Apple Car the next iPod, or is it the next Apple television? What a polar difference and there are reasons to believe both. Let's check them out. [MUSIC] The buzz around Apple building a car is starting to remind [MUSIC] Of all that buzz around Apple building a television. You know, the thing it never built, that it was certainly going to. But as of the start of 2021, there's an awful lot of smart commentary and smart money saying, I think they're gonna do this. The biggest question is, why would they? Why would they enter an industry that has wild swings with macro economic cycles, some feast, a lot of famine also, it's known for requiring a ton of money going into the top of the funnel and returning relatively thin margins on the bottom end and that's in the good year. It's highly regulated, not just in the technology, but also to the way that those regulations affect design. You think Apple likes that idea? And it's also got a vast history of dealers, executing the last mile if you will, of the brand of a car. A whole lot of these and some other reasons say Apple's not interested in this. But there's another side of the coin. This is the perfect place for Apple to go. First of all, it's an industry ripe for disruption, the way they disrupted blackberry and Nokia and palm back in 2007. It's also one that is undergoing a total toss up of technology innovation. Autonomy, electrification and connectivity are completely resetting the chessboard, what a great time to get involved. And if anybody knows about designing a product, it's Apple plus in the big picture Gene Munster of loop lentures will tell you there aren't many other projects like this for Apple to conquer. But I think it's important to make a distinction between when Apple Works on something versus it sees the light of day and the carousel is moving at a speed where it is very clear. Apple has ambitions to build a car. [MUSIC] What might Apple's car look like? Very Hard to say. Of course, a number of talented designers have volunteered their paths at imagining it. They all end up looking more or less like a bar of soap. The big question is what Apple try and bring its electronics design language to a car or feel the two are so different that the car deserves its own new design language. And you have to wonder if they might contract with Johnny Ive to come back for one last hurrah. Or maybe he's already pinned it, and it's locked in a vault in Tim Cook's office. [MUSIC] Now, as you probably know, Apple's been testing autonomous cars in California at least for a number of years, and they've been using a fleet of as I count it 19 late model. Lexus RX's just as test mules for some kind of autonomous technology, but in that testing you should note, they've racked up a tiny sliver of the miles of the big guys like Waymo and Cruise. So they They're in but they're not that in at least not testing in California. Bloomberg reports Apple is shopping for or developing a key new version of LIDAR for cars. That's an interesting dovetail with the introduction of LIDAR and the latest flagship iPhones. LIDAR as you probably know is thought to be a holy grail for autonomous sensing. Unless your name is Elon Musk and you think almost the opposite. Apple has to move forward, I believe, and move autonomy away from a technology that understands and grapples with geography. To one that does that and also understands and serves your behaviors, needs and habits. Tesla's nascent automatic navigation. The good example, anticipates your needs based on your calendar and tees up your navigation route automatically. And even if you're not using turn by turn navigation. At a given time, it'll still suggest better ways to where it thinks you're going. I'd also expect Apple to use autonomy and services to create higher vehicle utilisation. Most cars spend 95% of their lives parked. Tesla is just starting to offer technology that will allow its cars to be utilised more than the owner might organically. Let's clear the air on one thing, any Apple Car that comes to market will be electric period. Does that mean Apple's got some battery technology that they can develop or already have a head start on that is going to transform electric cars. There's been rumors that the kind of point of differentiation is the battery I find that hard to believe for a lot of reasons and one for example is that Apple they work with a lot of battery technology today with their phones, but the batteries still continue to be a pain point for many smartphone users, not just Apple, but for many they have not cracked the code when it comes to battery life. A bigger area for Apple to renovate would be the world of infrastructure for charging. Sure a lot of that happens at home. I'd like to see what Apple can do there. But, also what can they do to leapfrog anyone else. In terms of easy ambiguous charging. To move us past the idea that we have to fill up and get a lot of range each time we charge. To the idea of snacking, and getting lots of opportunistic charges without ever thinking about it. And of course, it's a slam dunk for Apple to roll the payment and enrollment in that kind of charging network into their existing and growing wallet of services. Assuming we have some idea of what an Apple Car is gonna be and do, who's gonna make it Because Apple doesn't really make anything Apple's a design company, a marketing company, but they have partners who build all those phones and computers and Apple TV boxes, but they're not carmakers, for the most part. Foxconn, one of their big partners has recently signed a deal with stolen tests. That's the car