Apple and the End of the Car
As cars become computers with wheels, Apple is eyeing the $5 trillion auto market.
As cars become computers with wheels, Apple is eyeing the $5 trillion auto market.
Now that the car is evolving into essentially a smartphone on wheels, it’s no wonder Apple is kicking the tyres.
First, there is the transition from internal combustion engines to electric motors, which have far fewer mechanical parts. Now, enabled by that change, a second shift is under way—one that’s a prerequisite for a self-driving future.
For a century, the automobile was a system of interoperating mechanics: engine, transmission, drive shaft, brakes, etc. As those mechanics evolved, electronic sensors and processors were brought in to assist them, but the concepts changed little. The result was cars with dozens or hundreds of specialized microchips that didn’t talk to each other. Now that auto makers are moving to electric motors, elaborate entertainment systems and adaptive cruise control, cars need central computers to control all these things—why not use them to control everything?
At the hardware level, this might just mean fewer chips handling more of a car’s functions. Yet it has profound implications for what future cars will be capable of, how car makers will make money, and who will survive—and thrive—in what could soon be a global automotive industry made unrecognizable to us today.
No one inside Apple is saying exactly what its plans are, but the company has been contemplating a role in autos for years, spending huge sums on hiring hundreds, then eliminating their roles when its priorities change, and almost as quickly hiring other engineers with similar skill sets, then firing yet more engineers, all to realize a still-mysterious ultimate vision.
The company also recently approached auto makers including Hyundai about a potential manufacturing partnership, then saw talks fizzle. It’s just as likely Apple is, as usual, experimenting until or unless it hits on something it thinks it can do better than anyone else.
“We have seen enough echoes in the supply chain that we know Apple is really looking into every detail of car engineering and car manufacturing,” says Peter Fintl, director of technology and innovation for Capgemini Engineering Germany, part of a multinational that works with dozens of auto makers and parts manufacturers. “But nobody knows if what Apple creates will be a car or a tech platform or a mobility service,” he adds.
Many other tech companies, including Intel, Nvidia, Huawei, Baidu, Amazon and Google parent Alphabet, are pushing into the usually staid, conservative and relatively low-margin world of automobiles and their parts. Meanwhile, traditional auto makers like Ford, General Motors, Toyota, Daimler and Volkswagen, plus longtime automotive suppliers such as Bosch, ZF and Magna, are trying to behave more like those tech companies.
Basically, everyone is shifting their emphasis to software—and hiring like crazy to do it. In the past year, almost every major automotive company has advertised that it would like to hire many more software developers. Volkswagen, for example, announced in March 2019 that it would add 2,000 to its technical development team; the company already employs thousands of software engineers.
“Software is eating the world, and cars are next on the menu,” says Jim Adler, managing director of Toyota AI Ventures, a venture-capital fund owned by the car maker.
Today’s most complicated automobiles have up to 200 computers in them, just smart enough to do their jobs controlling everything from the engine and automatic braking system to the air conditioner and in-dash entertainment, says Johannes Deichmann, a partner at McKinsey whose expertise is software and electronics in automobiles. These computers, made by an assortment of suppliers, tend to run proprietary software, making them largely inaccessible even to the auto maker.
Such modularity is fine up to a point—when building a Chevy Malibu, does GM really need to know how the windshield-wiper computer works? Yet the proliferation of these narrow-minded processors has led to unsustainable complexity, says Mr. Deichmann.
Tesla, as you might imagine, has been instrumental in pushing the auto industry in a new direction. Since the first Model S, Tesla pioneered replacing hundreds of small computers with a handful of bigger, more powerful ones, says Jan Becker, chief executive of Apex.ai, a Palo Alto-based automotive-software startup. Systems that used to require dedicated microchips now run in separate software modules instead.
This is why Tesla can add new capabilities to its vehicles through over-the-air updates, he adds. Want better acceleration, longer range, an enhanced self-driving system, or your in-dash entertainment system to play fart noises every time you flip your turn signal? Tesla has shown they’re just a software upgrade away. It’s very much like the model of continual updates to the software in our mobile devices we’ve come to expect.
