Apple has reportedly signed a deal with Volkswagen to make self-driving vehicles.
At present, the agreement is believed to centre on Volkswagen’s T6 transporters, which Apple plans to adapt into self-driving shuttles for employees on its campus – the so-called Palo Alto Infinite Loop (PAIL) – but it has the potential to expand into a wider collaboration.
The partnership is seen by some commentators as a step down, in brand terms, from Apple’s previous ambition to partner with BMW and Mercedes-Benz to create all-electric, self-driving vehicles. According to the New York Times, quoting sources close to the matter, those deals stalled when the high-end makers rejected Apple’s demand to hand over control of the projects’ data and design.
Discussions with other brands have also reportedly led to nothing, but the NYT has suggested that Volkswagen leapt at the chance to partner with Apple, given the poor reputation its own software has garnered in the wake of the 2016 scandal over emissions tests cheating, which saw VW pay penalties of $4.3 billion in the following year.
But are these reports an accurate summary of Apple’s plans?
The NYT may be wrong
To present a partnership with VW as a mid-market, third-choice deal may be speaking too soon, as the Volkswagen Group – collectively Europe’s largest automaker – includes the Audi, Porsche, Lamborghini, Bentley, and Bugatti marques: some of the world’s leading performance and supercar brands, which all share Apple’s integrated, design-centric vision.
The NYT has also suggested that Apple’s ambitions to lead the self-driving car space now look lost, as it trails behind Waymo, Uber, Tesla, and traditional automakers, such as GM and Toyota.
However, while its programme has undoubtedly suffered from u-turns and a lack of strategic clarity, to present it as lagging behind Waymo, Uber, and the rest, is not borne out by recent statistics. Earlier this month, Internet of Business reported that Apple had increased its fleet of autonomous test vehicles in California to 55, with 83 registered drivers, according to the state’s Department of Motor Vehicles (DMV).
That announcement means that Apple has more autonomous test cars in the state than Waymo (51), Tesla (39), and recent entrant Drive.ai (14). Only GM Cruise has more registered cars, at 104. According to the DMV, 53 companies are testing a total of 409 autonomous vehicles in California.
A year ago, Apple had only three test vehicles in the state, but by January this year, had increased that number to 45, suggesting a major and ongoing ramping-up of its Project Titan autonomous programme.
However, Apple has yet to apply for a driverless permit, which would allow it to test the cars without a safety driver onboard. The California DMV began issuing full driverless permits in April 2018.
Last year, a report suggested that internal disagreements at Apple had shifted the focus of Project Titan from developing a standalone vehicle to – unusually – developing a driverless vehicle operating system, dubbed ‘CarOS’, to license to other companies.
While this would be a strategic change of tack for Apple and its traditional walled garden-approach to integrated software and hardware, having a route into Europe’s largest car group, complete with both high-performance and mass-market brands – not to mention global manufacturing, distribution, and channel facilities for electric and hybrid vehicles – could turn out to be the most viable option on the table.
Internet of Business says
While Waymo et al may have the ambition, the mindshare, and the strategic clarity, the extent of the task facing any driverless vehicle maker in the US is now becoming clear in a market in which common sense has often been replaced by arrogance.
Consumer support and trust for the technology has fallen dramatically and is now in a clear minority, even among millennials; safety claims are in doubt; technology challenges remain significant, especially outside of city limits; and the US has enormous cultural and employment baggage when it comes to cars and driving, all of which will need to be left on the hard shoulder (see our separate report on this).
Try imagining films such as Vanishing Point, Two Lane Blacktop, Bullitt, American Graffiti, and Easy Rider with autonomous electric vehicles and scooters and you take the point. Meanwhile, 3.5 million people in the US earn a living as drivers, and there are more cars registered in the US than there are adults to drive them.
In all of these areas, China holds the advantage, with vast state investment in autonomous technologies, a supportive and largely conformist population, and little in the way of baggage when it comes to being a car-ownership culture.
For US companies competing in the autonomous vehicle space, a vast money pit stretches years into the future before widespread autonomy takes hold on the roads, and any global switch occurs between car ownership and frictionless on-demand transport.
In crowded cities, and for many types of deliveries, on-demand, autonomous transport could be liberating and transformative – with some taking to the sky – but real friction will exist at city limits and in towns and rural areas.
As part of Alphabet, Waymo may have the funding to last a difficult course strewn with obstacles, but Uber and Tesla are still haemorrhaging money. Uber’s Q1 financials, published this week, showed a 67 percent increase in revenues, but the company still booked an adjusted loss of $577 million.
For Apple, the world’s most valuable company, plotting an IP-centric course – in partnership with an established auto brand that wants to rebuild its own reputation – could prove to be a clever long-term move, even if the deal has arisen more from strategic missteps than by design.
But if Apple merely wants to use its new partnership with VW as a high-end advert for its own internal mobility or badge, then that’s a different matter. Perhaps Apple needs to learn that carmakers aren’t a mere vehicle for its desire to stage manage its own appearance.
Either way, Apple’s driverless car ambitions need to break out of their infinite loop, not stay in one permanently.
Plus: Uber withdraws from Arizona
In related news, Uber has formally closed its autonomous car testing programme in Arizona, it was announced yesterday. The company was ordered off the road in the state two months ago, while investigations took place into the March accident in which a pedestrian died under the wheels of an Uber Volvo in Tempe. Uber has now withdrawn its programme from the state completely, but will continue testing in San Francisco, Pittsburgh, and Toronto.
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