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What an Apple Car Would Mean for Tesla

Updated: Jan 29, 2021

About the same time Twitter was abuzz with news of Elon Musk surpassing Jeff Bezos to become the richest man in the world, rumors were beginning to swirl about Apple partnering with Hyundai to develop an electric autonomous vehicle.

Musk has made no secret of his goal to be the first automaker offering vehicles with self-driving capability, but the results of his company’s effortshave been mixed—some would even say lackluster. Tesla did release a beta version of its

“Full Self-Driving” mode to select drivers in 2020, as promised (but the original promise was for millions of self-driving cars on the road that year).

Unfortunately, the fact that drivers are still instructed to keep their hands on the wheel and stay attentive at all times implies the designation is a bit of a misnomer. (Rival Waymo has said it will no longer use the term “Self-Driving” now that Musk has watered down its meaning.) Tesla vehicles are currently at Level 2 autonomy, meaning the driver must be present and alert, with the final goal being Level 5, meaning no driver even needs to be in the vehicle.

Now, as we move into 2021, many in the autonomous vehicle industry are suggesting the technology has been overhyped, as the dawn of the age of self-driving cars and trucks is still some years over the horizon. Whether that means it’ll be more like 5 years or 10 before the roads are filled with driverless cars and trucks depends on who you ask. Either way, it’s not going to happen this year or next.

Whenever we see fully autonomous vehicles on the road, though, it seems most investors today believe those vehicles will be made by Tesla.

Is that about to change?

Project Titan and Tesla’s New Rival

In the first week of 2021, Korean automaker Hyundai’s stock shot up 19% on the announcement that the company was in talks with Apple about a partnership to deliver electric vehicles. Though Apple didn’t comment—and, notably, the tech giant is rumored to be in talks with other manufacturers as well—its interest in developing a car is well-known. But for several years its so-called Project Titan, the name given to the effort, has been on hold.

That is, until the last month of 2020, when Reuters reported Apple was beginning work again on its self-driving system. How this system compares to Tesla’s is yet to be seen, but Apple also claims to have developed breakthrough battery technology, another area Tesla has focused on. The plans are for Titan to have working vehicles on the road by 2024.

What’s most interesting about this is that Tesla has enjoyed its status as an industry outsider, outperforming all the other major car manufacturers when it comes to electric vehicles. The company is also developing an electric semitruck with a range of 500 miles, which would make it competitive with other zero-emission companies relying on hydrogen fuel cells (which are more expensive).

With Musk leading SpaceX as well as Tesla, his brand carries a lot of prestige. No other company in the industry generates as much interest and excitement—all the critics and naysayers notwithstanding.

But that could quickly change when people start talking about iCars.

Apple’s Lidar vs. Tesla’s Cameras

The new iPhone 12 Pro and iPad Pro both rely on lidar sensors for their Augmented Reality features. Insiders have hinted that Apple is deciding whether to engineer their own lidar sensors or partner with another manufacturer. Either way, it seems the company will use lidar instead of cameras.

Musk has made no secret of his dislike for lidar. The difference points to one of the unforeseeable outcomes that will likely determine which company fails and which succeeds. While most analysts and engineers in the autonomous vehicle industry today believe lidar offers advantages that are difficult to reproduce with cameras, recent experiments have demonstrated that making up the difference in performance is well within the realm of possibility.

And the fact is no one knows yet what’s going to happen when we push these technologies to their limits and beyond. Lidar users are going to have to find a way for their sensors to read road signs and decipher traffic lights. Camera users are going to have to make the process of measuring distance more direct and reliable. Both of them are going to have to find ways to improve performance in inclement weather.

Apple vs. Tesla

The challenges ahead for Project Titan go beyond technology and software. It took Tesla 17 years of investment and supply chain development before it started turning a profit. While Apple certainly has the capital and the brain power for such an endeavor, they’ll still be entering a completely new market. There’s a big difference between manufacturing smart phones and assembling smart cars.

Apple’s plan will probably entail partnerships to help get them into the auto manufacturing space, but over time they’ll seek vertical integration—taking over the entire process themselves. They’ll also probably focus on electric vehicles first, but, as part of what one analyst calls a “Go big or go home strategy,” they’ll eventually try to beat companies like Tesla across the fully autonomous finish line.

Several other companies are working on autonomous driving systems today. Approaches range from narrowly focused, map-based navigation with lidar for real-time responses (Waymo), to brute force machine learning based on massive amounts of camera-recorded footage from the open road (Tesla). Where Apple will fit in this spectrum is hard to tell, but they may already have a completely different strategy in mind.

Much of the outcome of this inevitable rivalry will depend on the results of gambles both companies make along the way. But Elon Musk’s reputation as a swashbuckling pioneer, which has paradoxically made his company more alluring, may start to have a cost when consumers have a company like Apple to compare to Tesla. Musk and Tesla stand for adventure, with maybe a bit of recklessness. Apple is all about high quality and seamless user experiences. Which brand ex-drivers prefer when it comes to getting to work and back home again safely just may shift when it comes time for the rubber to meet the road.

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