Following suit, auto makers are scrambling to build or commission their own whole-car operating systems. The field is still wide open, says Mr. Fintl. Nvidia offers its Drive OS, VW and Daimler have announced they are, like Tesla, working on their own, and Google is insinuating itself ever deeper into vehicles through its Android Auto OS. To date, it’s still focused on in-dash entertainment and navigation, but Ford recently announced that as of 2023, it will use Android in the displays of all models sold outside of China—including the just-revealed Ford F-150 Lightning—and will also use Google to help manage the data streams collected from its vehicles. GM is also using Android in its all-electric Hummer.
This is where Apple might face a tough decision: While it has the chance to flex its enormous software and chip-making expertise to create a next-generation platform for the highest bidder, the company tends to create products for its own brand, not components for others. Besides, the strategy of being just another supplier to auto makers is already being pursued by Intel (via Mobileye), Alphabet (via Waymo and Android Auto), Nvidia and others.
The enormous complexity and expense of making and delivering vehicles by the thousands, much less millions—and making them safe—are why so many tech companies are joining forces with automobile companies, rather than trying to build their own vehicles, says Ryan Robinson, automotive research leader at Deloitte.
While analysts for years predicted that big auto makers would make short work of Tesla, it turns out electric vehicles are more about software than hardware. And auto makers aren’t yet good at the kind of software today’s cars and drivers demand. Volkswagen decided last June that, despite years of development, it had to delay the debut of a flagship electric vehicle because its software wasn’t ready.
“This is the big industry mystery, if a famous fruit company is entering the game,” says Mr. Deichmann.
Apple already has its CarPlay in-dash interface for iPhones. But it’s limited to functions such as entertainment and navigation, and has nothing to do with the deeper integration and capabilities required of a true vehicle operating system. Apple has also demonstrated tremendous capabilities in designing the kinds of microchips and sensors that a smart automobile would require, though for now they’re mainly found in iPhones, iPads and Macs.
Apple didn’t respond to requests for comment.
Apple could build an operating system for a whole vehicle, and run it on its own silicon. But the company seeks to vertically integrate whenever possible, to control every aspect of the user experience. So the question is: Would a car maker let Apple treat it as the company once treated AT&T, when it first rolled out its iPhone? Or the music labels, when it launched iTunes? At a stroke, it turned the tables and took control of massive markets and significant portions of our lives.
This February, Apple’s partnership talks with Hyundai broke down, possibly over Hyundai’s concerns about being absorbed into the Apple Borg. Immediately after, Nissan signalled it might be willing to work with Apple.
If there is any tech company on earth with the resources to go it alone, building a new automaker from the ground up, it’s Apple. But there is no indication this is the company’s aim. If Tesla is the model here, it’s unclear why Apple’s executives would want to endure the tortuous process of building the manufacturing, testing and service capacities this path would require.
If providing the brains for other auto makers’ vehicles is unlikely, and competing directly with Tesla and every other electric vehicle startup unsavoury, that still leaves another option for Apple. As the automotive industry inches toward self-driving taxi services, Apple’s persistence in both acquiring and developing software and hardware for electric, autonomous vehicles could signal its long-term ambitions. Could an Apple mobility company, instead of an Apple car, make the most sense?
GM’s Cruise, Amazon’s Zoox and many others are already moving down this path. But since no such robot-taxi service yet exists, save for some limited experiments by Waymo in Arizona, there is potential for Apple to create something it controls completely, while also providing significant additional revenue to a struggling automaker such as Nissan.
Apple and others could design and commission vehicles that bear their branding, and operate as part of a service they provide, with no trace of the actual manufacturer on them, says Mr. Deichmann.
Apple, after all, isn’t an electronics manufacturer. In fact, it outsources all of its manufacturing, much of it to Foxconn—which as it happens is building up its own auto-making capabilities. Rather, Apple is first and foremost a customer-focused company that uses technical know-how to develop products physically made by contractors like Foxconn. It just happens that deep technical expertise is how it realizes its leaders’ visions. And because fully autonomous driving is turning out to be much harder than anyone predicted, Apple could have the time it would need to develop its own service.
It’s quite possible that Apple will end up spending billions on attempts to develop an electric car without ever releasing a product. Or maybe it offers a product or service that fizzles. It’s possible that transportation is so different in scope and complexity from personal and mobile computing that the only way to succeed is through the kind of grand-scale collaboration Apple isn’t known for.
