Apple Spent More Than $10 Billion on Apple Car Before Canceling Project

[farmboy]

It is a fact that it is a waste if you had stopped and just not continued to work on the project until it was successful and viable.

You did, so it's no longer a waste.

Apple didn't, so it is entirely a waste for them.

No, you learn things along the way that may go off in different directions and become something else entirely, whether or not it's applicable to the specific project or goal you are working on.

For instance, a 3M scientist was working on what they hoped was a super-strong adhesive. They had various results and one of them was a total failure as a super strong adhesive. But they took a look at it as a possible low tack, repositionable adhesive. 3M Post-Its are born, a billion dollar + earner, with variations applied to many other products.

Even your failures are important, and not a waste. Researchers know that all information is good information.

 

[MacFan782040]

I'm sorry, but this seems to be only a you issue. I love how flawless iMessage works across my devices, including the older ones. There's also something wrong with your Apple Watch since my AW5 doesn't do that. Then again, that sounds like user error. Walking is very light on the heart, meaning it takes quite a bit for a device to recognize you're "working out". Suggestion: start a workout. Also, try actually working out: running, lifting weights, biking, swimming, etc.

Nah. It’s not me. It was like this on my Series5. My series 7. I’ve reset to factory settings. What’s even worse is I forget to stop the workout and then 30 mins later it asks me. Oh, you didn’t know that I left the woods, got in my car, traveled 50mph, and are halfway home before you thought of asking? Great job Apple

 

[victorvictoria]

Some of these things can be done in a car already (I have a Toyota and Honda that have it), while others require simply pressing a switch, which should not be taxing for a driver. Some voice controls require you to hold the "Voice" button on the steering wheel before giving the command, assuming you've first turned down your radio and no one else in the car is talking.

So to me the ergonomics are not all that advantageous. I use it almost solely to make calls.

You're right that new cars have their own proprietary voice controls (as does our 2022 Volvo XC60), but you missed the possibility that if Apple were to achieve implementation of this hypothetical carOS across all or most automakers, you would have portability when getting a new car or across all your vehicles, much as your cellphone number follows you when you move, or change carriers. You wouldn't have to reprogram anything, or unpair/pair any bluetooth devices. Your Sirius/XM account would automatically run on your new car. All your saved GPS data would move to the new car. You wouldn't have to learn new commands for voice controls, either.

As more and more automakers adopted this universal OS, holdouts would come under increasing pressure to adopt it or lose potential customers, and Apple would profit at a much higher margin than they would trying to sell EVs that most customers don't want or can't afford.

 

[victorvictoria]

Many commenters on this forum seem to have missed the truth that we learn much more from our failures than from our successes.

 

[Analog Kid]

Sure, but Tesla is making money on every vehicle sold and will eventually get the production line up to snuff on the cyber truck. Unlike GM which is losing billions in its EV department.

Are you sure the cybertrucks are selling for more than it's costing them to hand assemble them? I'd be shocked if Tesla allowed an audit to determine that.

"Will eventually" sounds like an unverifiable prediction. Why will GM not eventually get the Escalade line up to snuff?

Didn't Tesla run in the red for a decade or two before turning a profit in EVs?

People seem to view Tesla as this unstoppable force that can only do right while the bumbling legacy makers can only keep failing. My view is that Tesla is basically an invasive species. It's thriving in its niche for the time being because they don't have predators. They've now grown to a size limited by their food source (EV early adopters) and they've begun attracting predators, all of which will limit their growth from here.

Tesla presented themselves, and were valued, as a tech play. A car includes a tech component but the auto industry is a manufacturing business, with manufacturing financials, in the end.

 

[Pezimak]

They are no Self driving cars for now …

The one Apple was spending billions on was. Apparently.

 

[I7guy]

Are you sure the cybertrucks are selling for more than it's costing them to hand assemble them? I'd be shocked if Tesla allowed an audit to determine that.

Don’t know for a fact, but my unverified wet finger in the air says that Tesla is making a profit in cyber truck also - even if small.

"Will eventually" sounds like an unverifiable prediction. Why will GM not eventually get the Escalade line up to snuff?

Tesla will push the envelope with whatever their overall plans are, imo. GM is losing billions, scaling back EVs and is showing the world it can make a halo car. Seems like folly.

Didn't Tesla run in the red for a decade or so before turning a profit in EVs?

We’re in 2024, not in 2014. Tesla has a sizable lead and produces the best selling car in the world. Move over f150. Do t want to repeat myself but we are in 2024, looking forward.

