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Comment by CharlesW | Hacker News Reader

> I still don't understand what's the game that Apple is trying to play here.

It's a fair question, which was also raised when the iPod was introduced. It helps to see Apple as an "affordable luxury smart things" company. Dumb, ICE-based cars were a poor fit, but smart, mostly solid-state vehicles may not be.

Automotive is just another product category large enough to matter to Apple. A possibility not mentioned in the article is that Apple may initially partner, as they did with Motorola for the ROKR (but hopefully more successfully). Sony, the company Apple wanted to be when it grew up, is doing this with Honda for their first car, the Afeela.

> Tesla had the advantage of being the first mover in the EV market…

Apple has gone up against several first-movers that are now gone or are shadows of their former selves. It's neat that Tesla will be remembered as people's first EV, but it's not enough to ensure their market position 20 years from now. Tesla has no special sauce that I'm aware of.

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2-3 years ago, I was thinking something similar along the lines of "yeah, why doesn't Apple just stick with computers/phones/peripherals/software." But if anything's become clear in the last few years in the EV market are issues with: reliability, software/firmware, usability, aesthetics, build-quality, and high startup capital requirements. Apple is a perennial expert UX/design/durability/usability. Sure there's been a few boondoggles over slight decreases in QA and quality (butterfly keyboards)--but at the end of the day, most of us still love at least some of their products because they still, usually "just work". Apple is also quite good (whether or not you like it) at building walled gardens. Imagine if Apple released a rock-solid car and an absolutely kick-ass charging network that rivals Tesla's? There's be demand. The biggest, most-obvious reason why Apple could succeed at building a car is that they have massive amounts of cash. The #1 reason these fly-by-night EV startups fail is because they can't handle 5-10 years of negative margins coupled with massive capital costs. Apple could burn billions before their EV division becomes profitable and not even blink.

I's add "privacy" to your list

I wonder if Apple has been secretly acquiring land or negotiating leases for a charging network. That would be a significant chunk of infrastructure to add to their services segment. Apple One -> Now includes charging your vehicle at no additional cost.

And what brought about this idea?

Seems absurd frankly. How would they even approach this task? Something like this is either organic, gradual, and before you are famous or it is stealth and as wide as possible.

I don’t see them pulling something like this off without everyone noticing.

"No one knew what the iPod was for either" is a sort of Godwin-for-Apple-speculation. Once you cross the Rubicon where that's invoked, with no other argument provided, it's been signalled it's rational to connect any dot.

But yeah, it's novel that Tim Cook's Apple would lean into something Wall Street would abhor - a low-margin capital-intensive business - for something that sounds out of date (L2 in 2028, n.b. Mercedes is at L3 on highways, even assumes liability. Elon would tell you Tesla is L3, YMMV)

Apple already is a major investor and builder of renewable energy farms around the world. They won’t even have to buy the energy, they will already have it.

That'd be Apple One Pro. I definitely see them starting to "tierify" their services just like they did their iPhones, Visions, iPads, Macs, etc.

When it comes to core UX, the current-gen iPhones and iPads are less usable than Androids. For one thing, this whole idea of swiping from beyond the edge of the screen, in many places without even a visible indicator that it's an available gesture, to do the most basic stuff like opening Home, is a severe regression compared to simple buttons; and it's even worse because some of the swipe gestures do different things depending on how far you swipe. To be fair, Android also introduced this misfeature, but at least you get a checkbox to restore the old behavior.

> Tesla has no special sauce that I'm aware of.

At first, Musk's stated goal was to make EV's viable. I feel like that Tesla is well on the way to that, in ways nobody thought possible.

Assuming he hasn't changed his mind, there may come a day he just calls it quits.

But to your point, I would agree - Tesla has no particular special sauce. I am waiting until Waymo FSD finds its way into consumer cars you can drive all over the country before I buy one of them.

> Assuming he hasn't changed his mind, there may come a day he just calls it quits

I have not idea what leads you to that conclusion.

At their last investor day every single department head gave a very detailed presentation about how they're going to 10x their manufacturing from 2M vehicles in 2023 to 20 million in 2030.

I have no doubt they'll do it.

Depends on what is meant by special sauce.

Tesla is still doing thing in a novel way, things that others follow on. Take e.g. the battery design or gigapresses.

I'm not claiming they will keep that edge.

Those novel things only matter if there's a large enough, visible, positive difference to the customer. I'm not convinced they have anything like that.

