Apple car was exposed to a big downgrade: it may become the next iPhone only if it completely abandons subverting Tesla

There's good news and bad news about Apple Car.

The bad news is that its release date has been pushed back from 2025 to 2026. The good news is that it's expected to cost under $100,000.

Apple's car-making project "Project Titan" has always been ill-fated. The development of Apple Car has been in development for more than eight years. It is costly and ambitious, and it carries Apple's desire to obtain high profits outside the iPhone.

When the "Project Titan" was just launched, Tesla was still a "spoiler" boy. Today, the Apple Car is difficult to produce, and it has to face the fierce situation of the "thousand-sail race" in the electric vehicle industry around it.

Apple's top market value symbolizes the prosperity of technology. Technology stocks have plummeted this year, and the top position was once occupied by Saudi Aramco, the world's largest oil company. The power of the "old money" is still strong, and the latecomers of the "new money" are eyeing – the fate of Apple Car determines the rise and fall of Apple in the next ten years.

Quadruple M2 chip for Denali

In fact, the good news for Apple Car is not so good.

Apple had expected each car to cost more than $120,000 and is now aiming for less than $100,000. On the one hand, those who can afford to buy an Apple car will not particularly care about the price difference of around 20,000 yuan. And, according to the U.S. Bureau of Labor Statistics, the average price to buy an electric car in 2022 will be $48,000, less than half the $100,000.

On the other hand, for a new car that has not been released for a long time, the price reduction does not mean "promotion", but more likely means that some "core" configurations will be cut or cut off.

The price of $100,000, compared horizontally, is about the same as Tesla's entry-level Model S and Mercedes-Benz EQS. At the same time, it will face off with the top brands of electric vehicles and gasoline vehicles, and the pressure is not small.

Therefore, when the "good" news and the bad news came out, Apple's stock price fell by 2%. Throughout 2022, Apple's stock price will fall by 19%. Even so, it's outperforming most of the stocks in the Nasdaq Composite.

▲ The appearance of the rumored Apple Car

Previously, the "Titan Project" probably revealed such an Apple Car: it looks like a smooth big mouse, without a steering wheel and accelerator/brake pedal, the center console is equipped with an iPad, and the C1 is modified based on the A12 bionic processor. Chips, "revolutionary" sensors, realize L5-level autonomous driving.

The latest news is that Apple Car has an on-board computer named after Mount Denali, the highest peak in North America. Said to be close to "production" status, Apple may scale down in mass production to reduce costs.

The car will use a combination of lidar, radar sensors and cameras to view the road and its surroundings, assessing the distance to objects and pedestrians. Electric cars that engage in self-driving are generally divided into several factions. Tesla is a firm camera faction (today there is news that the next new car will be equipped with radar), and companies such as Waymo are also a combination faction-"I want them all."

▲ Apple is investing more and more R&D expenses in the "next big event"

Beyond the hardware, the computer system with cloud components, hosted on Amazon Web Services, costs $125 million a year. That's a drop in the bucket compared to the $1 billion Apple spends on Project Titan every year.

In terms of management, Apple will also build a remote command center to assist the driver in remotely controlling the car in an emergency. Insurance plans are also on the table.

"Fed Put Option"

In August of this year, the "Reducing Inflation Act" signed by US President Biden included a series of provisions to protect and promote major investments in batteries and electric vehicle production. These terms represent the U.S. government's efforts to drive the auto industry to "change electricity."

The bill stipulates that in the United States, each electric vehicle sold can receive a tax credit of $3,750 or $7,500, depending on factors such as the source of battery materials. Government subsidies can make the profit margin of electric vehicles roughly equal to that of fuel vehicles, and encourage more automakers to make "tram cars."

▲ In November 2021, US President Biden tested a GMC Hummer electric vehicle. Photo via: Mandel Ngan/AFP via Getty Images

Many manufacturers are unwilling to make electric vehicles, because only the "rich" can afford them. Electric vehicles almost completely dominate the premium and luxury segments of the US auto market. Moreover, under the momentum of great inflation, the economy is in recession, and interest rates are rising, the practice of "changing the track" by changing from oil to electricity is extremely risky.

