Speaking during an interview at the Recode Code Conference in California, Tesla Chief Executive Elon Musk was once more quizzed on the potential impact of disruptive players. Specifically, the threat of Google and Apple branded vehicles was a popular topic, and in true Musk fashion, he made a number of frank remarks.
“There have been so many announcements of new autonomous EV start-ups, I’m waiting for my mum to announce one,” he said. “Google has done a great job of showing the potential of autonomous transport, but they are not a car company.” Instead, he suggested that Google would potentially license its self-driving technology to other companies – a different business model to Tesla’s. He noted the recent partnership (of sorts) with Fiat Chrysler Automobiles (FCA), in which a fleet of hybrid Chrysler Pacifica MPVs were given to Google for the integration of its self-driving technology. However, “I wouldn’t say Google is a competitor because they aren’t a car company,” he affirmed.
Sam Barker, Research Analyst at Juniper Research, told Automotive World: “He’s got a point in the fact that Google doesn’t have a history of being an automotive OEM, but when it comes to autonomous vehicles you have to look at it from a slightly different angle.” He explained that as these cars of the future are more technology orientated, “it is less about engine performance and more about connectivity and how it can interact with smart cities and other autonomous vehicles.” In this case, Google may not be a comparable company to a traditional vehicle manufacturer, and a competitor only in the sense that both companies are developing self-driving technology. “I can understand where he is coming from,” said Barker.
Apple will probably be a direct competitor – Elon Musk
Where Musk sees a real threat is in Apple’s future developments, which are still not only unclear, but also unconfirmed. “I think it’s great they’re doing this, and I hope it works out,” said Musk. “But they should have embarked on this project sooner… I don’t think they’ll be in volume production before 2020.” He admitted that this is just speculation, given the lack of hard evidence with which to work. “I don’t know. They don’t share the details of their production plans with me,” he joked.
Apple is currently in good health – Chief Executive Tim Cook reported Apple’s “strongest financial results ever” in January, with an all-time record quarterly revenue of US$75.9bn in the first quarter of fiscal 2016. Importantly, the company also has “the mother of all balance sheets” with almost US$216bn in cash. A number of senior auto industry executives have reportedly started working at Apple, but confirmation that its ‘Project Titan’ is in fact a front to develop its own car is still yet to come.
Too late to beat Tesla?
Continuing, Musk suggested that Apple may have missed an opportunity to capitalise on strong market demand sooner. “It’s a missed opportunity,” he said. “They will probably make a good car and it’ll be successful. But the industry is big – the most that any one company has is approximately 10% market share, so it’s not like somebody comes out with the car and they’ll kill everyone else.” Despite the challenges ahead, he admitted that “Apple will probably be a direct competitor” in future.
With this train of thought, and Tesla’s developments not only in electric vehicles (EVs) but also autonomous driving technology, Juniper Research’s Barker commented: “You have to consider Apple a competitor, because if you don’t – based on the rumours – tomorrow or in the near future we will probably have an announcement that Apple has been developing self driving technology. That’s why he sees Apple as a competitor.”
Comparisons between Apple and Google are made frequently, based on the fact that both companies would be two new entrants to the automotive market from a consumer technology background. However, as Barker pointed out: “You can’t really compare the two because you don’t know what Apple is doing. In my opinion, Google is probably far ahead of Apple; Google is in the process of developing the technology, and its technology can be approached for both consumer and commercial uses.”
Musk’s comments at the event have got people talking. While the head of Tesla is not afraid to speak his mind, others have questioned the company’s standing in the industry given its relative infancy compared to the likes of established OEMs. “What’s interesting is hearing the head of Tesla, a tiny company by Apple/Google standards, and one that has never been profitable, proclaiming who will or won’t be a competitor,” remarked Karl Brauer, Senior Analyst at Kelley Blue Book. “Of course, Musk could be 100% correct. If Google buys Tesla someday, then Google won’t be a Tesla competitor – it will be Tesla’s owner.”
It’s going to be odd to have a car without autonomy in the future – Elon Musk
“It’s good for the industry to be moving toward this, and it’s encouraging to see all this activity,” said Musk. “Autonomy is extremely important – it’s going to be odd to have a car without autonomy in the future.”
As it stands, Musk is confident that Tesla is ahead of the pack in terms of EV developments. “The direct car companies will all be nice competitors, but I don’t think any of the main car companies have made a great electric car, yet. They presumably will continue to improve and make a great car, but they haven’t done it just yet,” he said.
With this in mind, the opportunity for Apple to join the mix is looking ever clearer, despite the smoke and mirrors. As Barker concluded: “I associate Apple with being very consumer orientated, so it will be interesting to see what Apple comes out with.”
