Apple R&D Reveals a Pivot Is Coming

The future seems likely to involve a fleet of autonomous vehicles that we use on-demand -- why not own and operate the fleet? Not to mention owning the technology powering the autonomous cars.

I feel like OP understands this - the questions is that why do any of that when the younger generation is rapidly urbanizing, in which case "order a car on your phone, wait 10 minutes" seems silly compared to "walk out front door, onto train, be at destination even sooner".

The self-driving utopia is primarily a suburban-centric dream, in many European cities (and a small handful of American ones) it's likely to be less efficient than what already exists.

Around here for example, the subway runs every 2-3 minutes and moves faster than cars - perhaps even self-driving ones. Trips are generally short enough that being able to work/surf the internet is a pretty marginal benefit, and the hardware store is so close that it would be nonsensical to use any vehicle to go there. All of the above pre-supposed long travel times and having to take a vehicle for even mundane every tasks - this is untrue for many cities, where cars (self-driving or otherwise) will likely be strictly inferior to the utility offered by walking or mass transit.

> Cars are a terrible industry to get into.

Copypasta from a comment I made on reddit about Tesla, many of these points also apply to Apple, especially the battery knowledge...

"You could argue that Tesla is in the battery pack business, and only incidentally in the car business. When electric cars ultimately take off, not only will their vehicles be perfectly positioned, they can sell the know-how to the slow moving incumbent car makers who are struggling to play catch up. They already have a likely unsurmountable lead in battery pack knowledge (things like software to control charging and discharging certain batteries to extend the life of the pack, compartmentalised batteries to reduce fire risk and crucial battery cooling systems), and their fleet gathers more data daily, while the rest of the car industry makes half-hearted hybrids, or technologically inferior, range-limited cars."

"They already own the high end, and once the Gigafactory pumps out batteries in full force, they'll own the low end, at least initially. Not to mention, another industry, solar PV, is growing and growing but badly needs storage tech to reach full potential. Guess who has a market-ready, solar PV-complimenting battery pack, and will soon have an enormous factory churning out battery packs? They are going to sell these packs to the world for decades."

> Building cars is massively capital and plant intensive

Apple has buckets of cash, they need something huge to move the needle and to show the world they're still innovative, and EVs are likely it.

> heavily dependent on supply chain logistics

Tim Cook's specialty. Apple has lots of experience in dealing with a complex supply chain dealing with huge volume.

> and the market is already extremely competitive.

I would argue the market for EVs/autonomous vehicles is quite different from ICE cars. For one thing, existing car makers are only dipping their toes in the EV market, instead of going toe to toe with Tesla directly (e.g. BMW has the i3 and i8, but no high-volume EV version of the 5 series to take on the Model S directly). So it's going to be a landgrab for EV market share. Existing car markers are heavily invested in extremely refined diesel and petrol engines and the associated paraphernalia like turbos, they probably wish EVs would just go away. Also, they rely on service and repairs for a significant chunk of revenue. EVs are mechanically simpler, and will require much less maintenance. So the traditional business model will be disrupted, again something incumbents don't want.

If version II or III of the Apple car offers autonomy, then we can imagine a city car which is designed to be a taxi, which means you only ever rent it. Again, this is an alien concept to existing car makers, who rely on dealer networks selling to end customers. So this would also favour new players not bound by older business practices.

In short, with Apple's battery expertise, huge cash reserves, supply chain experience and the relatively open market for EVs/autonomous vehicles, I'd say now is a great time for Apple to get into the market. They are also betting on the trend of lithium ion batteries getting better and cheaper every year[1]

[1] http://rameznaam.com/2015/10/14/how-cheap-can-energy-storage...

Search engines are free. Whether you own or hire a self-driving car, you're going to have to pay for it, but all you really care about is whether it gets you from point A to point B. It's quite binary--either it works or it doesn't. There is objective and subjective factors the determine preferences towards search engines and phone. But if all driverless car tech works the same, then you're not going to care which one you use as long as it's the cheapest.

Right, but the idea is that there seems to be a large preference towards high density cities going forward, so it seems like self-driving cars improve a lifestyle that is to some degree actively being abandoned.

I think OP's point is (to paraphrase) "why all this when the population is moving into high density cities where this complex infrastructure already exists and presents a superior choice to cars, self-driving or otherwise".

Or from a more global perspective "why all this when the US is the only major market that is likely to continue having a mass suburban population in the long term, and the rest of the world has already urbanized and will continue to do so, already has highly robust mass transit infrastructure, is actively building even more of said infrastructure, and that is rapidly attracting even more population?"

There is a particularly common dream among American urbanists that suburban America will somehow rapidly urbanize - I don't think that's particularly true, but it's certainly true the rest of the world has urbanized, and will continue urbanizing rapidly. So the question is if self-driving personal cars (as opposed to say, commercial cargo vehicles) will largely be an American phenomenon, and if so, doesn't that present fairly modest total addressable market for a company the scale of Apple.