Apple Inc. (NASDAQ: AAPL) could be poised to start testing a self-driving car in the San Francisco Bay Area in the near future. Our friends at The Guardian reported that Apple has entered into a deal to test vehicle applications and technologies at GoMentum Station in Concord, California.
GoMentum Station is a heavily-guarded, autonomous vehicle testing center operated by the Contra Costa Transportation Authority at the old Concord Naval Weapons facility just east of Oakland. Its operators claim it is the largest facility in the world for the testing, validation, and commercialization of connected-vehicle applications and autonomous vehicles.
Apple Has Arranged to Use Car Testing Facility
It should be noted that the facility the University of Michigan operates in Ann Arbor is actually larger at 32 acres. There are 20 miles of paved highways (old runways) and streets at the facility, which is familiar to fans of Mythbusters; episodes of the addictive reality show may have been shot there.
Daimler A.G.’s Mercedes Benz and Honda (NYSE: HMC) have already carried out self-driving car experiments at GoMentum Station, The Guardian reported. Tesla Motors (NASDAQ: TSLA), which is based in nearby Freemont, has also looked into the possibility of using the facility.
GoMentum Station is similar to a movie studio; there are mockups of tunnels, railway crossings and even cattle grids at the station. That makes it ideal for testing new vehicle concepts. Apple already has a low-key auto development facility in Sunnyvale, California, not far from its headquarters in Cupertino.
Little Known about Apple Car
What’s truly striking about The Guardian’s story is that very little has been divulged about the Apple car. We still know next to nothing about it; we don’t even know if it will actually be a car.
Apple has not divulged what class of vehicle it is building. It could also be a van, a minivan, an SUV, a crossover or even a pickup truck. Nor has it divulged how the vehicle will be powered. Will it be electric, a hybrid, a fuel cell vehicle or just a plain old fashioned gasoline or diesel burner?
We can imagine that it will be autonomous, but we do not know how autonomous it will be. Is it a full self-driving vehicle or just a souped-up sedan with a few autonomous features like Tesla’s Model S?
Something else that is not clear is whether Apple is working with a partner, probably one of the major automakers on the car project, which has been called “Project Titan.” Although, there is a strong possibility it is because autos are way out of Apple’s area of expertise.
Is It Really an Apple Car?
One strong possibility here that would disappoint Apple zombies is that when the Apple car rolls out, it will simply be a Chrysler, a Toyota or a BMW with “Apple technology inside.” That is a luxury model of another brand that contains some Apple features as an added incentive.
Going that route makes a lot of sense because it would allow Apple to sell directly through an existing dealer network and avoid the political conflicts Tesla has faced with auto dealers. Tesla vehicles cannot be sold in many U.S. states because of state laws that limit auto sales to “licensed dealers.” The laws are on the books because dealers are a powerful political lobby in America’s statehouses.
It would also avoid the need for Apple to get into the car financing business and to provide maintenance for the vehicles. Instead, the auto company would handle finance, and the dealers would provide the maintenance in their existing facilities.
This doesn’t mean the car won’t be on display at the Apple Store. It simply means that Apple Store customers would be redirected to a local dealer to buy the vehicle. There might be a—gasp—auto salesperson in an Apple shirt on hand to explain the car’s features to Apple shoppers and mention the great deals on it available at Smith Chrysler just across the street from the mall.
The most likely candidates for partners on an Apple car project are companies like Toyota (NYSE: TM) and Fiat-Chrysler Automobiles (FCAU), which have not been very active in the autonomous car efforts yet. Apple CEO Tom Cook has met with Fiat-Chrysler’s boss Sergio Marchionne in the past, according to The Guardian.
Is an Apple-Fiat Partnership in the Works?
Apple would need such a partner because it does not have the production capability to build a car. Producing a car to sell in the U.S. in China seems unrealistic because of shipping costs; after all, a car would weigh more than a ton. It is not an iPod, of which thousands can be packed into one shipping container.
Fiat is a likely candidate because it needs a deep-pocketed partner. The historic automaker, which owns Dodge, Jeep, Alpha Romeo, Lancia, Maserati, Ferrari, Chrysler and Fiat, among other brands, reported a free cash flow of -$1.264 billion and a profit margin of .3% on March 31, 2015. Apple, on the other hand, has money to burn; it reported a free cash flow of $12.9 billion, a net income of $50.74 billion and a profit margin of 21.52% on June 30, 2015. Fiat is also burdened with €11 billion ($12.22 billion) in debt it needs to pay off.
Partnering with Fiat would give Apple the opportunity to introduce a wide range of vehicles, including vans, pickups, SUVs, crossovers, sports cars, and even station wagons in addition to sedans. That would give it an edge over Tesla, which currently only has one model in production.
Making a small foray in the auto market would be little risk for Apple, and it would generate a lot of good will among the customers. A company like Fiat would certainly benefit from access to Apple’s engineering, marketing, design and technology expertise. Just the association with Apple could help Fiat revitalize some of its luxury brands.
Fiat is hoping to position Alpha Romeo to compete with luxury brands like Mercedes and BMW. Apple technology would be a strong selling point in such a venture.
After all, Apple Zombies would probably buy anything with the Apple logo stamped on it—even a Chrysler—although it remains to be seen whether anybody would buy the Apple Dodge Ram or the Apple Jeep Liberty.
It looks like we could see an Apple car on the road in the near future. The only question we need to ask is will it actually have the Apple brand name on it or not?