Factory floor will see Apple-Tesla tussle as electric vehicle race picks up

Topics Apple  | Tesla | Electric Vehicles

“Cars are very complex compared to phones or smartwatches,” Elon Musk told Handelsblatt in 2015
It was kind of inevitable that Tesla’s biggest challenger wouldn’t be a car company. Apple makes for the perfect nemesis and could teach its California cousin a thing or two about reliability and delivery.


For years, there’s been speculation that Apple would join the electric vehicle race, with teams formed and development under way. Yet the programme also seemed to lack focus, leading to job cuts and changes in direction. Now, there’s renewed hype that an Apple car may be in the works, and the aggressive timeline is taking even the company’s fans by surprise.


Automotive suppliers, including Taiwan’s Hota Industrial Manufacturing, have been told by Apple to ramp up production of parts ahead of a launch as early as next September, the Taipei-based Economic Daily News reported. Reuters says that Apple has a 2024 timeframe for delivering its self-driving vehicle, with battery technology set to be the secret sauce.


Having sat on plans for electric vehicles for the better part of a decade, the resurfacing of Apple Car rumours has peculiar timing. One reason would be a leadership reshuffle inside the company.


Artificial intelligence chief John Giannandrea is taking over the self-driving car unit, an indication that Apple sees software and systems as the key ingredient. Previously, the effort was led by Bob Mansfield, vice president of hardware engineering.


Another development that went mostly unnoticed outside the EV realm: Foxconn Technology Group is getting into cars. That’s the same firm that not only assembles your iPhone but supplies numerous less-significant components for it. Foxconn announced plans in January and unveiled its own open-vehicle platform in October. It says it will start shipping a first EV development kit in April, allowing any developer to build a car on top of this barebones chassis and electrical system.


So after years of hearing little out of Cupertino, we have Apple shifting vehicle plans away from a hardware chief to an AI leader, its primary manufacturing partner unveiling a modular platform, and news reports from suppliers talking up an imminent product launch.


I have covered Foxconn for almost 20 years, yet I have no information that the Taiwanese firm has even been tapped to make cars for Apple. To be frank, I think their interdependent relationship is unhealthy: Foxconn gets over half its revenue from that one client, while iPhones couldn’t get made without that key supplier.


But they do seem in sync on one thing: In this era, a vehicle’s brand and production can and probably should be split. Tesla CEO Elon Musk vehemently disagrees.


“Cars are very complex compared to phones or smartwatches,” Musk told Handelsblatt in 2015. “You can’t just go to a supplier like Foxconn and say: Build me a car.”


I think his sentiment understates the complex and close relationship between Apple and its entire supply chain. CEO Tim Cook doesn’t just fax an order to Shenzhen and expect Foxconn’s team to bang together a few parts and ship them out. Bits of today’s iPhone were being designed five years ago, with manufacturing discussions likely under way two years before launch. And smartphones are sophisticated, made more difficult by the small size, tight tolerances, fast ramp up, and large volume of production.


Already, one thing Cook can do better than Musk is deliver on time a high-quality and consistent product. What’s holding Tesla back from growing into its $616 billion market value isn’t demand for EVs, but inability to manufacture them.


Two decades ago, founder Steve Jobs recognised Apple’s strength wasn’t in manufacturing Macs, but in designing and marketing them. Dell, HP, Sony Corp and dozens of others came to the same conclusion. Cars are different, comes the familiar refrain, and can’t be outsourced. Yet global leaders like BMW AG have tapped the likes of Magna Steyr to do assembly.


Musk fancies himself as the man who upended the automotive industry with an electric-only vehicle and direct-sales business model. Investors seem to think that warrants making Tesla the world’s ninth most-valuable company. But maybe the next true innovation in autos will pass him by as he clings to the fantasy that a car’s brand should also be its manufacturer.


Tim Cook looks ready to prove him wrong. This fight will be won on the factory floor.

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