Was Apple's Car Project Doomed to Fail?

1. 0:00 – 0:56

   Project Titan canceled: Apple exits the EV dream and redeploys to gen-AI

   1. KSKara Swisher0:00

      Apple is scraping its multi-billion dollar plan to release an electric vehicle, a not-so-secret project that was in the works for almost a decade. The company told employees in an internal meeting this week that the plan, known as Project Titan, has been canceled, surprising the 2,000-person team who'd been working on it, according to reports. Many of those employees will now be reassigned to Apple's generative AI projects, um, which'll be interesting to see, 'cause they have a lot less data than other people, 'cause they don't collect it. Um, you were excited about the idea of an Apple Car, Scott. Um, I'm, uh, I'm surprised they canceled it. I... Maybe they're working on software? Apple's car was initially envisioned as an EV to compete against Tesla, and later, a self-driving car rival, Waymo, which is, comes from, uh, Google, the Google folks. Elon Musk rejected, uh, reacted to Apple's news on X, posting a saluting emoji and a cigarette. I don't... Uh, whatever. Fuck you. Um, what do you think, first of all? Do you consider it a failure? Are they smart to get out of the EV game, um, even though they never said they were doing it?

2. 0:56 – 1:45

   Scott’s strategic reversal: why killing the car is the “right decision” now

   1. SGScott Galloway0:56

      So, look, a, a, a strategy and a vision is meant to be unifying, but not a suicide pact, and you were right. Two years ago, I predicted they were gonna build the most valuable waiting list in history, that this made a ton of sense, and in order to move the needle on what was then a $1.6 trillion market cap company, they would need to go after big game, and the automobile industry was big. I felt that Tesla had unearned market cap at $700 billion, or whatever it was then, and that Apple was just salivating to go after some of that. But here's the thing. When the data changes, as a good manager, you have the right and the obligation to change your mind, and a step back from the wrong direction is a step in the right direction. And you know what, Kara? This was absolutely the right decision, because in the last 12 months, the atmospherics-

   2. KSKara Swisher1:45

      Yeah.

3. 1:45 – 2:28

   EV market “atmospherics” shift: slowing adoption, margin pressure, and BYD’s rise

   1. SGScott Galloway1:45

      ... have changed dramatically, and let's just talk about some of those. The EV market is plateauing, if not slowing. All the projections are way overestimated consumers' pivot to EVs. Toyota's looking like a genius right now, 'cause they did not go all in on EVs-

   2. KSKara Swisher2:03

      They went hybrid-

   3. SGScott Galloway2:03

      They-

   4. KSKara Swisher2:03

      ... which are popular.

   5. SGScott Galloway2:04

      That's right, they went hybrids. Tesla is running up against margin compression, and then you have, um, you have the company which is probably, um, probably the most important company that no one talks about. BYD is now outselling-

   6. KSKara Swisher2:22

      That's right.

   7. SGScott Galloway2:22

      ... Tesla. So Apple-

   8. KSKara Swisher2:24

      J-... Warren Buffett has a big stake in that.

   9. SGScott Galloway2:26

      Is that right?

   10. KSKara Swisher2:27

       Yeah.

   11. SGScott Galloway2:27

       I didn't know that.

   12. KSKara Swisher2:28

       Yeah.

4. 2:28 – 2:58

   Why cars are a brutal business for Apple: subsidies, capital intensity, and weak economics

   1. SGScott Galloway2:28

      But let's look at the market versus where it was, say, just even two years ago, much less when this project was probably approved. You have a low margin, capital-intensive product that is subsidized. Basically, every car company in the world has either gotten federal loans, Tesla, or has been bailed out, GM and Chrysler. It's a massively subsidized industry, which makes it incredibly economically inefficient. They have this enormous competitor with a $600 billion market capitalization that is doing

5. 2:58 – 3:49

   Strategy basics: matching market dynamics to internal capabilities—and saying “no”

   1. SGScott Galloway2:58

      really well, called Tesla. They have another gigantic low-cost competitor that's actually outselling Tesla right now, and the consumer seems to be pulling back from EVs, and EV... The prices of used EVs are plummeting. And they look at this, and i- in addition, what has popped up? Generative AI. And so, uh, the, the key to strategy is... Strategy is decisions that attempt to cut a swath between market dynamics and your internal competencies, in order to add shareholder value. And the key to strategy is not what you say yes to, but what you say no to. And even Apple has finite resources, both human and capital, and my guess is they've said, "Based on this market, which quite frankly looks increasingly difficult, we would rather take our finite resources-"

   2. KSKara Swisher3:48

      All right. I'm gonna... Uh-

   3. SGScott Galloway3:49

      Okay, sorry.

