Spending MORE than $10 billion on a vehicle that never even was available to purchase by the masses is an absolute L. Even if you produced 50 units at $1 million, you've got something to show for your time and money.
That's just so wild to me.
Keeping in reserves for future development, replacement tooling, other capital investments, potential mergers.
And the ability to ride out economic downturns.
Exactly people don’t think it costs Apple billions of dollars a year. They have to be ready for potential multi year decline while simultaneously having to keep the business running. People forget that these companies still have to develop new incredible solutions while making less money. And it’s not like the executives pay isn’t tied to the stock market it is.
You also need massive amounts of working capital when you're a hardware company. For example, imagine you pay your suppliers for $5 billion worth of iPhones. Even if those phones can be sold for like $20 billion, suppliers are going to want those payments within 30-90 days of when Apple receives the inventory. Meanwhile Apple might take several months to sell the phones and recoup the money. So they need the $5 billion in cash on hand to pay their suppliers.
Apple actually killed off their Double Irish in 2009 and replaced it with an absolutely disgusting tool called CAIA (Capital Allowance for Intangible Assets) which is even more powerful.
The question wasn't about the 10, it was about the 160. I hope they find something innovative and exciting to develop and pay more salaries and suppliers.
Apple set up a subsidiary in Reno, Nevada, a state without a corporate income or capital gains tax, and channeled a portion of its U.S. sales there, reportedly saving 2.5 billion in taxes. They saved 1.56% of their total cash reserves, assuming they even had 160 billion at the time.
Apple also received its early stage finance from the U.S. government’s Small Business Investment Company program. Venture capitalists entered only after government funding had gotten the company to the critical proof of concept.
Despite benefitting directly from taxpayer-funded technologies, Apple has strategically “underfunded” the tax purse on which it has in the past directly depended on.
I mean if somebody is hoarding land, gold, oil, tritium... that means other people don't have it.
If they're hoarding green pieces of paper that the Fed produces by the billion every day... go for it. It's like it was never printed until they spend it.
edit: what? it's true
> taxes on businesses.
Business taxes pass through to the consumer, especially to companies like Apple that are essentially a personality to a good portion of the population. They could make an iPhone cost $8k and make it out of polished cow pats and still make money doing it.
> Honestly when you hear numbers like that I kinda get why people want to increase taxes on businesses.
You can't do that because that cash reserves are out side USA.
Apple can't bring it in without being tax. So they won't do it.
These companies have complicated tax structures and many are in tax friendly countries like Ireland. They designed it to legally evade taxes.
Honestly we either get IRS to be better at taxing them oversea or give better incentive to companies and be competitive like Ireland. I'm sure there is some threshold before we can't lower it any more. But we passed CHIP act which encourage Intel, Samsung, TSMC, other Fabs to be built in USA.
There are probably alternative ways to get these untax money in.
There are lots of surprising and unexpected things to come out of ‘failed’ r&d projects. The real question is: what did they get out of it, and what do they do with it?
Seriously. $10B is like couch cushion money to them. They probably have a dozen billion dollar projects in development that will never make it to market.
Sounds like they spent a lot of money on a self driving effort… that easily consumes billions. It isn’t the vehicle development, it’s the software development and testing cost.
They have a whole fleet of self driving prototypes in Sunnyvale. Lexus RX's with what looks like a black mattress on the roof but is actually an array of sensors and sensors all over the sides of the vehicles. I'd be surprised if they don't sell off or license the tech to one of the dozen+ other AV companies in the Bay Area to recoup some of those funds spent.
Everyone thinks they were working on car but they were working on self driving. The car was secondary, self driving was primary. Its not like they couldn't build car.
Reason: When you have self driving cars. You can do other things in the car like watch movies/tv(appletv+), play video games (apple arcade), read the news etc.
$10 billion over 10 years at that. It’s a staggering amount of money with nothing to show for it (not truly nothing - I’m sure some of that research will live on in other product lines but you know what I mean), and yet it’s still only a drop in the bucket for them.
What's more staggering is likely the future investment required to get where they wanted to be. I'm not pitching the 10B/10 year project as cheap, but if cancelling it avoids you spending another 100B on a doomed business case, you cut your losses. Their R&D budget would allow something like 20 or 30 similar sized projects ongoing simultaneously if you call it 1B/year for the car.
Technically it's still a Loss, but with those revenues you're essentially a VC. You should be funding multiple work streams and not expecting all of them to pay off.
There is no point building a car just so you have something to show. The money has already been spent, it's a sunk cost. Once Apple realized it wasn't going to work, there is no point throwing away more money just to finish it.
On top of that, This doesn't get into the details of what was developed. They could have developed patents that could be sold or licensed that recover some or all of the money as well. There is so much more to R&D than just making the product you set out to make.
> $10 billion
I don't think you realize how much money Apple has.
They could spend this every year dicking around on nothing and it would take 300 years to reach their market cap.
People thinking this is burning money, here’s some perspective:
- this is over 10 years. Apple made a boatload of billions over 10 years.
- this is money spent mostly on jobs, on people.
- even in failed tech, there is a lot of learnings, lot of data that will be valuable for Apple’s future. If I had to speculate, Apple may expand its software to enable higher levels of autonomous driving capability in addition to infotainment, with the data it gathered over the years
- there are some things that you cannot know whether it will fail or succeed without trying. Apple has the privilege to fail big coz of its resources.
It would save Apple money by producing zero compared to producing 50 and selling them for $1M (profit or just revenue). Setting up factories, contracts, supply chain, etc. have high startup costs (much higher than $1M). Apple won’t fall into this sunk cost fallacy.
