Apple Car Development Reportedly Stalls as Apple Implements Hiring Freeze

[jlc1978]

Oh. That's not at all insane. Look at Apple and compare them to every other phone manufacturer (especially pre-iPhone).

The iPhone blows way ahead when you look at top selling phone models because Apple doesn't make 30 different phone models. They make just 5, and only 2 are current.

Same with their computers. The MacBook Pro blows away any other specific computer model because Apple doesn't make hundreds of models like Lenovo, HP, and Dell do. Apple makes just 6 different models of computer, each one with a pretty distinct purpose.

Similarly, Tesla will have just 3 car models. The S, the X, and the 3. Each one will perfectly fit its target market. None of the hundreds of variants ******** that other companies do.

Pick the model you're releasing and go it 100%. Don't make dozens of prototypes then have your customer pick which one to buy.

There are several problems with that approach:

1. Cars are not computers, or phones, or watch. A purchase represents a significant amount of money and manufacturers build variants to hit price points within each market segment. That way, they can sell someone the same basic car for 25K or 50K+ depending on what the person wants. With Tesla, if you don't want to pay their price you have no other options, which limits the ultimate buying population.

2. Apple gets away with a small product line because no one else makes computers that run OS X. That is the draw for Macs, while other manufacturers are essentially building a commodity item that is easily substituted for by an Windows box. Thus, they must try to differentiate their offerings and styles proliferate.

3. Tesla is betting the company on each model. If they guess wrong and one model fails to generate sales they may very well not survive; whereas the other manufacturers have plenty of other vehicles to sell to make up for mistake; and can move production from, or simply stop making, slow selling ones. Tesla won't have that luxury.

Personally, I think the battery manufacturing and vehicle control technology is more valuable than the car building part of Tesla.
[doublepost=1453821881][/doublepost]

Apple would be absolutely STUPID to use a chassis like the i3. Nobody would buy the damn thing because it has a real world range of under 100 miles. Tesla plans to ship a 200+ mile range Model 3 next year for $35,000 (before tax credits) and Chevy is going to ship the Bolt this year with a 200 mile range. The i3 is already outdated by a large margin and BMW doesn't seem capable of increasing its range in any meaningful way.

Unfortunately, it seems tax credits are starting to go away, so it'll be interesting to see how many people are really willing to buy a 35k car that has a useful driving radius of 100 miles. That's the real problem for EVs; they're great for short trips but pretty much useless for extended ones. It's hard to overcome a buyer's concern they can't use the car for a long trip without risking getting stranded.

 

[derbladerunner]

You're referring to Gigafactory 1. Where did you get 2020 from? Everything I've been hearing is 2017-2018.

Gigafactory 2 is expected to have a similar capacity and be built in China, with construction starting as Gigafactory 1 construction finishes up.

Gigafactory 1 (the one in Nevada) will only be fully operational for an output of around 500k EV batteries/year by 2020. That's per Tesla, not my estimate.

Below is a press report, Tesla has only built one of seven sections so far. Only that first section will be fully operational by the end of 2017:

http://insideevs.com/first-phase-building-tesla-gigafactory-nearly-complete/

Cell production for energy storage products will start this year, cell production for cars will start in 2017 according to Tesla.

Gigafactory 2,3 is a pipe dream at this point (otherwise please show my concrete proof that Tesla has secured land and money). Tesla would have to raise fresh billions.

As I outlined in an earlier comment Tesla has other issues at the moment: It will first have to raise (more) money to be able to finish the rest of Gigafactory 1 and the Model3. Both projects will require additional billions until 2020, Tesla doesn't have that money on its balance sheet as of early 2016.

Tesla also won't be cash-flow positive on an ongoing basis until 2020 (again, the company is saying this). Which simply means: Tesla will require a lot of fresh outside money between 2016-2020 to keep them going and growing.

That's one of the key advantages for Apple with its huge cash fortress. Apple can sink a few billions into electric cars and related projects such as assisted driving and fail. That will of course anger shareholders, maybe cost Tim Cook his job etc. in the worst case, but it won't sink the company.

Tesla on the other hand could fail unless Google or someone else rescues them in case of major cash-flow issues or setbacks/recalls (a major recall or litigation can cost billions in the car industry) over the coming years.

 

[oliversl]

The iPhone with Steve Jobs's team, 3 years. A car with Tim Cooks's team, 12 years. 2027 here we go!

 

[duffman9000]

The iPhone with Steve Jobs's team, 3 years. A car with Tim Cooks's team, 12 years. 2027 here we go!