company that sounds like the little blue pill, but it's really the amalgamation of Fiat, Chrysler, Peugeot, Citron, Opel, they recently came together and now Foxconn is looking to build an electric car with them. So that's one interesting linkage. Another one is a company called Magna that most car buyers don't know but many car buyers are driving a car made by For example, if you drive a Mercedes-Benz G Vogan a five series since 2017, a Jaguar E pacer, I pace,a BMWC four or the new supra. You drive a car made by magnet. So Apple could work with them. And that is frankly, the odds on money. Favorite as of right now, who Apple might partner With to do the dirty work. If you're still doubtful that Apple can make it in the car business, it is vastly different. But you could also argue Apple CEO Tim Cook has waited his whole life for this challenge. His roots are in operations harmonizing far flung parts of vast organizations and seeing it from all facets of the business, not just from product and design. This is what Tim is really good at way more than Steve Jobs would have been. The time is right for Apple to be in cars from that respect. Now where would they sell this? They once they make it fascinating question, you might say, they'll do like Tesla. They'll do their own direct sales stores at the Apple Store. They could just expand these things or have an auto gallery across the way at the mall from the regular Apple Store. There's credibility in that idea of course, but Apple is looking at a scale almost certainly that is much bigger than Tesla and much sooner this company plays for keeps. Therefore, you've got to expect them to look at the other cards they have in the deck. Look at how Apple has store within a store at Best Buy, for example. Look at the number of Apple products, particularly iPhones, that are sold in carrier stores. So Apple does have a strong track record, of working with others who are not its own brand, or its own structure. But making sure things are done right the apple way, somewhere in there is a very telling hybrid of how they would sell cars. [MUSIC] Now, if you've been listening carefully, you've heard me mention one term more than most others. Tesla. If Tesla is so far down the road of a lot of things that we think Apple would likely do, why don't they come together? In other words, why doesn't Apple buy Tesla? To put it very simply, there are just two reasons that will never work according to loops, Gene Munster, Tim and Ilan, what it is not going to be, and I feel strongly about this. It's not going to be some sort of a hybrid project between an existing car maker where they get some sane design and Apple gets the same design. And you get somewhere in between Apple wants full control over design. That's why in our belief that Tesla experiment never worked out with Apple is because the control design was really important for both companies. Which brings me to a related thought and that is how does Apple make a car uniquely and totally apple? What's an apple suspension What's an apple gum? Like? What's an apple bumper cover? like it'll make it truly distinct from the rest of the market. An Apple Car where every facet is distinctly Apple is essential in an industry that's extremely hard to crack and extremely easy to fail in. And that degree of uniqueness is much harder in a car than in a phone due to the number of facets and the level of regulation. Bottom line, when might this come to market and what might it cost? I don't think Apple's in a rush to get to market because taking a few years, which is really essential. Doing something as big as a car is going to work in their favor. Remember it's an electric car and in the next five years, the overall market cost of battery capacity kilowatt hours per a given size, weight and dollar cost of battery is coming down and continues to do so dramatically. that plays into Apple's favor when they want to offer a car that makes money. Incentives and losing money on a car to place yourself in the market. I do not believe are of any interest to Apple. They want this thing to be profitable right out of the gate without a bunch of props that create an artificial Market, which is largely what we have right now in the EV space all this said I keep being haunted by the Apple. The one that never happened. I'm certain Apple took a hard look at TVs did some prototypes, did a lot of engineering work and realize we shouldn't be doing this. The television isn't the thing. Television with a lowercase T is the thing and that's where they went. Who would have believed five years ago that Apple would be a major original TV and movie studio, as it is now. With a little box to help you get the stuff, but even that's not necessary. And that seems to have echoes around automotive. Something like licensing models are a lot easier to approach but it's just not in Apple's DNA to do that. And then you end up at this conclusion which is the part that's hard to believe it's like, actually imagine Apple coming out with a car. It is I know for me for somebody who has found a company, it, it's just still seems like a long ways away. A lot of smart money is realizing that the car business is not about cars as much and will be increasingly less so as we go forward. Ford's former CEO Mark Fields laid out an opportunity for his company. He said, Look, making cars is $2.3 trillion worldwide. Getting people around is $5.4 trillion worth of business worldwide. Which one do you wanna go into to grow your company? And for Apple it's all about profitable growth. I just don't know if that's in the business of building cars.