Elon Musk Is Firing Shots at Apple. Why the Company's Self-Driving Car Project Is Making Him Nervous

Tesla’s CEO is making his real feelings known about the world’s most valuable company.

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The Apple Car would wreck Apple, and Tesla's incredibly volatile history shows why (TSLA, AAPL)

Summary List PlacementIn case you missed it, the Apple Car is back. In the past few weeks, both Reuters and Bloomberg have reported that something is up with what Apple is calling “Project Titan,” after years of starts and stops. There have even been confusing statements about a possible collaboration with Hyundai.
I don’t think Apple seriously wants to get into the auto business — in fact, I think Apple would rather sell Project Titan and be done with it forever— but plenty of tech and finance folks seem to think that time is right for Apple to go mobile.
As in, four wheels mobile.
No one who’s enthusiastic about a revived Project Titan is really thinking much about the traditional auto industry. Because of course the traditional auto industry has been so thoroughly disrupted and invalidated over the past decade that it sold a mere 84 million vehicles since 2015 in the US alone. 
Tesla has sold some of those cars: approximately 1.2 million worldwide. As far as the US goes, less than 1% of the total since 2015. That’s not a disruption. It’s a rounding error. 
But there is a shift underway in the auto industry, toward electrification. It’s driven by a complicated cluster of factors, including increasingly stringent regulations in Europe, a growing China market, and the logical desire of automakers to get consumers to swap their old gas-powered vehicles for new electric ones.
Tesla gets all the attention, but the Apple Car is forever news
In this context, Tesla is getting all the attention because the company is run by an entertaining CEO in Elon Musk, has survived several near-death experiences, has developed an impressive level of customer loyalty, and has transformed easy money from central banks into a $600-billion market capitalization. Tesla is now the most valuable automaker in the world, by a lot.
Project Titan is back because Apple’s current innovation trough is its longest ever. Since the iPhone, the company has rolled out a watch, some new headphones, and a credit card. Hardly the stuff of dreams from a company that’s supposed to define how we live in the 21st-century, at the intersection of design, entertainment, and communications.
Read more: Henrik Fisker reveals how he and a little-known auto giant are developing a radically different business model for making electric cars
Morgan Stanley’s tech and auto analysts published a joint research note last week in which they made a fairly straightforward case for Apple escaping this rut by offering a car. The global transportation industry is worth, by their estimation, $10 trillion, while the iPhone business adds up to about $200 billion. Apple doesn’t need to capture a commensurate share of transportation, it simply needs to nab a narrow slice to emulate its iPhone success.
That’s a nice case by the numbers, but a terrible proposition from an actual build-the-business standpoint. The iPhone advanced the triumph of the iPod, which built on Apple’s ability to deliver premium access to the internet with its computers. These were essentially all communications and entertainment devices, expensive in and of themselves, but cheap relative to something like an automobile. 
All Apple had to do was optimize its manufacturing supply chain and vertically integrate the user experience to post an enviable 20% profit margin on gadgets that had to be replaced every two or three years. 
Why a vertically integrated Apple Car would be a terrible idea
Morgan Stanley thinks that Apple would have to vertically integrate a car to make it a true product of Cupertino, but this is a ruinous idea. The modern auto industry — the one that manufactured and sold those 84 million vehicles in the US between 2015 and 2020 — did away with vertical integration decades ago.
Tesla is the only automaker that’s trying to return vertical integration to its former glory. And while its titanic market cap makes that effort look successful, in terms of manufacturing it has meant that Tesla has taken 17 years to sell as many vehicles in all of 2020 as GM sold in the US in the past two months.
In other words, you’d have to be completely, totally, utterly out of your mind to pursue a vertically integrated auto manufacturing model, unless your objective was to build and sell as few cars as possible using an antiquated methodology.
Read more: Ford’s electric-car mastermind explains how his team made the Mustang Mach-E stand out against competitors like Tesla
Also consider that while Tesla looks great now, for much of the past half-decade, it has looked terrible. At points, it basically hasn’t been able to manufacture an automobile, at least not at the standards of the industry. It’s also been selling itself, through steady equity raises, to fund its growth. 
This has made Tesla into an investment that defines financial volatility. Apple, meanwhile, has been a rock of stability, perhaps the best set-it-and-forget-it stock of the 2010s, avidly shorted like any market darling but rewarding long-term investors who favor low risks and appetizing returns.
Messing with perfection
Apple currently has it all: wonderful market share, excellent management, beloved products, a stupendous brand, steady revenues, and magnificent profits. It’s as close to a perfect company as I’ve ever seen, and I can remember when it was on the verge of bankruptcy.
The payoff for perfection is a cash hoard that’s now at just under $200 billion. It has to be oh-so-tempting to look at Tesla’s risk-addicted ride and conclude that this is where the action must be. Why not spend some of that loot on a car? What’s the worst that could happen?
Well, Apple could blow it all. Car factories cost a few billion each to build, and an automaker can easily burn through $5 billion in a quarter. To achieve Tesla’s scale, Apple could incinerate the majority of that $200 billion in less than 10 years. And deliver, at best, two or three vehicle models. 
Meanwhile, GM spent what is usually spends, $7-9 billion, to deliver about 50 different models in the fourth quarter. That’s right: 50! From a single carmaker.
I’ve been dispensing this wisdom since Project Titan first popped up, several years ago, and I think it’s fair to say that I’ve been relentlessly critical of the idea. Still, I’m dismayed when enthusiasm for the Apple Car resurfaces, usually propelled by a tech media that thinks Apple can do anything and that’s been emboldened by Tesla’s unlikely ascent. 
“If you knew anything about the car business!” I typically holler into the void. 
Luckily, I think Apple’s leadership has learned a few things about the auto industry since Project Titan was christened. I hope they’ve followed Tesla’s fortunes, and more importantly, its misfortunes. And I can’t believe that they’d wreck a great company to do something so stupid as trying to build a car.