You're comparing a car with a phone?

 

[derbladerunner]

Apple would be absolutely STUPID to use a chassis like the i3. Nobody would buy the damn thing because it has a real world range of under 100 miles. Tesla plans to ship a 200+ mile range Model 3 next year for $35,000 (before tax credits) and Chevy is going to ship the Bolt this year with a 200 mile range. The i3 is already outdated by a large margin and BMW doesn't seem capable of increasing its range in any meaningful way.

The interesting aspect of the BMW i3 (for Apple and others) is the use of carbon fiber, not the battery.

Regarding the "outdated" range of the i3. Everybody is using the same battery suppliers, there is no magic bullet. BMW is no worse than its competitors. All electric cars priced below $40k only offered a range between 70-110 miles so far.

The main difference up to now was the cell form factor. In short:

- Tesla is the only car company using small cylindrical cells (so far). Panasonic had overcapacity in Japan (from old Sanyo plants coupled with lower demand for laptop batteries using the same form factor, i.e. laptops and other devices got too small/thin to use these batteries) and could therefore give Tesla a great price.

- All the other car companies are using pouch/prismatic cells which used to cost more. These are coming mostly from Asian suppliers as well (LG Chem, Samsung, Yuasa, BYD and so on...).

LG Chem has signed the most contracts for upcoming electric cars, they will for examplealso supply the battery cells for the Chevy Bolt you mentioned.

The cost and energy density is getting close. Soon, equivalent pouch/prismatic cells will not cost more than cylindrical cells using similar chemistry.

Volume will of course also drive prices down.

LG Chem has a likely advantage in the coming years because they signed a lot of supplier contracts with many big car brands. Same for Panasonic if Tesla can sell the Model3 in the anticipated numbers.

The three global battery winners for cars using current Li-Ion technology look like:

LG Chem, Panasonic and Samsung (in that order).

BMW is using Samsung as EV battery supplier and is not worse than others in terms of range per battery kilogram or liter. It's just that the BMW i3 has a small battery compartment:

http://evobsession.com/electric-car-range-comparison/

BMW will update its i3 car later this year with new batteries (rumored range increase of 30-50%).

Coming back to Apple; One interesting question for Apple's "Titan" project is which battery supplier they will choose for their first car - and if they wait for next-gen battery technology (solid-state batteries or similar new batteries coming beyond 2020 with much better specs) or still use advanced current Li-Ion batteries.

In any case, Apple or the battery supplier can't hide this project. As we saw with the Tesla Gigafactory, ramping up production for a few 100k electric car batteries/year requires a huge factory and billions in investments.

Free battery capacity isn't there for Apple (or any new entrant) at the moment, that's why Tesla had to build its own battery factory with Panasonic in Nevada.

It takes 2-4 years to build such a giant factory. Apple will have to decide on a battery supplier quite soon (who will then have to build a new plant) if they want to ship an electric car by 2019-2021.

 

[MarkusL]

You're comparing a car with a phone?

We're getting there. The phones are getting bigger and bigger!

 

[ArtOfWarfare]

There is no way Tesla is going to make up 8% of world wide car sales in the next few years, with 3 models, all priced >$35k.

Musk announced that the pre-incentive price for the base Model 3 will be $34K. Federal incentives bring it down to $26.5K (until Tesla is selling 200K units per year, at which point the federal incentive is reduced to $5K). MA state incentives bring it down a further $2.5K for me, to $24K.

Some other states are even more generous. Louisiana offers $8K off, which when combined with current federal incentives brings the base Model 3 all the way down to $18,500.

So the Model 3 is expected to be a good deal cheaper than you think.
[doublepost=1453839801][/doublepost]

Unfortunately, it seems tax credits are starting to go away, so it'll be interesting to see how many people are really willing to buy a 35k car that has a useful driving radius of 100 miles. That's the real problem for EVs; they're great for short trips but pretty much useless for extended ones. It's hard to overcome a buyer's concern they can't use the car for a long trip without risking getting stranded.

That's a concern limited to the manufacturers that either:
A - Don't build their own charging networks.
B - Don't build cars compatible with Tesla's.

Tesla already open sourced their patents. All the car companies have to do is make something that's compatible.

I'd understand their refusal to hand their fate over to Tesla if they were building their own charging networks, but they're not. Instead they seem content to just sell cars with limited range and very slow recharge times.

 

[jaymzuk]

It takes 2-4 years to build such a factory. Apple will have to decide on a battery supplier quite soon (who will then have to build a new plant) if they want to ship an electric car by 2019-2021.

