by Jean-Louis Gassée

The Apple Car speculation continues. This week we run through the possibilities — without much success. But Apple execs get a potentially helpful glimpse of a potential partner’s strong culture.

Two weeks is a long time. The January 23rd Monday Note wondered: Sure, the first Apple Car (a.k.a. Project Titan) rumors started in 2014, but a project doesn’t always turn into a product. For all we know, Apple scouts may have made several R&D expeditions into auto industry territory and returned with the Here Be Dragons shakes.

This time it’s different, the rumors are more colorful and detailed. We hear that on February 17th, Apple will announce their $3.6B investment in Kia for a car that will ship in 2024. This caused Kia shares to jump by as much as 14.5%.

For the sake of exploration, let’s accept the rough outline of the story and look at two possibilities: Will the Apple/Kia car be a better Tesla, in the way the iPhone supplanted Blackberry and Nokia smartphones; or it will be a completely different species of transportation.

Creating a “better Tesla” isn’t as simple as it might appear. On the surface — literally sometimes — Tesla vehicles leave much to be desired, they don’t offer the superior Fit and Finish that we get from Japanese and European cars. On the other hand, the user interface software in a Lexus or a BMW, contracted to the lowest third-party bidder, can’t touch (pun intended) the natural gestures of a Tesla.

(Personal testimony: I recently took the wheel of a German vehicle that presented three touchpads plus two high-resolution screens, one with yet another set of touch widgets. The vehicle comes with several user manuals and a CD-ROM that contains Open Source software license information.)

The marriage of hardware elegance and UI simplicity is Apple’s province, but can the company offer a transformation that was as broad and deep as the original iPhone? Perhaps my lack of imagination occludes my vision, but I don’t see how Apple could improve on Tesla’s Battery-operated Vehicle model (BEV) with anything short of Level 5 Autonomy — true autonomous vehicles. And experts agree that True Autonomy lies somewhere in an indeterminate future.

If epoch-making differentiation weren’t hard enough, Apple will have to anticipate what the car market will look like in 2024. Tesla is likely to sell 2M cars or more per year, German makers probably will have corrected their software and UI issues, with more than a half a dozen competitive models.

Let’s discard the “better Tesla” hypothesis and consider a “different enough” BEV that would spare Apple the need to enter a space dominated by incumbents.

Two weeks ago, I suggested that the Micromobility space could offer great promise. As Horace Dediu and others have wondered, why do we buy cars that are built to endure 1,000 mile excursions when most of our trips measure in low multiples of ten miles? Electric bikes, which range from about $1K to close to $8K for a top Stromer model, are starting to make inroads although supply is tight at the moment. From there, one is tempted to see a future where the growing acceptance of e-bikes makes room in minds and wallet for micro-cars such as the Twizy quadricycle:

Is this what we should expect from an Apple car? Probably not. After poaching execs from Tesla and German automakers, one of Apple’s latest car industry hires is Dr. Manfred Harrer, Porsche’s former VP of Chassis Development. We’ll take the risk of thinking this isn’t for quadricycle development.

How about driverless vehicles within enclosed campuses? We can easily imagine autonomous cars and trucks moving people and packages along safely mapped and protected pathways, thus avoiding the currently impossible to surmount obstacles of full autonomy on open roads. The limited market of a driverless Campus Car probably isn’t big enough for Apple, so let’s imagine a Last Mile market, one where fleets of autonomous vehicles deliver people and packages over short distances from — or to — a hub such an Amazon location or a shopping mall.

But now we’re starting to stretch the model too far into treacherous open roads. We already have well-enclosed, carefully tended, precisely mapped spaces in golf courses, but we see no autonomous golf-carts.

Here we are: no “conventional” Tesla Only Better electric car, no microcar, no Campus Car.

Still assuming there is an actual plan for an Apple Battery-operated Electric Vehicle, I think I must be missing something, or putting the wrong constraints on the putative product.

That said, I now need to justify this Note’s title: The Hyundai-Kia Gift, begging for your patience because you might see how it is relevant to the Apple Car challenges.

Last month something unusual happened. An Apple Supply Chain Management potential partner broke the long-established protocol that states suppliers are not to talk about what they’re working on, when it will ship, how many will be delivered… Kia talked (bragged?) to South Korea media and, at the speed of the Internet, we learned that Kia and Apple were in negotiations for a car project, complete with the February date and the $3.6B mentioned above.

While the disclosure was promptly taken back, it was too late. In a backhanded confirmation of the rumor, we now learn that Apple had “paused” the Kia conversations while Cupertino execs held exploratory talks with other potential partners, perhaps in Japan. If that wasn’t enough, at Hyundai (which owns 34% of Kia), execs publicly worried about a potential relationship with Apple. Quoting from an article on The Drive [as always, edits and emphasis mine]:

“Apple is the boss. They do their marketing, they do their products, they do their brand. Hyundai is also the boss. That does not really work. […] Tech firms like Google and Apple want us to be like Foxconn…”

Here is the gift: Hyundai-Kia execs tell Apple how the relationship will work…before the marriage contract is inked. As the saying goes: “After the wedding, wait until the in-laws show up”…

About this helpful clarification, Apple might say nothing at all, letting its inaction speak for the company. In the meantime, the form and purpose of the putative Apple Car remains a mystery.

_________________________________________

Late update: It's now official, Hyundai just confirmed late this Sunday "it was not in talks with Apple…"

— [email protected]