I feel like Apple as a company is great at coming up with those novel things that tend to blow right past the competition. (I don't like the locked-down, walled-garden result of many of those products, but I can't deny they have that special sauce.)

But a car? Computer -> laptop -> music player -> smartphone -> tablet -> smart watch... -> ... car? Not sure I buy it.

It matters if it makes it cheaper for the manufacturer. Teslas are best selling cars in many places (e.g. Model Y is the best selling car in EU) at the same time while Tesla maintains rather high margins compared to the industry standard.

If the competition forces them to, they have buffer to lower their prices.

> Teslas are best selling cars in many places (e.g. Model Y is the best selling car in EU)

You made me look this up and this is slightly misleading. I couldn't find the full numbers for 2023, but I did find H1 2023.

Yes, Model Y is the best selling car in the EU, but for H1 2023 Tesla is barely the 16th best selling car brand in the EU. The other brands just sell a lot more models, on average.

> at the same time while Tesla maintains rather high margins compared to the industry standard.

I looked this up yesterday, Tesla has similar margins to BMW and Mercedes, because they sell upscale models, just like those. Tesla margins will drop once Tesla starts making cheaper models. For reference, cheaper models in Europe = cars costing 20k€. Not 40k€+ like the cars Tesla is selling right now.

I didn’t get it but I recently did a couple of things that changed my mind. Drove an EV and switched to an iPhone. EVs are not cars as we know them, they are scaled up phones whose only real traditional car bits (tyres, brakes, Air conditioner) the major manufacturers already outsource. Once the engine and gearbox are gone you are only left with one point of differentiation and that is styling/user experience.

Apple kills it at those things. All the stuff you don’t see will be outsourced. All the stuff you do see could be amazing. I am no Apple fanboy but get in a Tesla and think how good it could be if fancy stylists and designers made it.

I am a car guy but really, now you can’t differentiate on power trains the EV market is ripe for an Apple style product.

> think how good it could be if fancy stylists and designers made it

I'm thinking about how bad it would be, actually. That's the kind of thing that brings you the infamous steering yoke because it "looks cool". Or touch controls everywhere instead of physical knobs, because the latter are "ugly".

When it comes to cars, I want function over form, especially when it comes to UX.

> the battery design

The battery cells and system in the new Cybertruck has been widely panned.

The industry is now on par and often exceeding Tesla.

And when Toyota releases solid-state batteries it won't even be close.

For fast-charging, the Cybertruck battery is an incremental improvement, not the leap everyone wanted. For longevity and cost? The rest of the market can't come close. Tesla's secret sauce is being willing to do things nobody else will do, change the paradigm, all that stuff MBAs want to do but don't know how to do.

However, more people are making EVs, so Tesla is using its biggest advantage (supercharger network) to essentially force every other EV buyer to witness what competence looks like. Great move.

Cybertruck uses the new 4680 batteries which were supposed to offer significantly better performance [1] at lower cost.

Instead they are worse than what we have today and there is no evidence that the costs are lower.

And the supercharger network is no longer an advantage as almost all EVs will now be using them.

[1] https://www.drive.com.au/news/tesla-model-y-cost-to-reduce-4...

Cybertruck uses the 2.4 4680 without dry coating. We've already seen the CT has amazing thermals, great charging curve, and we haven't even seen the 800v charging yet. We also have a floor on the cost with the range extender, which is the cheapest 50kwh battery I've seen first-party.

Tesla is becoming a commodity and you don't see an advantage?

> For longevity and cost? The rest of the market can't come close.

The Cybertruck was supposed to be a vehicle costing 40k with a range of 500 miles. It's a vehicle costing 100k with a range of 300 miles.

Reality distortion field in effect.

Longevity refers to battery degradation over time, and cost refers to the cells themselves.

> Tesla has no special sauce that I'm aware of.

Manufacturing of both cars and batteries. That's vertical integration. While I think their current overselling of Autopilot is going to be a folly for them, their assistive driving suite alone would be a multi billion dollar business. They have taken on a ton of risk, and they certainly have their problems, but their successes are substantial and are nothing to wave away.

> Manufacturing of both cars and batteries. That's vertical integration.

Tesla is building their own battery packs, but they're still buying the cells from Panasonic, just like everyone else (Apple included) has the option to do.

Unless I’ve misunderstood something, this is incorrect. According to this October article Tesla has produced 20 million of their own battery cells at their Texas gigafactory: https://electrek.co/2023/10/11/tesla-4680-battery-cell-produ...