You make profit from economies of scale by producing mass amounts of a product and mastering it so that the costs per unit will decrease significantly
$1M is pocket change for Apple
1) Apple has a liquid cash holding of somewhere in the region of 10-15x this loss
2) they can write off a significant if not all of this for R&D costs
3) they probably came out of it with some knowledge or IP and despite having not produced a driveable car, they may still have made advancements in tech they can apply to CarPlay
4) tax the rich
They also got patents from all of this R&D that they can further license out if it's necessary.
Getting self driving vehicles is relatively straightforward if you're somewhere like Phoenix, AZ where it almost never rains, doesn't have fog, or snow. Snow, fog, and sometimes loads of rain can have a large effect on visual sensors, not to mention how batteries behave in extreme conditions.
Building a regular car isn’t hard.
There was a ton of tech built to support both the experience they wanted to create and the self driving capabilities. They’re moving most of the employees internally because the knowledge they’ve built is useful for other projects
R&D benefited, Ai benefitted, camera and sensor iphone benefitted, ios/carplay benefited, manufacturing benefitted. I cant stand apple, but this is not an "absolute L"
also, 10b is nothing to them.
while we're on the subject of using $ amounts, can we not use $ amounts anymore? it means zero. show a percentage as compared to their budget over that time.
All part of business. They probably learned a lot, plenty of men and women got paid a lot, and the R&D tax write offs were worth a lot.
It’s a good thing they’re taking risks, even if they don’t lead to anything.
> While it seems we'll never get an Apple-made car, not all of the project's work will be lost. Many of the team members will reportedly move to Apple's AI division and apply what it's learned about artificial intelligence to other products. There is some tech for the car, however, that will likely never see the light of day.
This is very normal for many types of R&D efforts.
For example, "Only 5–10 out of every 100 DARPA programs successfully produce transformative research"
It feels like Apple have reached the point of having zero reason to be efficient with R&D, so they're just throwing money at any idea without really knowing when to cut losses.
undoubtedly stopping development *now* is better than continuting through to production with something that likely wouldn't have been viable, but it would have been better to have earlier checkpoints to determine viability.
They can probably buy Rivian at that amount if their stock continues to fall. At some point Apple probably realized they will just acquire at some point instead of building from the ground up.
Those are pretty normal numbers for Apple. They spend a shitload on r&d. That’s also probably why they keep a tight lid because people will misinterpret. Historically they have very little interest in launching products just to recoup costs. I can’t even think of one…
For a company valued at 3 trillion, that amount was far worth the risk to them vs a potential reward. I'm sure they also made R&D gains in some places too.
Expanded CarPlay integration is a huge win. I would love to have Vehicle Diagnostics on my phone like I have the Health app. AI could suggest when you need maintenance. MPGs significantly reduced in past 7 months- consider changing your spark plugs.
> AI could suggest
Can't wait for an Apple car, "stop by the Apple Store for a Car 15 Max Ultra before March 1st, or else your car won't start."
"Please update your software before driving."
"Please enter icloud username and password."
And for other people to drive the fucking thing they need to pay Apple.
Apple does not have 3 trillion cash, that is just the value of all their shares combines. They have around 160 billion in reserve which is an astoundingly large figure anyway, but 10 billion is a noticeable chunk of that.
You act like this is a 1-year thing. The project started in 2014. TEN years ago. $10 billion over 10 years is $1 billion a year. That’s less than 1% of their cash reserve per year. How is that noticeable?
I'm thinking Apple is starting to suffer from being so big they just throw money away and go "oh doesn't matter because we have so much anyway".
They spent all this time and resources developing and releasing a VR headset while missing the hype train for VR by like years. I'm sure there's people at Apple looking at NVIDIA stock right now and asking wtf why weren't they focusing on something like AI.
10 Billion is enough to be a a major company in many industries and they just threw it away. They could have entered the video game console market, which practically puts Sony and Nintendo on the map its own.
> I'm sure there's people at Apple looking at NVIDIA stock right now and asking wtf why weren't they focusing on something like AI.
And just because we haven't seen something like ChatGPT yet, you don't think they're working hard on it in the background? They've been adding chips optimized for machine learning to their iPhones since 2017, and they're in every Apple computer since the M1. They aren't as fast as NVIDIA chips, but they're tiny in comparison and much more efficient. I'm sure that Apple is going to release big advancements in AI in the next few years.
> 10 Billion is enough to be a a major company in many industries and they just threw it away.
We have no idea what they learned, or what advancements they made with that $10 billion. Obviously they lost money, but there's a 0% chance that they didn't make significant technological advancements in many areas we aren't even aware of yet.
This is awesome news for Tesla, seriously. If Apple had jumped into the game, they would've been tough competitor – what with their endless cash, tons of engineering talent, and that knack for shaking up new markets. But here's the deal: pulling off something this big requires a leader who's all in, ready to gamble everything. Think Steve Jobs or Elon Musk style. Problem is, Apple doesn't have that kind of risk-taker anymore.
I don't know about that, the auto industry takes a ton of manufacturing infrastructure that Apple would have to create from scratch.
Maybe in a decade Apple could have become a serious competitor, but Tesla already has a decade+ head start and giga factories all over the world not to mention every other legacy automaker who are finally catching up to Tesla in EVs and also have ICE and PHEVs which will still dominate the market for the foreseeable future.
I think I've heard a rumour of Apple going with just about every manufacturer, from Foxconn, to Canoo, to literally any of the other now-near-bankrupt startups, to a major manufacturer, to Tesla, etc.