The time frame for a 2019 ship date is gone. A traditional mass auto maker would be looking at around 4-5 years start to finish, with many more people working on the engineering side, full service suppliers working on engineering, powertrains ready off the shelf or ahead in engineering/manufacture and a plant and supply chain that already exists.

While it's possible that Apple have been working on this for some time, the infrastructure just isn't there to pull it off alone and I don't think Apple have staffed up fully yet for a serious tilt at mass manufacturing.

 

[megadon]

That's assuming Apple is correctly valued. I think that's BS. Apple leadership would be derelict in their duties if they're not thinking beyond their current product portfolio. No publicly traded company exists just to maintain, every company is looking for growth opportunities. Plus it's impossible to retain and attract the best talent if they're not constantly being challenged.

I fully agree that public entities need to increase shareholder value, however, during the last 10 years investors are less willing to pay the same premiums for Apple shares when compared to its peers within its own industry. This is a reflection of investor sentiment on the growth rate of apples earnings.

This doesn't mean Apple is not a great company to invest in, but they haven't shown signs of any products in the pipeline that can increase their bottom line when the iPhone is around 60% of their revenue.

Apple Watch is a great example. Even if they sell 40 million watches, which is a huge number, it will only increase their bottom line slightly due to the massive iPhone revenue that dilutes other incomes sources.

If you look at apples growth in the last 5 years which is around 110%, it's going to be extremely difficult for them to maintain that growth in the next 5 years. That would mean they need to increase their market cap by over 500 billion. Which is extremely unlikely.

With all that said, it doesn't mean Apple won't increase shareholder value over the long term.

 

[jlc1978]

That's a concern limited to the manufacturers that either:
A - Don't build their own charging networks.
B - Don't build cars compatible with Tesla's.

Tesla already open sourced their patents. All the car companies have to do is make something that's compatible.

I'd understand their refusal to hand their fate over to Tesla if they were building their own charging networks, but they're not. Instead they seem content to just sell cars with limited range and very slow recharge times.

why should they? Incompatibility means Tesla is simply an afterthought and will have to spend considerable dollars building out a charging network; money that is needed to build new models. If I ran a car company I'd happily let tesla runout of cash and go away.

 

[Mactendo]

Where there's Ive there are always "tensions", "displeasure" and talented people get fired left and right. He's ruining the company. Ive, his megalomania and Cook should leave. Just leave.

 

[PortableLover]

An apple car.. Wonder if it wull have battery molded in almost every crevice in the car body.

 

[Pilgrim1099]

Where there's Ive there are always "tensions", "displeasure" and talented people get fired left and right. He's ruining the company. Ive, his megalomania and Cook should leave. Just leave.

Agreed. Including Cue and probably Schiller. But Cook and Ive are, IMO, prima donnas. Not to mention Jeff Williams. I don't trust the idea of him as COO. Something doesn't smell right to me if he and Cook graduated from Duke Uni. There's something " nepotistic " about his promotion.

 

[opfreak]

Musk announced that the pre-incentive price for the base Model 3 will be $34K. Federal incentives bring it down to $26.5K (until Tesla is selling 200K units per year, at which point the federal incentive is reduced to $5K). MA state incentives bring it down a further $2.5K for me, to $24K.

Some other states are even more generous. Louisiana offers $8K off, which when combined with current federal incentives brings the base Model 3 all the way down to $18,500.

So the Model 3 is expected to be a good deal cheaper than you think.
[doublepost=1453839801][/doublepost]

That's a concern limited to the manufacturers that either:
A - Don't build their own charging networks.
B - Don't build cars compatible with Tesla's.

Tesla already open sourced their patents. All the car companies have to do is make something that's compatible.

I'd understand their refusal to hand their fate over to Tesla if they were building their own charging networks, but they're not. Instead they seem content to just sell cars with limited range and very slow recharge times.

when wrong you double down

your 128x growth rate would mean that in 2-3 years tesla will produce 6.4 millions cars. that's just not going to happen.

 

[8800]

Fkn iSheeps

 

[ArtOfWarfare]

why should they? Incompatibility means Tesla is simply an afterthought and will have to spend considerable dollars building out a charging network; money that is needed to build new models. If I ran a car company I'd happily let tesla runout of cash and go away.

Having their cars work with Tesla's charge network doesn't really stand to benefit Tesla, and would definitely benefit the other company. Utilizing their network in no way props Tesla up. It does help you have a more viable product. BMW looks like a joke right now selling the i3. It's literally a punchline. It gets a range of 100 miles. There's few chargers available for it. The chargers that work with it only give it 5-10 miles of range per hour.