And their first gigafactory in Nevada as far as I know has been producing cells for years. I suspect they stopped buying cells from Panasonic years ago.

Actually, the Gigafactories are operated by Panasonic on behalf of Tesla. Technically the cell production in the Gigafactory is done by Panasonic and the packs then assembled by Tesla.

https://asia.nikkei.com/Business/Automobiles/Panasonic-to-bo...

Tesla has a special deal with panasonic[0], maybe they ""colab"" on the development of the batteries

[0]https://www.tesla.com/blog/panasonic-enters-supply-agreement...

Ah I looked for something more current and it seems Panasonic is operating production inside of Tesla's factory: https://www.theverge.com/2019/4/11/18305976/tesla-panasonic-...

I don't see that special sauce as ensuring market dominance. The established players can (and do) source their batteries from third parties, and that seems to work well enough.

If that vertical integration translated to a marked, obvious benefit to customers, then I'd agree. But I don't think it does. Certainly your average EV buyer is not going to say "I bought my Tesla because Tesla makes their own batteries". Why would a customer care about that? I certainly wouldn't.

>that seems to work well enough.

Not when you look at their margins.

Tesla's special sauce is that they can make a profitable, desirable EV at scale. The established players can't ramp their EV programs -- they'd go bankrupt! I wouldn't call that "working well enough."

The dinosaurs failed to innovate for decades, while Tesla sat down and did hard engineering.

> Not when you look at their margins.

Look at BMWs and Mercedes margins. They're quite comparable with Tesla margins.

Let's see Tesla margins once they grow to try to match that insane market valuation that only makes sense if they sell 10+ million cars per year, most of which will have to be cars costing 20k€ per year, not 40k+€ per year.

>Look at BMWs and Mercedes margins

Key words are "at scale."

It's easy to be profitable at the high end, but that also comes with a negligible total addressable market. BMW and Mercedes still have all their R&D work ahead of them to advance their high-cost EV technology to catch up with Tesla.

BMW/Mercedes also didn't do the engineering legwork (like the other dinos), they just use a slightly different strategy to conceal the deficiency. They chose "make expensive and unpopular EVs" instead of "quietly lose money on EVs." Same shit different shovel!

At this point, I doubt they'll even try to catch up on technology. They'll retreat behind "we don't make cheap cars so why lift the cost curve with R&D," meaning they'll never contribute more than a rounding error in the EV transition.

It's doubling down on buggy-whips in 1905. It won't be pretty.

Both BMW and Mercedes have EV platforms, have you done your homework?

I find especially US folks (sorry) very un-informed about non-US car companies regarding EV technology.

Also, Mercedes sold ~250k EVs last year and BMW sold about ~380k. Yes, Tesla sold 1.8 million or something, but you're acting like Tesla is some hyperscaler. And this is in a context where both BMW and Mercedes sell more cars overall, than Tesla, so they have to take care of the going concern, too.

A lot of wishful thinking in that comment.

> Both BMW and Mercedes have EV platforms, have you done your homework?

Of course I know they "have" platforms, but look at the price of the actual cars. They're at least a generation behind Tesla on platform cost.

Legacy automakers' dirty little secret is that their cheap EVs aren't profitable, and their profitable EVs aren't cheap. They failed to invest in lowering EV build costs.

I find non-Tesla/non-China automakers (including Europe) very in denial about how far behind they are.

> Both BMW and Mercedes have EV platforms, have you done your homework?

Doing some quick googling I could not find any source for margins of BMW / Mercedes on their EVs. I remember EVs fron GM / WV being mostly unprofitable, but maybe those are old news.

Can you please share some links for those who want to be more informed?

It translates to price, speed of innovation, and overall quality. Tesla beats everyone at $-per-mile of range, there are no refresh cycles, and the cars, ignoring fit and finish, are phenomenal. Adds up to a serious advantage.

Apple will never build cars. Each dollar of car revenue will hurt their margins. It doesn't matter how lux the car is or the target market, it isn't going to happen.

Tesla isn't going to be able to hold their margins, either.

It's going to be more like Nvidia - Nvidia captures all of the margin in the servers - with some going to Intel or AMD - and SuperMicro, Lenovo, HPE, etc. eke out their existence on the low value chassis.

Don't you need CPUs, PCIE lanes, NVME and cooling systems to deploy GPGPU(s) and DPU(s) - or are you suggesting hopper will replace it?

Nobody needs DPUs. It’s a fake market.