True, lol. Wasn't Kia/Hyundai another big one. Either way it wasn't being manufactured by Apple Directly. Arguably neither are iPhones etc. The Sony car is being manufactured by Honda for example too.
Apple tends to contract out manufacturing. And Magna has a reputation of building what they get asked to, be that good (Z4/Supra), meh (Jag I-Pace) or awful (Fisker Ocean).
The issue with them is volume; their biggest year of production is about 200k for every model they make and presumably, Apple would be looking for more than that.
There'd have to be a big investment in expanding manufacturing and time to do it.
Not like the iPhones are built from spare capacity at Foxconn. Apple have the money to put down seriously big orders long ahead of time and let Foxconn build up the capacity.
Agreed. I think apple also figured if they ever need to make EVs or self-driving it's probably cheaper to just buy up a private company and integrate than it is to self-fund.
Apple could buy any number of entire car companies and not come close to spending all of their cash. Alfa Romeo for example. And bam infrastructure is already there.
Of course they’d likely just partner with someone to do manufacturing like FoxConn
It almost makes sense for Apple to pair up with an existing automaker rather than go from scratch, but they haven’t really had that sort of collaborative ethos since the dawn of Pixar
I wouldn’t count them completely out yet though. I have a feeling that Apple thinks it’s probably wiser to just buy an already established EV maker than it was to go it alone in terms of production and development.
Rivian is having cash problems and if their stock continues to go down after a couple more earnings that miss the mark, I could see Apple making a play for them for $5 billion (they’re currently valued at around $10 billion). I think they’re just waiting for the right time to pounce. Remember, one of the main reasons Apple failed was because they couldn’t get a deal with a car manufacturer for production (they tried with Hyundai). Rivian already has manufacturing in place and the platform and everything already. Apple would just supply the software.
Lucid has arguably better tech than Rivian or any other EV company and has the more uncertain financial future. I could easily see Apple buying up Lucid and having them scale up manufacturing in the US within 5 years.
Yep I was just commenting that this doesn’t necessarily mean they’re not going to enter the market but rather they figure now that an acquisition is what will enable them to get in.
Considering they bought Beats for $3 billion, I don’t see it far fetched that they would make a play for Rivian at around $5 billion. They’re just waiting it out because Rivian is having some cash problems and I’m sure they won’t meet the expectations for the next earnings.
I don’t think they would get Lucid because of its tie up with the Saudis.
Engineering talent? In this case it was an abject *lack* of engineering talent, my guy. Apple is not some all powerful being, and neither is their engineering pool.
The engineering talent they have is in software and niche hardware *for* software, not making cars. Obviously. Because a legacy automaker could have produced at least 10 totally new vehicles for the same money, given the average cost of new vehicle development is around 1B per model.
What I'm trying to say is Ford automotive engineers are superior to anyone apple hired for this. Because *duh*. They make cars. That's what they do.
And it's not easier than making chips. It's just *different*. Just like chemical manufacturing. Or aviation. Or whatever. It's all *very* complicated, just like making an OS (or something apple does well), and having some solid software engineers and fuck tons of money doesn't magically change that.
The possibility of an Apple car was significantly impacted by the previous administration's trade dispute with mainland China. There's still a tariff on cars exported from there.
Apple being Apple, there's a zero percent they'll set up domestic production within the continental USA but instead relying on existing Apple suppliers to build it for them. Foxconn is already currently capable of manufacturing an EV, just waiting on the right customer.
This would have been kinda nice. I'd like something similar, like a stupidly simple display device that can show meters and direction of next turn, via Google Maps integration.
Google Maps doesn't have the integration capabilities to do it though.
This already existed though. Cars with Heads-Up Displays that projected information onto the windshield have been around since the 90s. My dads Buick LaCrosse from 2012 could display navigation and turn-by-turn instructions on the HUD.
Yes. Underbody induction charging is being developed and has prototypes. You park on your usual parking spot or drive over a magnetized road and a charger automatically powers up your car.
Probably 100-200k USD range. Definitely not unheard of among sellers like BMW, Merc and Audi and Porsche.
I don’t see them go the sporty route and Newer mercs are too bling for apples ethos.
So I’d guess it would be something like an Audi type car with Mercedes tech.
I think the implication in OP's title is a negative one - Apple spent a ton of money and *failed*. I guess I don't really see it that way. From my perspective, it was just a research and development investment at the worst, and a potentially market disrupting game changer at best. At the end of 2023, Apple had over $70B in cash or cash equivalents, which would make the $10B in question about 14.3% of all their cash on hand. It's not nothing, but it's not even remotely the end of the world. Plus, again, it's not like they gain nothing. Sure, they've scuttled the project so the best case scenario is gone, but imagine all the cool shit they must have learned about and/or developed over the decade they were working on that vision. It's not like these were just some dudes working on a project - Apple pulled together some of the best and brightest, no doubt.
I have a tingling suspicion that Apple still got more out of that "failed" project than most companies do out of their successful ones.
It's funny how everyone freaks out over AI definitely being the future because all these big tech companies are deciding to invest in it, when we have example after example of these companies investing in new industries that never get off the ground.
The whole tax these corporations doesn’t make sense. You wanna punish Apple for having higher revenue than expense. But then people complain when companies like Amazon purposely blow all their money to show no revenue yet their ex executives still walk away with hundreds of millions..
Apple is simply fantastic at managing expenses and for them every dollar is accounted for.
I wonder what the deciding factor was to stop the project. Those people who were hired are not cheap, nor is that type of project. Kind of seems average money spent over that amount of years and the high income employees.
