Interest in the elusive Apple (AAPL -0.90%) car finally seems to be grinding to a halt.
In the wake of the never-to-be project, Motley Fool analyst Sean O'Reilly and senior auto specialist John Rosevear talk about how Apple might be looking to get into autonomous driving technology instead, a few problems they might run into if they do, and whether or not shelving the car project was the right thing to do.
A full transcript follows the video.
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This podcast was recorded on Oct. 20, 2016.
Sean O'Reilly: Mr. Rosevear, what is Apple going to do if they're not going to throw $200 billion at building a car?
John Rosevear: Well, it would probably only take about $15 billion.
O'Reilly: Oh, well, sorry. (laughs)
Rosevear: Bloomberg reported that Apple has refocused Project Titan on the idea of developing an autonomous driving system, an Apple-branded autonomous driving system. This would allow Apple to either partner with an existing automaker, or at some point in the future, if it looks good, to go back to building their own car. So here's a problem with that. Everybody else is already attacking that problem, and they're already well along. We've talked about this on past podcasts. Ford (F 0.48%) says it will be mass-producing fully Level 5 self-driving cars, no steering wheel, for ride-hailing services by 2021. That's a little over four years out. Delphi (DLPH) and Mobileye (MBLY) -- we talked about this, too -- they will have a full self-driving system that will be available to any automaker in 2019 ...
O'Reilly: I'm going to build my own in my garage. Just kidding.
Rosevear: Yeah, good luck getting the Feds to approve it. (laughs) There is that guy, I don't recall his name, who has built one in his garage, who says, "Mobileye blah blah blah." But, it's one thing to build something in your garage that mostly sort of works. It's another thing ...
O'Reilly: To mass-produce something that works.
Rosevear: Right, that passes an automaker's tests for "this will be perfect for 200,000 miles." And it's not just the traditional automakers. NVIDIA in this, Baidu's in this, Uber is throwing a lot of money in, they want their own system, self-driving vehicles are a key to their business model in the future --
O'Reilly: We have the Volvos in Pittsburgh.
Rosevear: Yeah, the Volvos and the Fords. They're all making huge investments. Just last night, Tesla came out and said, "We're going to start shipping our cars with available hardware that will enable fully self-driving software when we have it done," which is sometime, they hope, in the next year and a half or so, if they can get it past the regulators.
Why would any of them need Apple? You might see a little company -- we've talked about this before, too -- the companies that might be natural customers for the Delphi-Mobileye effort, the smaller companies that maybe don't have the $1 [billion] to $2 billion to blast into this, companies like Subaru or Fiat Chrysler (FCAU), some of the Chinese automakers.
O'Reilly: Let me ask you -- correct me if I'm wrong: It almost seems like if Apple wanted to do this, they should have done it five years ago.
Rosevear: Yeah. There's another problem in this whole thing, too, and that's the problem that [Alphabet's] Google has bumped up against -- the automakers may not want Apple. I've talked to senior executives at some of the other companies. They know what happened in the phone business. They don't want to be making "dumb cars," like dumb phones, the self-driving equivalent of Android. They don't want to be HTC or whatever. They don't want that situation. They're mindful of that.
O'Reilly: You mean they don't want to break even at best? John?!
Rosevear: It's hard enough to make money in the car business, give me a break! (laughs) And, they don't want to give up control of the data, too. They know: You partner with Google, Google wants the data. Google will monetize the data. You're just a box the data is being collected from. They aren't going there. There have been hints. About a year ago, Google and Ford were reported to be in close conversations. Those talks reportedly broke down. Nobody officially ever said anything. There have been some hints that Ford said, "We're not giving you the data," and Google said, "Then we can't do business." It was all very mindful of the phone example. Like I said, there might be an opportunity with some company. [Fiat Chrysler Automobiles] is the one we always point to because they have a ton of debt and they're scrambling to keep the basics going. They might be willing to compromise to come in here. But then, Apple is in a position where, what is it offering that is special? Because, they're going to be competing with the Delphi-Mobileye effort, probably others, maybe Google even trying to get in here to offer the prefab solution to some automakers. What are they going to do that's special? This is the interesting question.
O'Reilly: It sounds like they're making the right decision here, unfortunately.
Rosevear: Yeah. Again, it comes down to the question. There are things Apple does really better than anyone else. When it crafts a special, gotta-have project with that Apple magic, it's a lot about user interface, it's a lot about how it works seamlessly with other devices, it's a lot about how it anticipates the user's needs. How to translate that to an automobile, I think, it's a question that they may be haven't answered yet.