People seem to view Tesla as this unstoppable force that can only do right while the bumbling legacy makers can only keep failing.

It really feels like that is truth. Look at the Chevy blazer for an example. Rivian and lucid are bleeding money.

My view is that Tesla is basically an invasive species. It's thriving in its niche for the time being because they don't have predators. They've now grown to a size limited by their food source (EV early adopters) and they've begun attracting predators, all of which will limit their growth from here.

Much like the smartphone market. Except that from what I can gather the ev market has grown and Tesla is selling hella lot of vehicles.

Tesla presented themselves, and were valued, as a tech play. A car includes a tech component but the auto industry is a manufacturing business, with manufacturing financials, in the end.

Times are a changing. Manufacturing is giving way to robotics.

 

[Pezimak]

As as customer, it's logical that you'd complain about issues you've encountered with Apple software. From a shareholder viewpoint, no one has any reason to complain, unless they shorted shares instead of buying.

I should complain to you for failing in your duty to ensure Apple upholds its quality and service then. You'd soon do that if customers started leaving in droves.

 

[MacFan782040]

Funny, I don't have that problem with Mesages.
"It's a bad mechanic that blames his tools."

Maybe you need better tools. Try Android.
See you back soon…

I guess the guy who has been using solely Apple products since the 1990’s is an idiot and its user error ok thanks for the advice

 

[MichaelAdam]

The one Apple was spending billions on was. Apparently.

And got scrapped

 

[baryon]

It failed because the self driving was based on Apple Maps, causing many life-endangering scenarios, mostly due to unsolvable problems such as thinking that "Wall Street" meant it was supposed to drive into a wall, or assuming that "Italian Restaurant" was in fact, in Italy.

 

[Analog Kid]

Don’t know for a fact, but my unverified wet finger in the air says that Tesla is making a profit in cyber truck also - even if small.

Tesla will push the envelope with whatever their overall plans are, imo.

My uncalibrated wet finger says Tesla will continue losing money on early cybertruck production, as it does for every new line, until it turns the corner. Their pricing and cost structure almost surely assume high volume production.

We’re in 2024, not in 2014. Tesla has a sizable lead and produces the best selling car in the world. Move over f150. Do t want to repeat myself but we are in 2024, looking forward.

I'm not a believer in immaculate conception. Tesla didn't just birth a product line without having to do the dirty stuff that everyone has to do to make a new product. You can't just disregard the accumulated state in the system. Tesla achieved this lead through massive front end investment that cost billions between 2003 and essentially 2020-ish.

GM is losing billions, scaling back EVs and is showing the world it can make a halo car. Seems like folly.

Tesla also lost billions. I'd be shocked if other established makers (Rivian and Lucid aren't what I'd consider established makers) are just turning off their R&D. Just like Apple showed here, the cost of R&D is cheap, the cost of manufacturing is high, and the commitment to long term maintenance is staggering.

The current EV market is showing signs of saturation-- why try to ramp up fixed cost production facilities to try to force new vehicles into a saturated market. Better to keep the low cost R&D alive and renew the push when the market is ready.

Much like the smartphone market. Except that from what I can gather the ev market has grown and Tesla is selling hella lot of vehicles.

But has the overall automotive market grown? I don't think so. And I'd argue there was more fundamental change in the nature of a phone when smartphones were introduced than the transition from say hybrids to full EV.

Tesla's last few quarters say the market hasn't grown much further and they need to start slashing their margins to get to the remaining buyers.

Times are a changing. Manufacturing is giving way to robotics.

It's still very capital intensive manufacturing...

 

[I7guy]

My uncalibrated wet finger says Tesla will continue losing money on early cybertruck production, as it does for every new line, until it turns the corner. Their pricing and cost structure almost surely assume high volume production.

Okay we can’t prove either assertion.

I'm not a believer in immaculate conception. Tesla didn't just birth a product line without having to do the dirty stuff that everyone has to do to make a new product. You can't just disregard the accumulated state in the system. Tesla achieved this lead through massive front end investment that cost billions between 2003 and essentially 2020-ish.

Tesla has a sizable lead in ev manufacturing and importantly battery supply chain, no matter how it is sliced. Tesla already went through putting its supply chain in effect while legacy automakers are failing behind. Witness the chevy blazer ev.

Tesla also lost billions.

