Sources: Apple and Hyundai-Kia close to a car manufacturing deal; first “Apple Cars” will be “designed to operate without a driver and focused on the last mile”
- Apple is close to finalizing a deal with Hyundai-Kia to manufacture an Apple-branded autonomous electric vehicle …
CNBC
Context & Ripple Effects
Apple and Hyundai first characterized their contact as early discussions on a self-driving-car collaboration, with Apple also speaking to other automakers. Hyundai then removed Apple from its public statement after the talks moved markets, underscoring how commercially sensitive the prospective partnership had become.
The reported move toward a manufacturing agreement coincides with a separate report of Apple planning an investment in Kia and U.S. production, turning an exploratory vehicle effort into a more defined manufacturing-and-deployment plan.
First-order effects
Apple gains a prospective Hyundai-Kia manufacturing route for an Apple-branded autonomous EV rather than having to establish vehicle production itself.
Hyundai-Kia becomes the reported production counterpart for a vehicle designed around driverless, last-mile operation, placing it at the center of Apple's automotive plan.
Second-order effects
Kia's reported Apple investment and U.S. production plan would tie manufacturing commitments more closely to the partnership, raising the cost of a reversal for both companies.
The last-mile focus makes the commercial test less about a conventional consumer car launch and more about whether Apple and Hyundai-Kia can package autonomy and vehicle manufacturing into a deployable service vehicle.
Third-order effects
If this model holds, automotive value chains may separate further between consumer-tech companies that define the product and automakers that supply industrial-scale manufacturing.
The partnership points toward an autonomy stack in which vehicle production is only one layer; control over the driverless operating experience becomes the strategic prize.
The trend: Consumer-tech companies are pursuing autonomous transport by combining their product platforms with incumbent automakers' manufacturing capacity.
@GarrettZumini Apple enters spaces where no one else can or will do what they're willing to. Sometimes that works. If they can make this one work, it has the potential to change everything. But it won't be overnight. And they might see this as a “lead by example” situation. Not w…
I say apparently b/c there's nothing really new here and the quotes from sources are meaningless eg: ""Chung has made it clear, mobility is the future of the company." That's important because the Apple Car will be fully autonomous." Find me an OEM that *doesn't* say that. 2/2
The Apple/Kia deal says $49,900 to me More than most people can afford, but Apple will come up with creative financing arrangements You'll pay the same as you would for a $35K lease but you'll be locked into the platform somehow
A few years ago carmakers were all scared of becoming mere suppliers to Big Tech - ‘Foxconns of the car industry’. Now that it's apparently* happening, everyone is excited and Hyundai/Kia shares have surged. 1/2 https://twitter.com/...
When Apple was contemplating Apple Watch in the early 2010s, Wall Street said Apple was making a mistake because the watch market wasn't large enough. Apple saw the wrist's potential. Five years after launch, Apple Watch outsold the entire Swiss watch industry by 2.4x in 2020.
@GarrettZumini Using their immense R&D to re-think transportation as we know it, but execute in steps that are incremental and realistic. They won't enter this space without anything less than a vision to re-think the car at the level they re-thought the phone. Just my take.
@dennis888 They are well aware of the money currently being spent on cars and related fields. A very good argument can be made that Apple's entry into the space can lead to an even larger market, of which Apple will aim to get a non-small share (which is part of Apple's calculati…
Cause 2% of that market is larger than the iPhone business.. AND Apple likes markets where customer satisfaction is relatively low, and experience can be better, which is automotive. https://twitter.com/...
@tedtodorov @counternotions @neilcybart Tesla early cars were hand-made. Apple is a volume producer. Early watches were perfectly accessible by any middle class family.
@CNBCnow Apple is going to work so hard to erase any association with Kia from these cars. Like, you won't believe how much Apple will never mention these three letters consecutively.
When Apple considers entering a new market, the current size of that market is irrelevant. Instead, Apple looks at how big that market may become given its entrance.
@asymco @counternotions @neilcybart The average US car price in 2019 was ~$39,000, so a $100K car would be 2.5X the average. I bet the original Apple Watch cost at least 2.5x the average watch in 2015. Also, Tesla's first car price was $200K. Still starting with a Ferrari seems v…
Another view: The distribution of retirement ages for cars in the United States. Most common is 14 to 16 years. Significant number > 20. https://twitter.com/...
@counternotions @neilcybart I have no evidence but the idea of spending a significant amount of R&D and capex to produce 100k units/yr of anything seems inconsistent with Apple's previous products and services. The question of Apple Car isn't if. It's how many.
Shares in Kia up 14.5% after a local media report said Apple is investing $3.6 billion to help the company make an Apple Car https://www.bloomberg.com/...