If they were compatible with Tesla's network, there'd be hundreds of chargers across the US that they'd be compatible with, and they'd be able to be fully charged in 30 minutes (instead of 10-20 hours). They'd have a vastly more viable EV car (although that tiny battery is still super iffy. A range of only 100 miles? Really? I regularly drive 120 miles a day... there's no way I'd ever consider a car with anything under 150 miles of range.)

 

[derbladerunner]

Having their cars work with Tesla's charge network doesn't really stand to benefit Tesla, and would definitely benefit the other company. Utilizing their network in no way props Tesla up. It does help you have a more viable product. BMW looks like a joke right now selling the i3. It's literally a punchline. It gets a range of 100 miles. There's few chargers available for it. The chargers that work with it only give it 5-10 miles of range per hour.

If they were compatible with Tesla's network, there'd be hundreds of chargers across the US that they'd be compatible with, and they'd be able to be fully charged in 30 minutes (instead of 10-20 hours). They'd have a vastly more viable EV car (although that tiny battery is still super iffy. A range of only 100 miles? Really? I regularly drive 120 miles a day... there's no way I'd ever consider a car with anything under 150 miles of range.)

All other car manufacturers have long decided on two other standards for fast-charging (DC) electric cars:

- Chademo: Mostly Nissan, but also many other Asian car makers
- CCS ("Combo"): Basically all European and U.S. car makers

CCS will be updated to 150kW (or even 350kW for buses etc. later) before the end of the decade, putting it on par with or even surpassing Tesla's charging speed:

http://insideevs.com/audi-bmw-daiml...art-150-kw-charin-ccs-fast-charge-initiative/

I don't see why each car manufacturer should create its own plug and charging system, that will result in a giant mess.

CCS is the open standard that everybody in Europe and North America agreed upon.

I see CCS winning out because all Western car makers (except for Tesla, they had to find a solution for their big batteries and the CCS standard wasn't fully ready when they launched their Model S in 2011/2012) support this standard for DC charging.

Most new charging stations now feature two plugs for DC charging, Chademo and CCS:

http://insideevs.com/nissan-bmw-team-deploy-120-dual-chademo-ccs-fast-chargers-u-s/

Tesla will have to adopt to the rest of the auto world, not the other way around...

 

[Arran]

Just curious what experience Elon Musk had in heavy manufacturing prior to Tesla.

That's a good question and I don't know the answer, but the fact that Tesla's offering cars priced around $100,000 with lower than average reliability ratings might be a clue:

http://www.consumerreports.org/cars/tesla-reliability-doesnt-match-its-high-performance

There's no* way I'd spend that amount of my own money on an automotive newcomer with no track record.

* I guess, maybe if I was a car collector with limitless funds and the Tesla wasn't my main transportation? More of a hobby car, really. But that can't be a big market, surely?

 

[ArtOfWarfare]

Just curious what experience Elon Musk had in heavy manufacturing prior to Tesla.

Does SpaceX and/or Solar City count?

Otherwise, I don't think he does. I don't think PayPal ever had any manufacturing involved.
[doublepost=1453899371][/doublepost]

CCS will be updated to 150kW (or even 350kW for buses etc. later) before the end of the decade, putting it on par with or even surpassing Tesla's charging speed:

http://insideevs.com/audi-bmw-daiml...art-150-kw-charin-ccs-fast-charge-initiative/

I don't see why each car manufacturer should create its own plug and charging system, that will result in a giant mess.

Because Tesla wants to sell EV cars now, not eventually. That article didn't give any dates in it.

Further, the Model S and X come with a large set of adapters so that they can work with a variety of outlets. One of them is for CCS.

 

[jlc1978]

If they were compatible with Tesla's network, there'd be hundreds of chargers across the US that they'd be compatible with, and they'd be able to be fully charged in 30 minutes (instead of 10-20 hours). They'd have a vastly more viable EV car (although that tiny battery is still super iffy. A range of only 100 miles? Really? I regularly drive 120 miles a day... there's no way I'd ever consider a car with anything under 150 miles of range.)