6. 3:49 – 4:29

   Kara’s counterview: EVs are still the future, just slower than investors expected

   1. KSKara Swisher3:49

      ... let me, let me give you some thoughts on this. Okay, I think EVs, yes, they ha-... I think they over... Everyone overinvested, right?

   2. SGScott Galloway3:55

      Mm-hmm.

   3. KSKara Swisher3:55

      And so I, I still think it's the direction it's going, period.

   4. SGScott Galloway3:58

      Mm-hmm.

   5. KSKara Swisher3:59

      I think this is the way it's going. I just think consumers aren't quite ready yet. Um, it's sort of the valley of death area that it happens in. But w-... A lot of w-... Who got into this? Car makers, right? Car makers got into this, and started to make, are starting to make beautiful cars. Now, as they do that, I do think customers and people have, you know, don't have, don't have worries about charging and everything else. I do think it's gonna move... Uh, you're gonna see, in 10 years, you know, I forget how much of a percentage EVs are. It'll, it'll, it'll move up. It just won't move up this

7. 4:29 – 4:59

   From EVs to autonomy: long-term arc toward autonomous electric transportation

   1. KSKara Swisher4:29

      quickly. That's one. It's 'cause I, 'cause I do think this is the way things are going, these, these, uh, autonomous vehicles. Not auto-... Excuse me, electric vehicles, and then eventually autonomous vehicles. I think that is the direction. I think s-... Uh, science fiction has been correct about this, that we'll have autonomous electric cars and s-... You know, in the future, when we're dead, when D-... Uh, both of us are dead. Um, so I think that's... It's just there's so many competitors now, and now you do have, like, BYD, um, and, and which is just roasting everybody else, and, uh, they're...

8. 4:59 – 5:29

   What Apple should have done: focus on car software and transportation systems, not manufacturing

   1. KSKara Swisher4:59

      And they're coming here. They're looking at Mexican, uh, sites to build, uh, a factory so that they can move into this area. Um, so I do think people will have a lot more choice, like they do with regular cars. That's one. And so... But it's a lot less than the investment. So GM, everybody's pulled back, but they haven't totally pulled back, 'cause they realize this is the future. The second thing is, um, Apple... I, I was always dubious, as you know, about them building the car. I'm like, "Why don't they just work on the software for the car, like, uh, making the car, these electric cars work better, or

9. 5:29 – 6:20

   Apple’s AI challenge and opportunity: ecosystem lock-in without the same data scale

   1. KSKara Swisher5:29

      a t-... He... Uh, you know, uh, Cook, Tim Cook never acknowledged his car project and referred to it, uh, as work on autonomous systems. I think they should not abandon... I didn't think they should abandon building the car. That was sort of weird to me. But, um, but keep at this idea of how to operate transportation vehicles, right? It's a great area. And as to AI, I think it's very important that they incorporate AI into all their products, so that you, you f-... Like, assistants, all that kinda stuff. Like, I don't... They're gonna have a harder time in the AI market, 'cause they don't collect as much data. Um, but it's a better bet for them to focus on making these products seamless in a new AI environment, like my AI... my Apple AI talks to your Apple AI kinda things. Um, and I think that's where they're gonna get the big-

   2. SGScott Galloway6:16

      Mm-hmm.

   3. KSKara Swisher6:17

      ... push of keeping you in the Apple ecosystem. I'm not sure.

10. 6:20 – 7:31

    Rivian as the reality check: a well-executed EV startup still struggles financially

    1. SGScott Galloway6:20

       You know what I think was likely the final nail in the coffin when they said, "Okay, it's time to officially announce this is over," is Rivian.

    2. KSKara Swisher6:27

       The guy left. Oh.

    3. SGScott Galloway6:29

       Uh, if you-

    4. KSKara Swisher6:29

       Yeah. Why's that?

    5. SGScott Galloway6:30

       Well, okay. Rivian's been around a decade and a half. It's executed really well. I have an order on a Rivian. Real briefly, I'm going to get, uh, that ocean foam green Rivian. I've already outfitted it.

    6. KSKara Swisher6:41

       Oh, cool.

    7. SGScott Galloway6:42

       And I bought a home in Aspen, and I'm gonna drive into town, have lunch at Casa Tua, dinner at Cache Cache. I'm gonna be a cliché of a douchebag, and everyone is gonna love me. And I'm gonna put my dogs in the back of the Rivian. Anyways, I love Rivians. I think they're beautiful. They're really popular. They have executed really well. They cost about $70,000. This is an incredibly difficult business, and they probably-

    8. KSKara Swisher7:03

       The Valley of Justice.