Yes, lost. In q4 2023 Tesla is making a profit. Like I said we are today looking forward not today looking back.

I'd be shocked if other established makers (Rivian and Lucid aren't what I'd consider established makers) are just turning off their R&D. Just like Apple showed here, the cost of R&D is cheap, the cost of manufacturing is high, and the commitment to long term maintenance is staggering.

I don’t know what Rivian or lucid is doing.

The current EV market is showing signs of saturation-- why try to ramp up fixed cost production facilities to try to force new vehicles into a saturated market. Better to keep the low cost R&D alive and renew the push when the market is ready.

Don’t know if it’s showing signs of saturation or not. The market is growing from what I can gather even if it’s not double digits.

But has the overall automotive market grown? I don't think so. And I'd argue there was more fundamental change in the nature of a phone when smartphones were introduced than the transition from say hybrids to full EV.

More people aren’t suddenly going to decide they need a car. EV or ICE.

Tesla's last few quarters say the market hasn't grown much further and they need to start slashing their margins to get to the remaining buyers.

That’s what Tesla did last year and enabled me to acquire a long range model 3 with 19 nice wheels for $38K after rebates and taxes. So yeah they’ll slash margins. At least they won’t lose their figurative shirts.

It's still very capital intensive manufacturing...

Of course.

 

[flofixer]

$10 Billion is a lot to throw away on a project that was considered by many to be doomed from the start.

Maybe all of that talent could been put to better use if Tim and company would have stayed in their lanes and innovated on something related to their expertise.

The most telling words from the NYT article: “The car project’s demise was a testament to the way Apple has struggled to develop new products in the years since Steve Jobs’s death in 2011.”

So, as a shareholder I think do have something to complain about. Tim Cook is a weak leader regardless of the financial engineering and overall market exuberance that has has caused all of the FANG stocks to grow during his tenure.

Oh well, maybe the Vision Pro will be that product. 😂

It's more than market exuberance that has propelled Apple to its current financial position. To call Tim Cook a weak leader is a bit short sighted as I see it. My net worth has increased dramatically due to my early investment in the company and I am grateful. I think Cook deserves some of the credit.

 

[victorvictoria]

I should complain to you for failing in your duty to ensure Apple upholds its quality and service then. You'd soon do that if customers started leaving in droves.

I've used Apple products and services since 1986. I worked for Apple in their SMB networking division for 11 years. I own multiples of almost every current Apple product, and a bunch of legacy and obsolete stuff. I've never once had a problem when anything needed service (I always get AppleCare), either in stores or by mail. In those 38 years, I've had one failed logic board and a broken iPad screen (my fault). I don't understand what your complaint is. Do you believe other tech companies make better products? Then it's your duty as a consumer to buy them instead of Apple. Just be prepared for disappointment if you do.

 

[notabadname]

Tesla has not lost billions. Market valuations are fluctuations in stock price. Google lost 70 billion in market valuation in 3 days after their Gen AI Gemini disaster, not actual money. Tesla has 16% Profit margin despite reduction in prices. Tesla can drop prices more and still make more profits than all of the EV makers. There is a reason, GM, Ford Mercedes, Volvo and others are scaling back on EV. Tesla can drop prices further and watch others implode and still make money.

Sure 😉

 

[duffman9000]

I may not like Musk for many reasons, but he is hardly gimmicks. Dude slept in the factory and assembly lines/literally lived there till they got it right and became profitable. Musk’s advice to Rivian executives and others was live in your factory or die.

I’ll call him a serial purveyor of cow manure then. From his self driving is a solved problem to his robo taxi and appreciating assets non-sense, he’s full of it.

 

[bill-p]

This is the sunk cost fallacy in a nutshell.

It also makes assumptions that Apple didn't get any value at all from the project, potentially including

1 The R&D completed contributed to or can be included in other products (AVP, CarPlay &etc)
2 The R&D costs can be written off against tax (making it much cheaper than the $10Bn quoted)
3 The engineers involved did not work for potential competitors (obviously a benefit)


Personally, I probably wouldn't want an EV and definitely wouldn't want an autonomous vehicle, regardless of who built it. Apple probably also saw the writing on the wall for EVs - cf. posts above - they're not really the way forward in terms of the green revolution. I do also question how many people actually want or would trust a fully autonomous vehicle even if it's eventually possible to build such a system. Apart from city driving (taxis?) and maybe long motorway stretches, I wonder if most people still want an element of fun in their driving?