Toyota chief Akio Toyoda said in March that Apple should prepare itself for a 40-year commitment if it offers cars to consumers. This makes sense, especially if the goal turns out to be not merely to create a car, but to replace a significant portion of the world’s 1.4 billion cars with a completely autonomous, emissions-free, radically transformed transportation system. In other words, a trillion-dollar revolution—and Apple’s already pulled off one of those.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
New research tackles the source of financial conflict and what we can do about it
When couples argue over money, the real source of the conflict usually isn’t on their bank statement.
Financial disagreements tend to be stand-ins for deeper issues in our relationships, researchers and couples counsellors said, since the way we use money is a reflection of our values, character and beliefs. Persistent fights over spending and saving often doom romantic partnerships: Even if you fix the money problem, the underlying issues remain.
To understand what the fights are really about, new research from social scientists at Carleton University in Ottawa began with a unique data set: more than 1,000 posts culled from a relationship forum on the social-media platform Reddit. Money was a major thread in the posts, which largely broke down into complaints about one-sided decision-making, uneven contributions, a lack of shared values and perceived unfairness or irresponsibility.
By analysing and categorising the candid messages, then interviewing hundreds of couples, the researchers said they have isolated some of the recurring patterns behind financial conflicts.
The research found that when partners disagree about mundane expenses, such as grocery bills and shop receipts, they tend to have better relationships. Fights about fair contributions to household finances and perceived financial irresponsibility are particularly detrimental, however.
While there is no cure-all to resolve the disputes, the antidote in many cases is to talk about money more, not less, said Johanna Peetz, a professor of psychology at Carleton who co-authored the study.
“You should discuss finances more in relationships, because then small things won’t escalate into bigger problems,” she said.
A partner might insist on taking a vacation the other can’t afford. Another married couple might want to separate their previously combined finances. Couples might also realize they no longer share values they originally brought to the relationship.
Differentiating between your own viewpoint on the money fight from that of your partner is no easy feat, said Thomas Faupl, a marriage and family psychotherapist in San Francisco. Where one person sees an easily solvable problem—overspending on groceries—the other might see an irrevocable rift in the relationship.
Faupl, who specialises in helping couples work through financial difficulties, said many partners succeed in finding common ground that can keep them connected amid heated discussions. Identifying recurring themes in the most frequent conflicts also helps.
“There is something very visceral about money, and for a lot of people, it has to do with security and power,” he said. “There’s permutations on the theme, and that could be around responsibility, it could be around control, it could be around power, it could be around fairness.”
Barbara Krenzer and John Stone first began their relationship more than three decades ago. Early on in their conversations, the Syracuse, N.Y.-based couple opened up about what they both felt to be most important in life: spending quality time with family and investing in lifelong memories.
“We didn’t buy into the big lifestyle,” Krenzer said. “Time is so important and we both valued that.”
For Krenzer and Stone, committing to that shared value meant making sacrifices. Krenzer, a physician, reduced her work hours while raising their three children. Stone trained as an attorney, but once Krenzer went back to full-time work, he looked for a job that let him spend the mornings with the children.
“Compromise: That’s a word they don’t say enough with marriage,” Krenzer said. “You have to get beyond the love and say, ‘Do I want to compromise for them and find that middle ground?’”
Talking about numbers behind a behaviour can help bring a couple out of a fight and back to earth, Faupl said. One partner might rue the other’s tightfistedness, but a discussion of the numbers reveals the supposed tightwad is diligently saving money for the couple’s shared future.
“I get under the hood with people so we can get black-and-white numbers on the table,” he said. “Are these conversations accurate, or are they somehow emotionally based?”
Couples might follow tenets of good financial management and build wealth together, but conflict is bound to arise if one partner feels the other isn’t honouring that shared commitment, Faupl said.
“If your partner helps with your savings goals, then that feels instrumental to your own goals, and that is a powerful drive for feeling close to the partner and valuing that relationship,” he said.
When it comes to sticking out the hard times, “sharing values is important, even more so than sharing personality traits,” Peetz said. In her own research, Peetz found that romantic partners who disagreed about shared values could one day split up as a result.
“That is the crux of the conflict often: They each have a different definition,” she said of themes such as fairness and responsibility.
And sometimes, it is worth it to really dig into the potentially difficult conversations around big money decisions. When things are working well, coming together to achieve these common goals—such as saving for your own retirement or preparing for your children’s financial future—will create intimacy, not money strife.
“That is a powerful drive for feeling close to the partner and valuing that relationship,” she said.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’