Why would a high margin, high ROE, low capital requirements business like Apple invest in a low margin, poor ROE, high capital requirements business like a car maker?
Besides being a poor investment that would lock up lots of their capital, it would also create a ton of management distractions.
If they are serious about building self-driving cars, they are probably making a huge mistake. Cars have been a poor business model for quite a long time. Licensing automonomous tech seems like a far better business model.
Electric will drive down the per-mile cost of the vehicles, and autonomous will drive up the per-hour use of the vehicles, which will lead to a larger potential margin.
You can sell a car for a lot more if it's being rented out for 12 driving hours per day. Especially so if it's a high end experience. People have a hard time shelling out $60,000 for a car when they could get something pretty adequate for $30,000, but when the choice is a $2 cab ride or a $4 luxury cab ride, a lot more people will pay the margin.
It won't work that way though. Cities have this thing called "rush hour" for a reason: a some specific times of the day far more people need to get around than others.
Worse, the people who use their car in the middle of the day are the least likely to use shared cars. They are the most likely to need a change of clothing, a stroller in their car just in case. They are also the most likely to run back and for from their car for each purchase at the mall.
What that leaves is people going to/from work, and their lunch breaks. At this point you may as well own your own car self driving car: at worst it is not much more expensive (shared might be 10% cheaper), and you get to leave your golf clubs in the car while at work. At best you can ignore a few tears and keep the car for longer making owning your own car cheaper than a shared car which needs to maintain appearance and cleanliness standards.
Shared cars work well for those people who rarely use a car. However those are the people who already are renting cars, using taxis and the like for the few times they need a car.
My understanding is that it's one of the few markets left that can move the needle. The biggest markets are health care, finance, petroleum, consumer electronics, and automotive.
PCs and phones are low-margin capital intensive businesses. Apple seems pretty good at commanding high margins in such industries.
As for why Apple doesn't license their tech, well, that's not how Apple operates, because then they lose control over the experience. ROKR and the like.
Apple has an easy way to move the needle, return it's profits to shareholders as dividends. They can produce better returns that way then dumping it into lesser businesses.
Apple has made great margins in PCs and Phones because it refused to use commodity operating systems. It's not clear that there is any similar advantage in cars. Everyone will be making autonomous cars, the markets will be highly competitive and they'll still require massive capital investments to make. It's unlikely customers will pay up much for a slightly better autonomous system.
If Apple wanted to go into cars, they should buy Porshe or Ferrari. They actually have brands that make their products difficult or impossible to copy well. Porsche in particular sells cares that are super highly engineered in every area, Apple can't create a Porsche like car business by selling an autonomous car by doing autonomous great, but ride, handling, acceleration, etc just acceptably
Everybody and their dog is trying to develop autonomous tech and license it. Autonomous capabilities used to be regarded as the secret sauce, and if you had it, the future of mobility was yours. This is not true. The ability to mass produce a vehicle is the secret sauce. It's the part that's hard to do.
But as far as low margins in the car industry goes, that point is irrelevant. Robotaxis are a different ballgame.
> Autonomous capabilities used to be regarded as the secret sauce, and if you had it, the future of mobility was yours. This is not true.
I think you're right that when we get self-driving cars it won't be due to a single secret, but rather hundreds of years of engineering time dedicated to getting all the kinks out.
But this is still a super complicated engineering problem, and not all people/orgs will be up to the task, and will not execute on the same timescales.
I think the way this plays out will be determined by how much of a lead the first movers (probably WayMo) will have, and whether companies will cut corners to get something "good enough" out the door, and how the public will react to that.
E.g. I think it's a very different world for automakers if WayMo turns out to have a 5 year lead on them, vs a 1 year lead on them. Cruise certainly looks like they are giving them a good run for their money.
Besides being a poor investment that would lock up lots of their capital, it would also create a ton of management distractions.
If they are serious about building self-driving cars, they are probably making a huge mistake. Cars have been a poor business model for quite a long time. Licensing automonomous tech seems like a far better business model.