Read more:
Meet the 11 top execs helping General Motors CEO Mary Barra pivot into an electric future
7 jobs that can earn you a 6-figure salary in the $4 trillion auto industry
Tesla’s new ‘tabless’ battery design eliminates the power pack’s ‘weakest link,’ a top researcher says — and could cut production costs by 50
Tesla could follow a historic 2020 with a monumental 2021 by raising money, rolling out more vehicles, and expanding into China
FOLLOW US: On Facebook for more car and transportation content!
Join the conversation about this story » NOW WATCH: How Tesla’s Cybertruck stacks up against the Hummer EV

One chart shows how Elon Musk's Twitter is a huge wealth creator

Summary List PlacementElon Musk, the world’s second-richest man, also has the golden touch when it comes to Twitter.
A two-word tweet from Musk about Signal, the encrypted messaging app, boosted the stock of the unrelated company Signal Advance by nearly 7,000%. And since he put #bitcoin in his Twitter profile at 3:00 am ET on Friday, when the crpyptocurrency was at $33,000, it has topped $38,000.
His prolific tweeting has gotten him in trouble before. In the fall of 2018, he issued a statement on the platform suggesting that he taking Tesla private and that he had “funding secured,” and was slapped with a $20 million fine when no such event was in the works.
Musk later tweeted that the post was “worth” the fine, and his Twitter finger hasn’t been deterred since. Investors in everything from dogecoin to GameStop have reaped the benefits.
While correlation isn’t necessarily causation, Insider’s chart below looks at how four well-timed Musk tweets have coincided with rising values for the companies GameStop and Signal Advance, as well as the crytpocurrencies dogecoin and bitcoin.

