The July cover story of the German manager-magazine features an extensive article on Apple’s secret car-project code-named Titan. The authors were able to interview several automotive executives (though all remain anonymous and no companies are named) that show the far reaching contacts between the Silicon Valley giant and the German automotive industry. Apple has spoken with all major car makers, but it’s a delicate dance. Apple can benefit from German craftsmanship and experience, but so far none of the talks have lead to any official announcements.
Project Titan is insofar interesting and threatening for German car-makers, as they are considered premium brands with German engineering’s high reputation. This is exactly the segment that an Apple car would be targeting. With design, an extensive digital experience, and high quality Apple would try to occupy the premium market in line with their digital devices.
What this means for car makers is clear: On the one hand this could lead to fierce competition, on the other hand for those partnering with Apple this could lead to a profitable windfall given Apple’s past success story. Both sides are pampered by success. German car makers have been very successful, and even in the aftermath of the Diesel-scandal not much has changed in their behaviors. And Apple is used to encounter devout partners who do as Apple says, but this time this doesn’t seem to work. A meeting with a top car supplier nearly folded before it even began, because of restrictive clauses in Apple’s NDA. This NDA would have granted all ideas generated in the meeting to Apple, which the supplier refused. Apple’s lawyers were puzzled, and one said “We are Apple. What do you think you are doing?”
To gain more insights Apple has been aggressively investing in car startups. Chinese Uber rival Didi Kuaidi received a one billion Dollar investment to share the data and driving behaviors with Apple. Apple’s also talking to potential manufacturers. Magna is high on the list and technically could build the whole car. And the Germans are concerned. Rumors have it that the big three (BMW, Audi, Mercedes) agreed on a joint strategy: cooperate only in limited areas with Apple. Connecting Android and Apple phones to the car is OK. Access to the complete OS or data? No way. But this alliance has proven shaky. Too important is Apple and everyone fears that one of the others will break out of the alliance and work with Apple – and make shitloads of money.
In the talks with Audi Apple discussed connectivity ideas, with Mercedes a joint car model, with Bosch electric motors, and with Conti discussions were around their whole technology offerings. For a time it looked like BMW was most advanced with negotiations with Apple, but that’s over. For now.
So what about the car? A few things seem to be certain: the car is electric, and it drives autonomously. The target market is – like with their digital devices – people with above average incomes. The price is expected to start above 100,000 Dollar. Three models are supposed to be in the series, with a luxury model at the higher end to a middle class car. Similarly to how Tesla started out.
Apple’s goal seems to be to produce half a million car right from the beginning. While Apple produces 230 million iPhones a year, 500,000 cars from nothing is a different feat and virtually unheard of in the car industry. Tesla’s announcement to ramp up car production to half a million by 2018 was met with incredulity in the car industry. It’s tough to build a car, and the complexity is surprising, but Apple has often done the impossible. However, if Apple is able to work with an experienced supplier this may be doable.
The digital experience in the car is where Apple’s car will be spectacular. Suppliers who have seen the designs were raving about a revolutionary concept. Everything will be controlled by a central unit – in contrast to today’s cars who have up to 100 decentralized units. AR/VR are a must in the car. The operation system matches simplicity like the iOS and shows the holistic approach of the experience in a car.
Without the history and burden of the car industry, Apple can break a lot of rules and move flexibly and fast. That makes them dangerous for the traditional industry where car makers have to support old series and keep staff on technology that will be outdated soon. With Apple Maps the company also has a map solution that is a prerequisite for autonomous driving. Apple hired 4,000 people in Hyderabad to improve the map data. Apple also showed interest in the Israeli company Mobileye that makes driving assistance systems as used in the Tesla Autopilot and in many other cars.
Money is not the problem at Apple, with cash reserves way above 100 billion Dollars. Already over 1,000 people are working on Apple’s car project and technology-wise the company seems ready to release the car in 2019. Whether this will happen is unclear, given Apple’s drive for perfection. While 2018 was the original internal goal for a release, the date has moved first to 2019, then 2020, and now by another 2 years. Apple-CEO Tim Cook wasn’t happy with the concept. He considered it not radical enough. What he is aiming at is the ‘Disruptive Drive’ – a car that is as disruptive to the car industry as the iPhone was to the phone business.
German car makers fear that Apple is mainly interested in getting access to knowledge and talents. Some people now working for Apple such as Chris Porritt (former head of development at Tesla), Doug Betts (former head of quality at FiatChrysler), or Paul Furgale (former vice-head of autonomous driving at ETH Zürich), were all poached from them.
Apple’s culture for secrecy is legendary. In Apple’s HQ in Cupertino Project Titan meeting rooms are locked and only if you have an invitation you can enter the meeting room for this specific meeting. This special culture has been off-putting for some talent. Also that at Apple not the engineers are the kings (like in the rest of the automotive industry), but that Apple is run by designers.
Whatever Apple will release: they showed in the past that being the first is not important. Being the best is. And that’s where they have a track record.