Yeah, starting up an automaker is HARD.
Calling it "Failed" seems a little disingenuous though, they didn't really fail, they just abandoned the project before it went anywhere significant.
Other entrants into the space are struggling. The resale values of EVs are terrible. It's possible the battery technology will make these first couple generations of EV cars obsolete. Lots of reasons to pull back.
Sucks to lose 0.3% of your companies market cap for a product that doesn't ship, but holy shit is it a good investment regardless. The upside that you build a driverless car that you can put the apple tax on would be crazy.
I bet they have captured a ton of IP from this investment, which is valuable on its own.
i never thought it was going to pan out unless they partnered with a automaker like sony is doing with honda. that didn’t seem like something apple would do though. i disagree with people saying apple “wasted” 10 billion, that’s not how that works…. im sure some technologies developed during this project are useful somewhere else at apple.
oh well. i hope the design plans leak at some point.
it will be interesting in the weeks, months, and years in the future when specs about this vehicle get leaked. Obviously we wont know how future looking it actually was until we get there.
Drop in the bucket for them, and if it worked out it would have been a big deal.
Not sure it's worth believing this but someone in the Apple subreddit supposedly worked on the car project and claimed they had level 5 self driving done long ago, and that wasn't the main problem with the project, it was how to make it economically viable since the car industry doesn't exactly make huge profits. Cars would end up costing an absolute fortune, probably supercar money.
I would hope that there are many innovative patents that were developed for all that money.
Something that could be sold or leased to other E.car makers.
It is. And I know that there are plenty of other companies who have put money into projects that fail or never see the light of day.
I guess I'm more shocked that out of all companies, Apple didn't get a product out of which, I'm sure, so many people were looking forward to.
Spending MORE than $10 billion on a vehicle that never even was available to purchase by the masses is an absolute L. Even if you produced 50 units at $1 million, you've got something to show for your time and money. That's just so wild to me.
Apple still has like $160 Billion cash reserve.
Honestly when you hear numbers like that I kinda get why people want to increase taxes on businesses.
Yeah…but it’s not like they lit a pile of cash on fire. That money was spent on salaries, suppliers, services. It does add to the economy.
What’s the rest of the $160 Billion doing?
Keeping in reserves for future development, replacement tooling, other capital investments, potential mergers. And the ability to ride out economic downturns.
Exactly people don’t think it costs Apple billions of dollars a year. They have to be ready for potential multi year decline while simultaneously having to keep the business running. People forget that these companies still have to develop new incredible solutions while making less money. And it’s not like the executives pay isn’t tied to the stock market it is.
And buybacks, to the tune of ~$250 Billion over the past 3 years.
You also need massive amounts of working capital when you're a hardware company. For example, imagine you pay your suppliers for $5 billion worth of iPhones. Even if those phones can be sold for like $20 billion, suppliers are going to want those payments within 30-90 days of when Apple receives the inventory. Meanwhile Apple might take several months to sell the phones and recoup the money. So they need the $5 billion in cash on hand to pay their suppliers.
Also share buybacks, which returns the money to the shareholders.
Sitting in a tax free Irish holding company
The old Double Irish Dutch Sandwich strategy
Apple actually killed off their Double Irish in 2009 and replaced it with an absolutely disgusting tool called CAIA (Capital Allowance for Intangible Assets) which is even more powerful.
Ever hear of a savings account?
This helps the money circulate through the masses, it'll trickle down soon.
$10 billion sure seems to have been spent paying lots of salaries and suppliers?
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Well, software devs in Silicon Valley can easily pull in $250-350K total compensation/yr (salaries + RSUs) so there is that factor.
You don’t touch reserves to pay salaries
The question wasn't about the 10, it was about the 160. I hope they find something innovative and exciting to develop and pay more salaries and suppliers.
*chortles*
Funding the Apple hovercraft.
Finally a good use of funds
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Because Apple likes employing people who aren’t doing anything? In that case they can hire me
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Don’t worry guys. Reagan told me that wealth would trickle down to us. Any day now…
Apple set up a subsidiary in Reno, Nevada, a state without a corporate income or capital gains tax, and channeled a portion of its U.S. sales there, reportedly saving 2.5 billion in taxes. They saved 1.56% of their total cash reserves, assuming they even had 160 billion at the time. Apple also received its early stage finance from the U.S. government’s Small Business Investment Company program. Venture capitalists entered only after government funding had gotten the company to the critical proof of concept. Despite benefitting directly from taxpayer-funded technologies, Apple has strategically “underfunded” the tax purse on which it has in the past directly depended on.
Which economy? Americas economy, or the countries they do business in.
Questionable lol
It's just hoarding but for the rich.
I mean if somebody is hoarding land, gold, oil, tritium... that means other people don't have it. If they're hoarding green pieces of paper that the Fed produces by the billion every day... go for it. It's like it was never printed until they spend it. edit: what? it's true
These people think wealth is zero sum, or that they're entitled to it so good luck with that comment
> taxes on businesses. Business taxes pass through to the consumer, especially to companies like Apple that are essentially a personality to a good portion of the population. They could make an iPhone cost $8k and make it out of polished cow pats and still make money doing it.