The stuff you’re listing, other than CPUs, which I explicitly called out as going to Intel and AMD, is ultra low margin.

Also of note: while Tesla sells half of EVs, that’s still a small share. It’s not hard to imagine EVs as a whole still being at single digit market share in 2028.

It’s one thing to compete with iOS and Android, where the combined market share is nearly 100%. It’s another to compete with players who don’t add up to 10%, the market is still wide open.

Tesla’s special sauce, currently, is their charging network. I’ve driven both Tesla’s and non-Tesla EV’s. The public charging experience for Tesla is considerably better. I guess when everyone adopts NACS in the next year that may change though.

> It's a fair question, which was also raised when the iPod was introduced.

I don't know. Benefit of hindsight, but you can see the line between computers and iPod. The line from selling iphones and rent seeking on casinos for children to CAR seems less clear to me.

It’s much simpler to me than all that. To maintain the growth percentages that Apple has seen, there are only a few markets that Apple can enter to make enough money to keep growing at the same rate. Otherwise growth stops and then the stock price tanks. So Apple needs to get into American healthcare, cars, or housing.

The fact they chose cars is not that it’s a natural fit. It’s that it’s the only fit.

> Dumb, ICE-based cars were a poor fit

Our "dumb" Audi A6 ICE vehicle has just as good or better self driving and parking as most EVs on the market, so not sure why we are coupling these together.

The point is that Apple is all about coming across as innovative and trailblazey while also being premium. Smart features and build quality is the premium half of the equation, being an EV is still innovative/trailblazey. Your car isn't gonna feel innovative in 2028 if it is an ICE vehicle.

> Your car isn't gonna feel innovative in 2028 if it is an ICE vehicle

Couldn't disagree more. Again, our Audi A6 is much more advanced feature-wise than any Tesla on the market. That can continue to be true as the software, torque vectoring, AWD, air suspension, MPGs, assisted driving, etc all improves.

You're talking about incremental improvements, when I say innovative I mean Apple wants more Blackberry -> iPhone moments, not "our car has better suspension".

You might really like your Audi and think its advanced features are much better than what you'll find in a Tesla, but the market couldn't disagree more with you about which company is more "innovative".

Oh, so like going from physical buttons on a console to a massive iPad? Some may call that innovation, and that many now consider a regression in terms of usability. Thankfully the market doesn’t purchase cars purely for the sake of “innovation” or whatever your biased interpretation of that is.

And yeah, the fact that my car feels like I am driving on a cloud in a quiet cabin versus a rickety Tesla is innovative and equally important to a lot of people.

You realize we're actually talking about an Apple Car, right? Not Teslas. You're making points about why you think Teslas are shit, but I merely used them for illustrative purposes. Again, regardless of how much you like your car, it is not seen as "innovative", in large part because it is an ICE vehicle. Quality control, individual components, and decisions about the best way to interface with a car are secondary to that. In fact, you're only helping make the point. The fact that Teslas have a number of clear issues (including a founder many people like to hate) and yet still win the hearts and minds of people as an innovator in the car space speaks volumes.

Building an electric vehicle does not mean you need to be like Tesla in other ways. Apple doesn't want to be a Tesla clone, they want to do their own thing. I'm sure the bigwigs at Apple would balk at panel gaps or whatever more than you do. But Apple releasing an ICE vehicle in 2028 would not be in line with their brand and market positioning at all.

As an aside, if you'd like to see a vehicle that is both electric and superior to your Audi in terms of comfort, check out the new Rolls Royce Spectre. RR also feels that the best way for them to innovate is by electrifying their vehicles, and I think you'd be hard-pressed to find a car maker further from Tesla (in terms of ethos) than RR.

You’re right that it’s unfair to exceptions, of which there aren’t many in terms of cars on the road. My point was just that the combination of spatial computing + EVs is where an Apple entry starts to make sense.

Yeah, I thought that was weird. A modern ICE car and modern EV made by the same manufacturer have the same levels of smartness, generally.

The "special sauce" for Tesla is in the manufacturing, or as Elon Musk likes to say, "the machine that built the machine." Musk has built a corporate culture that drives innovation and change at breakneck speeds. Seek out a few Joe Justice videos to dive deeper into this.

Tesla has upended the way cars are being built with mega casting and structural battery packs. Their next-gen car will be another step change with the "unboxed" method.

The odds of anyone catching Tesla is about nil. Apple's chance may be less than that. Are they going to pay BYD to make cars for them and lose that margin?

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