EV's for the traditional manufacturers are more a test of concept than a serious line of cars. They aren't selling them as replacements for a gas powered vehicle, like Tesla is, so the lack of range and charging times aren't something they are worried about, yet. If they went with Tesla's chargers, if something went wrong, or they weren't available because a bunch of Tesla's are using them, the car owner's aren't going to blame Tesla, they're blaming who built their car. Meanwhile, Tesla has to build out a network, sort out how to ensure it's used as designed and not, as some are, for free charging on a regular basis, and pay for all of the infrastructure and the power bills. Given Tesla's cash flow situation, it makes sense for the big guys just to watch them bleed until they go away. If they were, OTOH, to adopt the Tesla charging design and started to create a network then they'd help Tesla since Tesla's would be able to use the expanded network as well without Tesla spending cash to build. If there cars required less current to charge then they could also limit the output so a tesla wouldn't charge very quickly, upsetting owners when the charger doesn't work as expected.

 

[megadon]

Unfortunately, it seems tax credits are starting to go away, so it'll be interesting to see how many people are really willing to buy a 35k car that has a useful driving radius of 100 miles. That's the real problem for EVs; they're great for short trips but pretty much useless for extended ones. It's hard to overcome a buyer's concern they can't use the car for a long trip without risking getting stranded.

My sister got the i3 and most people choose to get the option that has a generator (uses gas) that will power the car if it runs out of electricity. So not sure why you think you can't get past a 100 mile radius. Just go to the gas station like everyone else

 

[jlc1978]

My sister got the i3 and most people choose to get the option that has a generator (uses gas) that will power the car if it runs out of electricity. So not sure why you think you can't get past a 100 mile radius. Just go to the gas station like everyone else

I realize hybrids help address the issue of battery range; however I was referring to the range of the all electric Tesla Series 3. With a battery capable of 200 or so miles of travel on a charge it has a 100 mile range; and since it is not a hybrid you don't have the option of going t a gas station.

The I3 is an interesting experiment in building a city car. It's a shame BMW didn't come up with better styling, they seem to think an iCar needs extreme styling cues was well. I am curious to see how the tech makes it's way into mainstream products. Now, if they'd just come out with a real successor to the '02tii...

 

[megadon]

I'm not sure about this. Tech companies are very different.

For example, I would agree that a brand like Coca-Cola does not need to come up with different markets. They just need to keep a good job going.

In tech you never know when the next "big thing" will come along, so Apple must always be searching for this next big thing. If investors ever believe that Apple has no potential to find this, Apple will loose a lot.



Not at all, it just means they need to come up with new products when old ones are no longer profitable.

Just like the iPhone, it came to replace the declining iPod. Then the iPad, which in part came to replace a part of the PC market.

In 2001 no one would have thought about Apple being the most-profitable smartphone maker. Phones looked like such a different market. The car industry might just happen to be a similar scenario, a lot of similarities (old companies that have no interest in coming up with big innovations, that have settled for just sustaining their current market.

The problem with Apple is that they are a victim of their own success.

iPhone sales are such a large % of the pie that the "next big thing" won't be able to compare to the iPhone.
The

The smartphone market is fully saturated and now that Apple can't convince us to buy the next phone

I realize hybrids help address the issue of battery range; however I was referring to the range of the all electric Tesla Series 3. With a battery capable of 200 or so miles of travel on a charge it has a 100 mile range; and since it is not a hybrid you don't have the option of going t a gas station.

The I3 is an interesting experiment in building a city car. It's a shame BMW didn't come up with better styling, they seem to think an iCar needs extreme styling cues was well. I am curious to see how the tech makes it's way into mainstream products. Now, if they'd just come out with a real successor to the '02tii...

That makes sense. Sorry about that.
I fully agree with you. I think it will be harder for the model 3 to attract buyers.
The model s is 150k (awd fully loaded) here in Canada, so at that price point no one is buying for the savings on gas. It's more of a status symbol, and most buyers have a second or third car at least.

Although I like the i8 and i3 option with the 7 litre gas tank, I still think it's good to fully get off oil.

I was reading a very interesting article regarding oil and the guy was staring how "we moved out of the Stone Age before we ran out of stones"
He comoared coal to oil, how we moved away from coal even though there are enormous coal deposits still left.
He felt that oil producing countries feel that the development of renewables ability to become 24/7 base load energy will decrease the need for oil and places like Saudi realize this and are pumping as much as possible before the demand for oil dries up and all the proven reserves get left untouched. The guy believes oil will never go over 44 in the next 15 to 20 years. Wonder if cheap oil in the long term will hurt the development of these EV's.

http://www.economist.com/node/2155717

 

[oliversl]

You're comparing a car with a phone?

Is not the same?

 

[RedRaven571]

NP, Tesla Model 3 due out in 2017, for $35K.