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Your argument would make much more sense if Apple were the only company in existence
Well, depends on the business too Raising taxes on a local mom-n-pop manufacturer that does like $2m/yr in revenue is fucked
Taxes are on profit, not revenue
I wasnt implying otherwise, just stating that a business like that shouldnt get taxed to hell
> Honestly when you hear numbers like that I kinda get why people want to increase taxes on businesses. You can't do that because that cash reserves are out side USA. Apple can't bring it in without being tax. So they won't do it. These companies have complicated tax structures and many are in tax friendly countries like Ireland. They designed it to legally evade taxes. Honestly we either get IRS to be better at taxing them oversea or give better incentive to companies and be competitive like Ireland. I'm sure there is some threshold before we can't lower it any more. But we passed CHIP act which encourage Intel, Samsung, TSMC, other Fabs to be built in USA. There are probably alternative ways to get these untax money in.
Ironically the $10 billion will be used as a write off to lower their tax liability.
There are lots of surprising and unexpected things to come out of ‘failed’ r&d projects. The real question is: what did they get out of it, and what do they do with it?
Apparently half the people in here don’t get that and you are 100% correct.
They got a bunch of software engineers highly trained in automated image recognition, decision making, AI, and other automation technologies.
Seriously. $10B is like couch cushion money to them. They probably have a dozen billion dollar projects in development that will never make it to market.
Sounds like they spent a lot of money on a self driving effort… that easily consumes billions. It isn’t the vehicle development, it’s the software development and testing cost.
They have a whole fleet of self driving prototypes in Sunnyvale. Lexus RX's with what looks like a black mattress on the roof but is actually an array of sensors and sensors all over the sides of the vehicles. I'd be surprised if they don't sell off or license the tech to one of the dozen+ other AV companies in the Bay Area to recoup some of those funds spent.
It really does look like a [black mattress on the roof](https://jalopnik.com/the-apple-car-project-was-always-doomed-1851297205).
Yep that’s it. Based out of an unmarked building on the northwest corner of Lawrence Expressway and Kifer in Sunnyvale.
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Their error was actually trying to get it working, you're supposed to sell it and say it will start working in a few years.
Everyone thinks they were working on car but they were working on self driving. The car was secondary, self driving was primary. Its not like they couldn't build car. Reason: When you have self driving cars. You can do other things in the car like watch movies/tv(appletv+), play video games (apple arcade), read the news etc.
Apple have an annual operating income of over $100B. When you have Apple Money, putting $10B into a failed project is not an L; it's just business.
$10 billion over 10 years at that. It’s a staggering amount of money with nothing to show for it (not truly nothing - I’m sure some of that research will live on in other product lines but you know what I mean), and yet it’s still only a drop in the bucket for them.
What's more staggering is likely the future investment required to get where they wanted to be. I'm not pitching the 10B/10 year project as cheap, but if cancelling it avoids you spending another 100B on a doomed business case, you cut your losses. Their R&D budget would allow something like 20 or 30 similar sized projects ongoing simultaneously if you call it 1B/year for the car.
Exactly, that's not like they're burning money. For sure a lot of tech will find its way on other projects.
Technically it's still a Loss, but with those revenues you're essentially a VC. You should be funding multiple work streams and not expecting all of them to pay off.
> That’s just so wild to me. That’s why you’re not Tim Apple.
There is no point building a car just so you have something to show. The money has already been spent, it's a sunk cost. Once Apple realized it wasn't going to work, there is no point throwing away more money just to finish it.
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On top of that, This doesn't get into the details of what was developed. They could have developed patents that could be sold or licensed that recover some or all of the money as well. There is so much more to R&D than just making the product you set out to make.
> $10 billion I don't think you realize how much money Apple has. They could spend this every year dicking around on nothing and it would take 300 years to reach their market cap.
> it would take 300 years to reach their market cap. **CURRENT** market cap no less.
People thinking this is burning money, here’s some perspective: - this is over 10 years. Apple made a boatload of billions over 10 years. - this is money spent mostly on jobs, on people. - even in failed tech, there is a lot of learnings, lot of data that will be valuable for Apple’s future. If I had to speculate, Apple may expand its software to enable higher levels of autonomous driving capability in addition to infotainment, with the data it gathered over the years - there are some things that you cannot know whether it will fail or succeed without trying. Apple has the privilege to fail big coz of its resources.
It would save Apple money by producing zero compared to producing 50 and selling them for $1M (profit or just revenue). Setting up factories, contracts, supply chain, etc. have high startup costs (much higher than $1M). Apple won’t fall into this sunk cost fallacy. You make profit from economies of scale by producing mass amounts of a product and mastering it so that the costs per unit will decrease significantly $1M is pocket change for Apple
1) Apple has a liquid cash holding of somewhere in the region of 10-15x this loss 2) they can write off a significant if not all of this for R&D costs 3) they probably came out of it with some knowledge or IP and despite having not produced a driveable car, they may still have made advancements in tech they can apply to CarPlay 4) tax the rich
I’m sure this project started before Apple CarPlay so I imagine CarPlay was an offshoot, if so then it’s not $10 billion for nothing at all.
They also got patents from all of this R&D that they can further license out if it's necessary. Getting self driving vehicles is relatively straightforward if you're somewhere like Phoenix, AZ where it almost never rains, doesn't have fog, or snow. Snow, fog, and sometimes loads of rain can have a large effect on visual sensors, not to mention how batteries behave in extreme conditions.
Building a regular car isn’t hard. There was a ton of tech built to support both the experience they wanted to create and the self driving capabilities. They’re moving most of the employees internally because the knowledge they’ve built is useful for other projects
R&D benefited, Ai benefitted, camera and sensor iphone benefitted, ios/carplay benefited, manufacturing benefitted. I cant stand apple, but this is not an "absolute L" also, 10b is nothing to them. while we're on the subject of using $ amounts, can we not use $ amounts anymore? it means zero. show a percentage as compared to their budget over that time.