!function(){“use strict”;window.addEventListener(“message”,(function(a){if(void 0!==a.data[“datawrapper-height”])for(var e in a.data[“datawrapper-height”]){var t=document.getElementById(“datawrapper-chart-“+e)||document.querySelector(“iframe[src*='”+e+”‘]”);t&&(t.style.height=a.data[“datawrapper-height”][e]+”px”)}}))}();

Dogecoin

One word: Doge — Elon Musk (@elonmusk) December 20, 2020

 
Musk posted the above three-word tweet at 4:30 am ET on December 20. Dogecoin, a cryptocurrency that began as a joke on Reddit, surged by 17.95% the following day. He also tweeted an image of “Dogue” magazine on January 28. 
Musk said in a January 31 interview on Clubhouse that his tweets about Dogecoin are “really just meant to be jokes.” But the market takes them seriously.
Signal Advance

Use Signal — Elon Musk (@elonmusk) January 7, 2021

 
After WhatsApp told users in early January that they would have to agree to let Facebook and its subsidiaries collect WhatsApp data, Musk promoted Signal, a competing encrypted messaging app, on Twitter.
Signal’s downloads spiked by 4,200% following the announcement and the tweet, but there was another beneficiary. Shares for Signal Advance, a tech penny stock, soared nearly 7,000% in the day following Musk’s tweet. 
GameStop

Gamestonk!! https://t.co/RZtkDzAewJ — Elon Musk (@elonmusk) January 26, 2021

 
GameStop stock surged by more than 60% in after-hours trading on January 26, after Musk tweeted “Gamestonk!!” with a link to the “wallstreetbets” Reddit forum. In the next day’s trading session, the stock skyrocketed by 348%. 
Musk has become a key figure in the Reddit short-squeeze drama, questioning Robinhood CEO Vlad Tenev on Clubhouse about why the platform had stopped users from buying GameStop and other viral stocks last week.
Bitcoin

Musk added the #bitcoin hashtag to his Twitter profile early Friday morning, tweeting at 3:22 am ET, “In retrospect, it was inevitable.” Bitcoin price topped $37,700 by 8:00 am that day — a 17% boost in five hours — and ended at 4% within 24 hours.
That boost was short-lived, but Musk later repped Bitcoin again on Clubhouse, saying “Bitcoin is a good thing” on the evening of January 31. Bitcoin broke $38,000 the next day.SEE ALSO: Russia may fine citizens for using SpaceX’s Starlink internet. Here’s how Elon Musk’s service poses a threat to authoritarian regimes.
SEE ALSO: SpaceX is being investigated by the Department of Justice over alleged hiring discrimination
SEE ALSO: 11 things Elon Musk said Tesla would accomplish in 2020, and how those promises panned out
Join the conversation about this story » NOW WATCH: Sarah McBride made history becoming the first openly trans person elected to a state Senate seat. In 2018, she explained why the Trump administration wouldn’t discourage her work.

Tesla Is Opening Up Superchargers To Other EVs, Elon Musk Explains How It Works

Image via Tesla

After an impromptu “wait, what?” announcement from CEO Elon Musk that Tesla’s Superchargers are going to be compatible with other electric vehicles (EVs), the CEO has confirmed some further details.

Musk elaborated on his strategy during the Tesla Q2 earnings conference call, reports Electrek. He reportedly also shared that this would be available to all users in markets where Tesla uses the CCS standard. The solution is going to be a “real simple thing,” Musk said at the earnings meeting.

“You just download the Tesla app, you go to the Supercharger, you just indicate which stall you are in, you plug in your car, even if it’s not a Tesla, and you just access the app to tell ‘turn on the stall that I’m in for how much electricity,’ and this should work for almost any manufacturer’s electric car.”

But what about the connector that’s unique to Tesla cars? Musk explained that an adaptor is going to be available soon, allowing anyone with an EV to use the Supercharger network. This opens up a new stream of revenue for the company and allows EV users to access the Supercharger network. This network is, after all, something that gives the company a boost up from the rest of its competition.

Another detail that was revealed was how the company plans to introduce other EVs into its network without overloading the system, creating long queues and dissatisfying waiting times. It’s apparently going to implement dynamic pricing based on charging speed and traffic at specific stations, encouraging shorter charging sessions.

No news yet on whether Tesla will come up with a solution for its users to use third-party charging stations, though. But perhaps we’re getting ahead of ourselves here; that could very potentially be its next move.

We created our own connector, as there was no standard back then & Tesla was only maker of long range electric cars. It’s one fairly slim connector for both low & high power charging. That said, we’re making our Supercharger network open to other EVs later this year.— Elon Musk (@elonmusk) July 20, 2021

[via Input, image via Tesla]

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