual consumers or provide Robotaxi services to compete with Waymo, Uber, Lyft, etc., but Bloomberg believes that the more likely scenario is that Apple will sell cars to individuals. 

In fact, Apple products have never provided services. In the automotive field, this may break this precedent. Apple may provide models for individual consumers and Robotaxi services respectively, and it is likely to launch models for individual consumers first. This model is likely to be priced to match Porsche's high-volume models, which is about 800,000 to 1 million. Of course, it may also go down. After all, the sinking market is a larger market. Tesla has also proved that even in the sinking market, the gross profit margin can still reach an astonishing 30% or more.

Among all luxury cars, even among all car companies, Porsche was the most profitable before Tesla came out. But Porsche still makes money by continuously launching lower-priced models, such as the Cayenne, Panamera, Macan, Boxster and other models with a price range of 700,000 to 1.2 million yuan. Of course, Porsche's behavior of waiting for car owners to add optional features through rough cars is unlikely to occur in Apple cars.

For Apple, in the field of mobile phones, it has always been a player in the high-end market. It once wanted to transform into a luxury brand, but failed. In the field of automobiles, the brand tone cannot be changed, and the high-end must be maintained. However, the scale of the high-end automobile market is not enough to support the scale. Therefore, Apple's car gameplay may still move from high-end to mid-range, and the product price will drop. After all, the unit price of Apple mobile phones is not comparable to the unit price of cars. 

As for whether to launch the Robotaxi model, it all depends on the realization of fully autonomous driving, including technological progress, legal permission, social acceptance, etc. However, if Apple wants to make Robotaxi, it will face huge operational and maintenance issues. Whether to do it or not depends on how big the market is. Companies of Apple and Huawei's size must be eyeing the super-large track. 

For Apple, the world's most valuable technology company with a market value of $2.57 trillion, the smart connected electric vehicle super track can provide Apple with a broader space. After all, Tesla's market value has steadily exceeded $1 trillion and is believed to have the potential to exceed $10 trillion. Once Apple launches the Apple Car and wants to make Apple Cars for more consumers, it is expected to open up new valuation space. Of course, don't forget that Apple is also eyeing the evergreen super track of health.

For the entire automotive industry, when the Apple car appears, we may see the starting point of smart cars, and then a new round of imitators will begin. After all, Apple's financial resources, intelligence, and ability to define smart hardware are likely to truly define what smart cars look like.