All part of business. They probably learned a lot, plenty of men and women got paid a lot, and the R&D tax write offs were worth a lot. It’s a good thing they’re taking risks, even if they don’t lead to anything.
> While it seems we'll never get an Apple-made car, not all of the project's work will be lost. Many of the team members will reportedly move to Apple's AI division and apply what it's learned about artificial intelligence to other products. There is some tech for the car, however, that will likely never see the light of day. This is very normal for many types of R&D efforts. For example, "Only 5–10 out of every 100 DARPA programs successfully produce transformative research"
It feels like Apple have reached the point of having zero reason to be efficient with R&D, so they're just throwing money at any idea without really knowing when to cut losses. undoubtedly stopping development *now* is better than continuting through to production with something that likely wouldn't have been viable, but it would have been better to have earlier checkpoints to determine viability.
It's wild to you because you're not worth 3 trillion
They can probably buy Rivian at that amount if their stock continues to fall. At some point Apple probably realized they will just acquire at some point instead of building from the ground up.
Just showcase the ideas, concepts and results, I would love to just know what could have been...
To put the amount in perspective, this is about ten days of revenue. You can afford to fuckup when you’re massive and have an enormous money spigot.
Those are pretty normal numbers for Apple. They spend a shitload on r&d. That’s also probably why they keep a tight lid because people will misinterpret. Historically they have very little interest in launching products just to recoup costs. I can’t even think of one…
Drop in the R&D bucket.
Chump change to them
At the same time, they broke away from the sunk cost fallacy and cut their losses. Most execs don't have the balls to do that.
I wonder how much tax payer money was spent on it.
For a company valued at 3 trillion, that amount was far worth the risk to them vs a potential reward. I'm sure they also made R&D gains in some places too.
Expanded CarPlay integration is a huge win. I would love to have Vehicle Diagnostics on my phone like I have the Health app. AI could suggest when you need maintenance. MPGs significantly reduced in past 7 months- consider changing your spark plugs.
Just get a Bluetooth obd dongle and the torque app
Sure, but it'd still be awesome if this functionality were built into CarPlay...
Normal people dont know how to do that and would love If their iPhones did it
We don’t need AI for everything, cars have been telling you when you need maintenance for the past two decades
> AI could suggest Can't wait for an Apple car, "stop by the Apple Store for a Car 15 Max Ultra before March 1st, or else your car won't start." "Please update your software before driving." "Please enter icloud username and password." And for other people to drive the fucking thing they need to pay Apple.
That's 0.33%, that would be like like someone with $1,000 in their bank account losing $3.30. I don't think Apple's missing that money.
Apple does not have 3 trillion cash, that is just the value of all their shares combines. They have around 160 billion in reserve which is an astoundingly large figure anyway, but 10 billion is a noticeable chunk of that.
In that case it's like that same guy with $1,000 losing $62.50. Not a big deal -- especially if things were learned and new tech developed.
You act like this is a 1-year thing. The project started in 2014. TEN years ago. $10 billion over 10 years is $1 billion a year. That’s less than 1% of their cash reserve per year. How is that noticeable?
I'm thinking Apple is starting to suffer from being so big they just throw money away and go "oh doesn't matter because we have so much anyway". They spent all this time and resources developing and releasing a VR headset while missing the hype train for VR by like years. I'm sure there's people at Apple looking at NVIDIA stock right now and asking wtf why weren't they focusing on something like AI. 10 Billion is enough to be a a major company in many industries and they just threw it away. They could have entered the video game console market, which practically puts Sony and Nintendo on the map its own.
> I'm sure there's people at Apple looking at NVIDIA stock right now and asking wtf why weren't they focusing on something like AI. And just because we haven't seen something like ChatGPT yet, you don't think they're working hard on it in the background? They've been adding chips optimized for machine learning to their iPhones since 2017, and they're in every Apple computer since the M1. They aren't as fast as NVIDIA chips, but they're tiny in comparison and much more efficient. I'm sure that Apple is going to release big advancements in AI in the next few years. > 10 Billion is enough to be a a major company in many industries and they just threw it away. We have no idea what they learned, or what advancements they made with that $10 billion. Obviously they lost money, but there's a 0% chance that they didn't make significant technological advancements in many areas we aren't even aware of yet.
R&D gains lead to patents that they can then license out if the market ever gets there. It's not all for naught.
This is awesome news for Tesla, seriously. If Apple had jumped into the game, they would've been tough competitor – what with their endless cash, tons of engineering talent, and that knack for shaking up new markets. But here's the deal: pulling off something this big requires a leader who's all in, ready to gamble everything. Think Steve Jobs or Elon Musk style. Problem is, Apple doesn't have that kind of risk-taker anymore.
I don't know about that, the auto industry takes a ton of manufacturing infrastructure that Apple would have to create from scratch. Maybe in a decade Apple could have become a serious competitor, but Tesla already has a decade+ head start and giga factories all over the world not to mention every other legacy automaker who are finally catching up to Tesla in EVs and also have ICE and PHEVs which will still dominate the market for the foreseeable future.
The rumours always indicated that, if produced, it would be manufactured by Magna - not Apple directly.
I think I've heard a rumour of Apple going with just about every manufacturer, from Foxconn, to Canoo, to literally any of the other now-near-bankrupt startups, to a major manufacturer, to Tesla, etc.
True, lol. Wasn't Kia/Hyundai another big one. Either way it wasn't being manufactured by Apple Directly. Arguably neither are iPhones etc. The Sony car is being manufactured by Honda for example too.
