Fin-ology

Episode 15: An Apple Car

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Recorded 2015-02-25

Is an Apple car a strategic move of genius or a major lack in judgement. We discuss the potential strategies, opportunities, and potential pitfalls of what could be an earth shattering move by the world’s most profitable company.

Show Notes

  • Apple is going into the car business
  • Going into the car business is a diversification strategy, but is this strategy too far from Apple’s core competencies
  • The electric car business is less complicated from a manufacturing standpoint than traditional combustion engine
  • The size and profitability of Apple means that expansion has to be big enough to make a material difference
  • Are there similarities to dividend policies and investment in diversified industries? Does the expansion to cars mean that the opportunities in phones and computers are starting to disappear?
  • Apple is a mobile device company and the car is the ultimate mobile device
  • The apple watch is a secondary product to the iPhone, but the car is something completely different.
  • Phones are high end products subsidized by cell phone companies, but this is not the model with cars.
  • The core technology of electric cars is the battery, investing in this research could only benefit other products such as phones and computers.
  • The cash is there to develop a new car from scratch
  • Gross profit margins of Apple and Tesla are similar making the move into electric cars more realistic
  • For executives that are “car guys” it seems odd that the first descriptions are minivan like
  • The difference in distribution strategies for phones vs cars includes sales, education, and dealerships (similar problems to what Tesla is facing?)
  • Is Tesla on Apple’s radar? More importantly, would Musk sell?
  • Elon Musk is already investing in these new technologies and areas, i.e. Solar city
  • Are there limits to no founder CEOs when it comes to expansion to new areas?
  • Apple manages supply chains very well, making the car business feasible
  • Google car technology and the self driving car idea would be beneficial to add to the unique and tech savy car Apple is expected to create
  • Car interiors have looked the same for 100 years, what could Apple do to cars with their design team?

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      Fin-ologyBy The Atapha Group