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Apple Spent More Than $10 Billion on Apple Car Before Canceling Project
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Apple can afford to buy a car company, but like many point out the margins on cars are low so why would they.
To all those armchair analysts here (and within Apple), who knew it (better) from the beginning:
Apple has a reputation to try out ideas outside the mainstream, especially ambitious ones. Remember how other Apple products had been belittled and laughed at in the past. And they eventually became a success story, sometimes even completely redefining their respective markets.
Yes, that car project may have ultimately failed. I’m pretty sure other projects within Apple also fail regularly, only with less (if any) press coverage. That’s inherent if you research new things and try out new ideas.
And with 10 years duration, you couldn’t accuse Apple or Tim-Cook of a lack of perseverance.
Regarding the cost: 10bn cost in total may sound much at first glance. Spread over 10 years it’s “merely” 1bn per year. For comparison: In FY2023, Apple spent nearly 30bn on R&D in total. So the car project used up 1/30th (or 3.3%) of the budget there (statistically - don’t know the exact numbers of course).
Apple has a reputation to try out ideas outside the mainstream, especially ambitious ones. Remember how other Apple products had been belittled and laughed at in the past. And they eventually became a success story, sometimes even completely redefining their respective markets.
Yes, that car project may have ultimately failed. I’m pretty sure other projects within Apple also fail regularly, only with less (if any) press coverage. That’s inherent if you research new things and try out new ideas.
And with 10 years duration, you couldn’t accuse Apple or Tim-Cook of a lack of perseverance.
Regarding the cost: 10bn cost in total may sound much at first glance. Spread over 10 years it’s “merely” 1bn per year. For comparison: In FY2023, Apple spent nearly 30bn on R&D in total. So the car project used up 1/30th (or 3.3%) of the budget there (statistically - don’t know the exact numbers of course).
Often even from a failed project good stuff comes out of it, not all the R&D will be a complete loss, they may have made advances in areas that can either be sold or licenced to others or improve another Apple project. We get this type of thing in tech all the time, you try something, realise it isn't working and scrap it or change direction, but people are too scared to 'fail' so you often see governments and large organisations never admit they are wrong. Just look at the Post office "Horizon" system in the UK for a good example of a project they knew was broken but wouldn't admit it and start again.
Thats not true (at least from a global perspective). Many Chinese manufacturers are very successful with their EV cars. And the European car makers are also increasingly active in that market.
So Tesla gets attacked on the price side from Chinese car makers and on the quality side from the European competitors. Add the data privacy issues Tesla has and they need to get moving if they want to stay relevant.
Yes, they surely opened the market and ignited the transfer towards electric mobility. Nice to mention in a commemorative speech. But not sufficient to survive in the car market long-term.
I recall though that a lot of media coverage in the last ten years pointed to them wanting to create something revolutionary, something that had true self-driving capability in true Apple style (if we can't create something different and special we don't do it). I don't dispute that perhaps there was a lack of leadership but if they were going to just do what Tesla did I don't think there's much that would have stood in their way as long as they are willing to spend the money.
Something tells me Apple thinks they're not worthy of something as ordinary as what you describe. This is why the Vision Pro costs $3500.
It's still very weird that it escaped Apple, of all companies, that they don't want to become "just another car manufacturer" because that would have been the ultimate goal back then, just as it is now, had they continued on this path.
And beyond that, there's no such thing as "truck load of new tech" here. When you consider it...
1. Most of the talents on the team were in mechanical or automotive industry. Except for the AI team. Most of these folks don't really have anything else to offer Apple since Apple doesn't really need their talents in other projects.
2. The AI team was pegged with the single task of training an AI model to steer a car and make car-related decisions. It basically has zero consequences on other AI projects since they need to basically train entirely new models for those projects.
3. The software in the car may be interesting, except they already have CarPlay.
4. You'd think they could learn a ton about Lidar sensors from this project... except they already have Lidar sensors in phones and tablets and now in Vision Pro, too, where they are also used for pretty much the same thing... measuring depth and distance.
5. How about cameras? Surely Apple doesn't have cameras everywhere else already?
When you really analyze it, Apple basically can take... nothing from the project. It's really a complete dump of $10B for... absolutely nothing. Maybe some AI engineers who they can absorb into other teams?
Lots of patents but no product. Isn’t that how patent trolls work? I’m not saying that’s how Apple operate but I’m not sure it’s a great defence for spending $10bn or more on what has clearly been a distraction.
i do feel like Apple are stagnating with products either falling behind the competition or lacking in innovation and I’m not sure Vision Pro, given the current hardware and software limitations, is the answer.
As a customer I'd like to say screw Tim Cook. Because the software quality has been pretty bad across the board with bugs, and Apples services have been breaking down seemingly weekly at present. Not how a company with a 700% increase in capitalisation should be treating its customer base.
For the love of God they can at least fix the timer app so when I have one saved timer, when I click on it I get it and not the last timer I deleted instead!!!
Siri may be able to answer something then rather then presenting a website to you.
The Chinese car market is twice the size of the US car market with EVs market share averaging 25% in 2023 with that market share increasing (estimates put that at 33% for January though it is harder to get precise figures by month in China compared to some other markets as they don’t collect information in quite the same way).
Like all new technology EV adoption is on an S curve with different countries being at different points. For example Norway is quite a long way up the S curve to the point where they are replacing gas pumps with EV chargers.
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?
I want a CEO that doesn’t chase folly in an industry that he knows nothing about. I want a CEO that doesn’t lose $16 Billion Dollars throwing good money after bad.
I wouldn’t normally reply to a Troll post like yours. But your tone is so condescending, it makes my blood boil. I post a sarcastic, throwaway comment about a CEO that oversees a failed program and you have to chime in with a Red Herring for what? To make yourself look like a genius on internet message board? Congratulations on provoking a reaction. I lose. It’s always better to provoke a reaction than it is to react to provocation. And, you succeeded. I hope it makes your day.
I didn’t say that the stock didn’t rise while Tim Cook happened to be CEO. It did. And so did many other tech stocks. That wasn’t my point, notwithstanding your Red Herring.
You ignored the issue. I said that Tim Cook approved and pushed a program that many say was doomed from the start. A program that cost 16 Billion Dollars. A program that diverted company resources from other projects that could have actually made money. And, I said that, as a shareholder, I’m unhappy that this happened. This is a program that (I feel and felt at the time I read about it years ago) Apple never should have been involved in.
Whether the stock went up or down is irrelevant to my point. Now leave me alone and go find somewhere else to play.
The Chinese will likely exceed at it as well - also BYOD who were a battery first company are doing well. They had the hard bit done first. The other car markets are trying to work backwards into technology they don't know or understand.
Still Apple dodged a bullet.They may have gotten some tax write-offs for part of if not all of it,but it alwasy seemed like a terrible fit. Sure we have gotten a pretty cool car out of this but they have a great business that building a car with all it's liabilities and headaches seems like the antithesis of.
Microsoft and Google have created incredible wealth with software, in a modern age bussiness a new product with a new way to ship to consumers. While Apple is building tiny devices, as well as the software software that drives it to great success. The car with the required massive infrustructure to buid, maintains, store, service and sell seemed like a huge step backwards. Not to mention the lower margins and risks and liabilities after all is said and done.
Microsoft and Google have created incredible wealth with software, in a modern age bussiness a new product with a new way to ship to consumers. While Apple is building tiny devices, as well as the software software that drives it to great success. The car with the required massive infrustructure to buid, maintains, store, service and sell seemed like a huge step backwards. Not to mention the lower margins and risks and liabilities after all is said and done.