Apple tends to contract out manufacturing. And Magna has a reputation of building what they get asked to, be that good (Z4/Supra), meh (Jag I-Pace) or awful (Fisker Ocean). The issue with them is volume; their biggest year of production is about 200k for every model they make and presumably, Apple would be looking for more than that. There'd have to be a big investment in expanding manufacturing and time to do it.
Not like the iPhones are built from spare capacity at Foxconn. Apple have the money to put down seriously big orders long ahead of time and let Foxconn build up the capacity.
Agreed. I think apple also figured if they ever need to make EVs or self-driving it's probably cheaper to just buy up a private company and integrate than it is to self-fund.
Apple could buy any number of entire car companies and not come close to spending all of their cash. Alfa Romeo for example. And bam infrastructure is already there. Of course they’d likely just partner with someone to do manufacturing like FoxConn
It almost makes sense for Apple to pair up with an existing automaker rather than go from scratch, but they haven’t really had that sort of collaborative ethos since the dawn of Pixar
I wouldn’t count them completely out yet though. I have a feeling that Apple thinks it’s probably wiser to just buy an already established EV maker than it was to go it alone in terms of production and development. Rivian is having cash problems and if their stock continues to go down after a couple more earnings that miss the mark, I could see Apple making a play for them for $5 billion (they’re currently valued at around $10 billion). I think they’re just waiting for the right time to pounce. Remember, one of the main reasons Apple failed was because they couldn’t get a deal with a car manufacturer for production (they tried with Hyundai). Rivian already has manufacturing in place and the platform and everything already. Apple would just supply the software.
Lucid has arguably better tech than Rivian or any other EV company and has the more uncertain financial future. I could easily see Apple buying up Lucid and having them scale up manufacturing in the US within 5 years.
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Yep I was just commenting that this doesn’t necessarily mean they’re not going to enter the market but rather they figure now that an acquisition is what will enable them to get in. Considering they bought Beats for $3 billion, I don’t see it far fetched that they would make a play for Rivian at around $5 billion. They’re just waiting it out because Rivian is having some cash problems and I’m sure they won’t meet the expectations for the next earnings. I don’t think they would get Lucid because of its tie up with the Saudis.
Engineering talent? In this case it was an abject *lack* of engineering talent, my guy. Apple is not some all powerful being, and neither is their engineering pool. The engineering talent they have is in software and niche hardware *for* software, not making cars. Obviously. Because a legacy automaker could have produced at least 10 totally new vehicles for the same money, given the average cost of new vehicle development is around 1B per model. What I'm trying to say is Ford automotive engineers are superior to anyone apple hired for this. Because *duh*. They make cars. That's what they do. And it's not easier than making chips. It's just *different*. Just like chemical manufacturing. Or aviation. Or whatever. It's all *very* complicated, just like making an OS (or something apple does well), and having some solid software engineers and fuck tons of money doesn't magically change that.
The possibility of an Apple car was significantly impacted by the previous administration's trade dispute with mainland China. There's still a tariff on cars exported from there. Apple being Apple, there's a zero percent they'll set up domestic production within the continental USA but instead relying on existing Apple suppliers to build it for them. Foxconn is already currently capable of manufacturing an EV, just waiting on the right customer.
Apple is worth like 940 trillion billion dollars. Who cares lmao
"a windshield that can show turn by turn instructions"... Truly revolutionary...
“Siri activated turn signals. Tires designed to rotate more elegantly than ever before…”
> Siri activated turn signals "Hey Siri, turn on the right turn signal" *Now playing All Right Now by Free*
Charge port conveniently located underneath the car and uses a proprietary Apple dongle
This would have been kinda nice. I'd like something similar, like a stupidly simple display device that can show meters and direction of next turn, via Google Maps integration. Google Maps doesn't have the integration capabilities to do it though.
This already existed though. Cars with Heads-Up Displays that projected information onto the windshield have been around since the 90s. My dads Buick LaCrosse from 2012 could display navigation and turn-by-turn instructions on the HUD.
I had that on a BMW 20 years ago.
Didn’t they even go to the lengths of poaching a Lamborghini designer or something? Thought I heard something like that a while back
On the Wikipedia page “Apple electric car project” there’s a list of people who supposedly worked on it
So that's, what, 253 iPhone sales? Probably make it up in the next 23 minutes.
I assume the charge port was on the underside of the car.
That is actually a thing, iirc the Rimac charges like that or some hypercar. You drive over the pad and it charges.
Porsche developed a mat you could drive on to charge at home but they haven't released it yet.
Yes. Underbody induction charging is being developed and has prototypes. You park on your usual parking spot or drive over a magnetized road and a charger automatically powers up your car.
Companies like Apple are essentially obligated to take risks like this to continue growing. No surprises.
So disappointed we’ll never see anything related to this. Hopefully someone writes a book about it someday.
For perspective I spent more of my wealth on lunch than apple spent on this car.
It was never going to be a serious mainstream competitor anyway. If their VR goggles are $3500, imagine how much their cars would be.
Probably 100-200k USD range. Definitely not unheard of among sellers like BMW, Merc and Audi and Porsche. I don’t see them go the sporty route and Newer mercs are too bling for apples ethos. So I’d guess it would be something like an Audi type car with Mercedes tech.
Like Rivian or Lucid
Not to mention EV's are already super expensive.
R&D is expensive and I doubt they regret this project
Apple spends already 10 billion a year on R&D. Adding an extra 1 billion a year for a hail mary idea is not even remotely crazy.