    9. SGScott Galloway7:04

       They probably said, "What's the analog here?" And they're like, "Well, the analog's Tesla." And it's like, come on. Tesla caught, got in front of a tsunami when the entire industry didn't want to acknowledge what was happening. They had a spokesperson that brought massive attention to it, government subsidies. What has happened there is a unicorn on top of a unicorn that gives birth to unicorns, right?

    10. KSKara Swisher7:24

        Mm-hmm.

    11. SGScott Galloway7:24

        They said the, the analog to what we're trying to do here is Rivian. Rivian has executed well. It's a-

    12. KSKara Swisher7:30

        Right.

    13. SGScott Galloway7:30

        ... good-looking car.

11. 7:31 – 9:49

    Talent signals and M&A debate: should Apple buy Rivian instead of building?

    1. KSKara Swisher7:31

       Well, interesting, uh, uh, one of the signs of this was, and I remember paying a lot of attention, this guy named DJ N- I think it's Novotny. He was sort of one of the early car people at Apple. He left to go to Rivian.

    2. SGScott Galloway7:42

       DJ Novotny?

    3. KSKara Swisher7:42

       Which is, yeah, this is his DJ name.

    4. SGScott Galloway7:43

       I think I saw him at the music, uh, Mi- Miami Music Festival.

    5. KSKara Swisher7:47

       (laughs)

    6. SGScott Galloway7:47

       He was right there with Calvin-

    7. KSKara Swisher7:48

       He-

    8. SGScott Galloway7:48

       I, I like, I like-

    9. KSKara Swisher7:49

       He-

    10. SGScott Galloway7:49

        ... Rufus Du Sol and Calvin Harris more, but he's-

    11. KSKara Swisher7:52

        Uh-huh.

    12. SGScott Galloway7:52

        ... right up there. I'm sorry, go ahead.

    13. KSKara Swisher7:53

        Anyway, he went to Rivian, and now, he went to Rivian and that was a big deal. Now as to Rivian, it's interesting. One of the people who follows Apple, Gene Munster, said Apple should buy Rivian. Like that's how-

    14. SGScott Galloway8:04

        Hmm.

    15. KSKara Swisher8:04

        ... to do it. Like don't get out, but actually buy it, which I thought was-

    16. SGScott Galloway8:07

        That's actually a really interesting-

    17. KSKara Swisher8:08

        ... interesting.

    18. SGScott Galloway8:08

        That's a really interesting idea.

    19. KSKara Swisher8:09

        Yeah. Do you like that? That's Gene Munster who said that. Um, I don't know if they-

    20. SGScott Galloway8:12

        But they're just buying losses at this point. I'm sorry, go ahead, go ahead.

    21. KSKara Swisher8:14

        Yeah, but, hmm, gets them in there. I don't know. It was, that was the, the alternative. I guess it's a, it's a huge project and they really are focused in on, um, they should be focused in properly on i- integrating AI into their systems and also, um, on, on their spatial computing. They've got to, they got to be focused on th- that more than this. But buying Rivian could be something. I don't know. Could be interesting. Yeah, so he said, "Apple's a tech company, and tech companies by definition need to grow." And that's the $400 billion question that they have here. They've got all this money. Um, so they, he, he feels like to grow the business, you got to get into... He- they shouldn't, uh, because he thinks Apple Vision Pro has potential, but the car, they would grow... He thinks it eventually would grow. It's an interesting, you know... He, he thinks they need to be in a new market and that why abandon it, stay in, stay in this market by buying someone? That's not an Apple thing to do, uh, you know?

    22. SGScott Galloway9:07

        They're not acquirers. Um, it's an interesting-

    23. KSKara Swisher9:09

        Yeah.

    24. SGScott Galloway9:10

        ... idea, but Rivian would have to get their financial house in order. It's tough to buy a company that's losing that kind of money right now.

    25. KSKara Swisher9:16

        Yeah. But they'd get a great, great staff. That, that guy who's the CEO of Rivian is impressive.

    26. SGScott Galloway9:21

        It's a really interesting idea. If they could get sort of to, uh, or close to break-even, then I think it'd be a great idea for Apple. But as you said, Apple doesn't like to make acquisitions.

    27. KSKara Swisher9:30

        Doesn't like to do it. They don't like, they do it, but what's the last one? The headphones. What did they buy last? I can't even remember.

    28. SGScott Galloway9:35

        Beats. Didn't they buy Beats?

    29. KSKara Swisher9:37

        Beats? Yeah, they bought... We had them on stage at one of the c- That was a long friggin' time ago. Anyway, um, it's not like them to do that, but, eh, they, could be.

Episode duration: 9:49