Because this is a perfect example of what sunk cost fallacy is.

The assumptions the other side is making are all related to "what can Apple recoup from this investment" but they keep forgetting that this project revolved around an entirely new field that Apple has never been in before. There is not much they can get out of it if they didn't follow through to make it a success.

And that's also why they gave up. They saw no value at all in the endeavor, and continuing on would have just made it even more of a money sink for them.

 

[bill-p]

No, you learn things along the way that may go off in different directions and become something else entirely, whether or not it's applicable to the specific project or goal you are working on.

For instance, a 3M scientist was working on what they hoped was a super-strong adhesive. They had various results and one of them was a total failure as a super strong adhesive. But they took a look at it as a possible low tack, repositionable adhesive. 3M Post-Its are born, a billion dollar + earner, with variations applied to many other products.

Even your failures are important, and not a waste. Researchers know that all information is good information.

Except that is not how big corporations work. Projects like these typically don't leave much behind because... most of the folks who are intimately knowledgeable about the nuances of why something didn't work... are gone. Even with the world's best and most detailed documentation still remaining, the only thing that upper management can gleam from this are the numbers. They won't really "learn things along the way".

Your example doesn't work because that 3M scientist is just not even with the organization anymore. They have moved on from Apple to some other car manufacturer.

Again: I know folks from the project. They are doing exactly what I just mentioned. And the mentality of Silicon Valley is what I described in paragraph 1 above. Why do you think Google never revisited any of the past projects? And even if they did, why do you think the new initiatives are nothing like what the old ones were? Same thing. Big corps just forget and move on from endeavors that don't make them money. That's how capitalism works.

As for the ones who actually did learn something along the way... the leaders, the engineers, the technicians... they actually did learn and their experience will benefit... guess what? Literally all other companies who are eager to absorb them into their fold. My friends who were with Tesla got poached by Apple for this project, and now with years of knowledge on these projects, they are being hunted by literally all other car manufacturers. I just helped one of them revise their resume for an interview.

So the reality is: none of this will benefit Apple specifically. The benefit is indeed there, but just not for Apple.

Or let's look at it another way: you're not wrong. The scientist did learn. His knowledge simply will just benefit another company. Apple just paid $10B to train a bunch of engineers who will now go and make other car manufacturers very happy.

 

[SFjohn]

I imagine Apple has tons of valuable patents from self driving to battery technology that will prove worthwhile in the years to come.

 

[sparkinstx]

There's a good history of the Apple Car today on The Truth About Cars:

Abandoned History: The Apple Electric Car Project, Rest in Peace (2014-2024)

 

[Dahl]

Woof. That's a lot to have very little to show for it.

I know Tesla had gotten to as low as $10B in losses before they turned the corner and became structurally profitable and now are lifetime-net profitable, but to burn through $10B and have nothing but carplay to show for it...

While we don't have an Apple car, we can only speculate about what they learned. I'm sure they learned a ton, knowledge they can apply elsewhere.

 

[Eriamjh1138@DAN]

You’re right. We can speculate. I’m speculating that whatever it was, it wasn’t $10B well spent.

 

[Dahl]

The Times article does not paint a pretty picture of Apple’s ability to innovate in the post Jobs era.

I find the constant need for "innovation" to be shortsighted. It opens you up for failure if not done right. When Apple made the iPhone, no one was keeping taps on them, now Apple can't make a move without everyone knowing about it. The company is not the same it was just 10 years ago and for them to make products that truly move the needle is harder than if you are a tiny start-up.

 

[Pezimak]

I've used Apple products and services since 1986. I worked for Apple in their SMB networking division for 11 years. I own multiples of almost every current Apple product, and a bunch of legacy and obsolete stuff. I've never once had a problem when anything needed service (I always get AppleCare), either in stores or by mail. In those 38 years, I've had one failed logic board and a broken iPad screen (my fault). I don't understand what your complaint is. Do you believe other tech companies make better products? Then it's your duty as a consumer to buy them instead of Apple. Just be prepared for disappointment if you do.

One of my complaints was in my post that ‘you’ replied to! The software is poor, and I am by no means the only one claiming this, plus its services are breaking down seemingly weekly. Hardware is nothing without software, and over the heads Apple has struggles with the quality of its software sometimes. Use the timer app and tell me if it’s acceptable when you delete a timer, then go to use the previous still saves timer it still displays the deleted one as the one you one to use even though it’s gone from your ti ears list. Stuff like that is just poor.