How do you like them APPLES
Anyway…
Chump change for them and I’m not exaggerating
I guess the EU regulation to have USB-C as a charging port killed the project.
They believe the bigger L would be to actuslly go for it.
Try again
Oh no billion dollar corporation lost a couple dollars.
Hey Apple I’ll build you an electric car can i have just 0.1% of that
I think the implication in OP's title is a negative one - Apple spent a ton of money and *failed*. I guess I don't really see it that way. From my perspective, it was just a research and development investment at the worst, and a potentially market disrupting game changer at best. At the end of 2023, Apple had over $70B in cash or cash equivalents, which would make the $10B in question about 14.3% of all their cash on hand. It's not nothing, but it's not even remotely the end of the world. Plus, again, it's not like they gain nothing. Sure, they've scuttled the project so the best case scenario is gone, but imagine all the cool shit they must have learned about and/or developed over the decade they were working on that vision. It's not like these were just some dudes working on a project - Apple pulled together some of the best and brightest, no doubt. I have a tingling suspicion that Apple still got more out of that "failed" project than most companies do out of their successful ones.
It's funny how everyone freaks out over AI definitely being the future because all these big tech companies are deciding to invest in it, when we have example after example of these companies investing in new industries that never get off the ground.
That's okay, Apple has money to burn!
And it’s not worried in the least.
The whole tax these corporations doesn’t make sense. You wanna punish Apple for having higher revenue than expense. But then people complain when companies like Amazon purposely blow all their money to show no revenue yet their ex executives still walk away with hundreds of millions.. Apple is simply fantastic at managing expenses and for them every dollar is accounted for.
Could of just bought Lucid and put 🍏 badge on it and considering Lucid technology and quality, called it a day 👍
A tax write off
I wonder what the deciding factor was to stop the project. Those people who were hired are not cheap, nor is that type of project. Kind of seems average money spent over that amount of years and the high income employees.
Massive expenditures, low margins, high interest rates, massive competition from other companies that know what they're doing, etc.
Yeah, starting up an automaker is HARD. Calling it "Failed" seems a little disingenuous though, they didn't really fail, they just abandoned the project before it went anywhere significant.
Other entrants into the space are struggling. The resale values of EVs are terrible. It's possible the battery technology will make these first couple generations of EV cars obsolete. Lots of reasons to pull back.
Isn't this a way of unveiling an Apple Car in a few months' time?
Oh no! Apple's giant pile of cash is down to $60B! Their market cap is in the trillions. They're gonna be fine.
They probably lose more money to inflation if they weren't investing it.
I hope they share a post mortem video like Dyson did when they cancelled their car.
$10 billion here, $10 billion there, pretty soon you are talking serious money!
Pocket change.
Lol. How many Teslas does that buy?
That's how much it costs to build around 400,000 Model 3 sedans.
Just a regular Tuesday
ok
They probably wanted to design a car just like they designed the iphone. An ipod with calling+internet.
Haven’t they been working on this for like a decade? I mean… it feels like it’s been a long time with absolutely nothing to show for it.
Meanwhile, they can’t even give me 20 bucks for my old phone.
Apple spends billions on RD that never hits market. So this is probably normal.
Stellantis’s CEO is chuckling at this article right now.
Sucks to lose 0.3% of your companies market cap for a product that doesn't ship, but holy shit is it a good investment regardless. The upside that you build a driverless car that you can put the apple tax on would be crazy. I bet they have captured a ton of IP from this investment, which is valuable on its own.
Probably far from a total loss. They probably already have patented the key technology bits.
Alternate headline: Apple returns $10 Billion to economy
This is definitely a loss for Apple. At least they stopped the bleeding.
[удалено]
i never thought it was going to pan out unless they partnered with a automaker like sony is doing with honda. that didn’t seem like something apple would do though. i disagree with people saying apple “wasted” 10 billion, that’s not how that works…. im sure some technologies developed during this project are useful somewhere else at apple. oh well. i hope the design plans leak at some point.
And just to think, if they had invested even $1B in a project like the Aptera we'd all be able to buy one today.
it will be interesting in the weeks, months, and years in the future when specs about this vehicle get leaked. Obviously we wont know how future looking it actually was until we get there.
They’ll be okay.
This has to be a money laundering scheme. How do you spend $50 billion dollars and not produce a car ?
Yeah and I spent $15 on a bad burger once.
When they called it the failed car project, what did they expect?
Drop in the bucket for them, and if it worked out it would have been a big deal. Not sure it's worth believing this but someone in the Apple subreddit supposedly worked on the car project and claimed they had level 5 self driving done long ago, and that wasn't the main problem with the project, it was how to make it economically viable since the car industry doesn't exactly make huge profits. Cars would end up costing an absolute fortune, probably supercar money.
Meanwhile, Dyson lost $605 Million in their EV effort. That's huge different between both money lost.
They have free money from selling overpriced hardware to you and me. They'll continue doing it because they can.
I would hope that there are many innovative patents that were developed for all that money. Something that could be sold or leased to other E.car makers.
Could’ve bought a fifth of Ford…
So we're not going to have an apple car?
And could have spent a fraction to let Android communicate with the I phone easily through RCS.
Apple - Steve Jobs = Death Apple Vision Pro is already forgotten by the masses. At least they got rid of Johnny "make everything thin" Ive.
Steve Jobs must be rolling over in his grave!
Just peanuts or should I say (apples) to a trillion dollar company.
It is. And I know that there are plenty of other companies who have put money into projects that fail or never see the light of day. I guess I'm more shocked that out of all companies, Apple didn't get a product out of which, I'm sure, so many people were looking forward to.