Smart people simply call the "Reducing Inflation Act" "Fed Put Option". Under the premise of favorable policies, the auto industry will inevitably have an oversupply. According to data from AutoForecast Solutions (AFS), by 2025, global automakers will produce 18 million to 19 million electric vehicles and sell only 15 million. Of the 38 million electric vehicles that will be produced globally by 2029, only 26 million will likely be sold.

▲ A worker inspects lithium-ion batteries at a factory in California. Photo via: Sandy Huffaker/AFP/Getty Images

The AFS judged that if the EV industry were to run factories at 68% capacity, it would lose money. Automakers typically want their factories to run at more than 80% capacity to ensure profitability.

Of course, AFS predictions are not necessarily correct. Improved batteries, and increased charging infrastructure, will drive more consumers to buy electric vehicles.

Different manufacturers have different strategies. Toyota is more conservative, with its $28 billion investment trailing "aggressive" Ford and General Motors. Jack Hollis, executive vice president of sales for Toyota North America, said in an interview that demand for low-end electric vehicles is growing slowly and the company will continue to offer gasoline-electric hybrids for the next few years.

Auto market bayonet sees red

The subsidies and financial incentives for the electric vehicle market in the United States have just begun, but Chinese car consumers no longer consider the price of subsidies. What needs to be bothered is often the dazzling price-performance ratio of electric vehicles.

In 2022, a quarter of new cars purchased by the Chinese will be pure electric or hybrid vehicles. More than 300 electric car manufacturers provide options ranging from RMB 35,000 to the same price as Tesla and mid-to-low-end BBA. There are currently about 4 million public charging piles across the country, double that of last year, and more charging piles are under construction.

This year, electric car sales in the U.S. accounted for 5% of all new cars sold, which is the level in China in 2018. The development of new energy vehicles is the call of the Chinese government in 2014 to "become an automobile power". That year's goal was for new energy vehicles to account for 20 percent of new car sales in China by 2025, a goal likely to be achieved this year, three years ahead of schedule.

▲ Wuling Hongguang Mini electric vehicle manufacturing plant, the Mini, which sells for about 30,000 yuan, will be the best-selling electric vehicle in China in 2021. Image via: QILAI SHEN/BLOOMBERG

The sales volume of new energy vehicles in China is expected to reach 6 million this year, surpassing the sum of sales in other regions of the world. Half of the top ten electric car brands in the world by sales are from China. BYD's global market share is second only to Tesla's and has begun exporting overseas.

American automakers are still hesitating. Although the subsidy of the "Reducing Inflation Act" is real money, it has strict restrictions on the place of production of cars and the purchase of batteries. The reality is that this discount does not apply to existing electric vehicle models, and the requirements for battery procurement will increase the manufacturing cost of electric vehicles.

Chinese battery makers Ningde Times and BYD are the two lithium battery giants in the electric vehicle industry. In 2022, the average price of lithium-ion battery packs will increase by 7%.

▲ The price of lithium batteries has been falling for many years, and it suddenly rose this year

Whether it is raw materials or production and sales links, China's electric vehicle industry has an advantage. Of course, the competition within the Chinese market is very cruel, and there are endless new entrants, most of which are at a loss. Predictably, some businesses closed down before reaching the scale of production required to reduce costs.

What Apple Car is facing is a "bayonet fighting" industry. All regions, countries, and companies around the world are racking their brains and striving to defeat their opponents at every level. And every short period of time, new technologies and designs will emerge, and the pressure on latecomers will be greater.

Apple Car once hoped to complete the revolutionary product of L5 autonomous driving at one time, but even Waymo, a subsidiary of Google's parent company, has invested a lot of resources in the past 18 years to specialize in L4/L5 high-level autonomous driving, and many technologies are at the top of the industry. There are still many difficulties in commercialization.

Former Waymo CEO John Krafcik has also become more pessimistic about the prospects for the commercialization of autonomous driving in recent years. He even said in a speech: Even in the next few decades, self-driving cars will not be everywhere, and fully self-driving cars will Even more impossible.

If Apple Car has been stubbornly wanting to be bound to L5-level autonomous driving, it may even miss the opportunity to enter the game, let alone become Apple's iPhone in the next decade.

Standing on the shoulders of giants, or being stepped on by giants?

More than ten years ago, the iPhone faced the same situation.

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