A ‘tail’ of two news services (as seen through news of China’s fossil fuel car ban)

In Part 1, I compare the reporting of the recent news of China’s move to ban fossil fuel in automotive vehicles by the pay-to-view Australian Financial Review and the free Bloomberg News service.

In Part 2, I consider the merits of Australian Financial Review’s ‘Lex Column’ argument on the future of China’s electric vehicle (EV) industry.

 

Part 1

Yesterday’s headlines read like the tale of two publications: One, the pay-to-read Australian Financial Review, and the other, the news service, Bloomberg. Whilst both were founded pre-World Wide Web (AFR in 1951, Bloomberg in 1990), the quality of journalism was on stark display.

Yesterday’s (12th of September, 2017) pay-wall protected article from The Lex Column (herafter ‘Lex’)  in the Australian Financial Review (AFR) made the bold claim ‘China’s electric vehicle ambitions a tailpipe dream for now’.  In contrast, Bloomberg’s headline read ‘China deadline shifts focus to electric car race.’

Lex’s claim came in response to China’s vice-minister of industry and information technology, Xin Guobin’s, public announcement that the Chinese (PRC) government is working with industry on a timetable to end production and sales of internal combustion engine (ICE) vehicles. Lex’s claim rests on the assertion that a shift to electric vehicles (EV’s) will require massive scale that Chinese automakers cannot achieve: “China’s automakers are not yet big enough to make electric cars profitably.”

Besides being a slightly irrelevant claim – China and the Chinese Diaspora all over the World have demonstrated on several occasions that a) they are prepared to operate on much lower profit margins than many in the West and b) they are frequently prepared to participate in industries even where they aren’t profitable (steel anyone?) – Lex wanly support their claim with one meager data point; that Great Wall, a Chinese auto company, recently failed to raise capital to buy Fiat Chrysler – as if somehow outbound Chinese foreign investment capabilities are germane to foreign investment inbound to China. It’s a point contradicted by the Bloomberg article’s mention of the much-documented fact that Warren Buffet (the world’s most famous and successful investor of the past 50+ years) has invested heavily in BYD, China’s largest electric vehicle manufacturer. And if you think that BYD doesn’t have scale in electric vehicles? Check out this video: https://www.youtube.com/watch?v=sLo3Pn4KC3w

Lex’s sweeping statement is hedged in the time honoured teleological error of conservatives: It is a ‘tailpipe dream for now.’  In other words, ‘It will never happen … until it happens’.

In stark contrast to the (pay-to-view) AFR’s op-ed comes the (free) Bloomberg article based on the same announcement. Bloomberg’s article is entitled ‘China Fossil Fuel Deadline Shifts Focus to Electric Car Race’. Contrary to Lex’s one data point and numerous assumptions, Bloomberg makes a far more contained assertion (but still a bold one) and they support their argument with loads of data and sound reasoning. For example: Recent 7 month sales data for two large Chinese automakers in the tens of thousands, and a comparison to GM’s paltry electric vehicle sales figures in China; two very strong policy reasons for China to support EV’s – reduced oil dependency and reduced pollution (everyone knows how bad China’s pollution problem is, not least of all the Chinese!); public comments from foreign motor car companies on their intentions to bring their latest EV’s to China; as well as news that Nio, a Chinese EV start-up is working with Anhui Jianghuai Automobile Group which is partnered with Volkswagen AG to introduce an electric SUV next year. Additionally, the Bloomberg article reports that “Tesla said in June that it’s working with the Shanghai government to explore local manufacturing, a move that would allow it to achieve economies of scale and bring down manufacturing, labour and shipping costs.” So much for Lex’s claim that “(W)estern producers … have been reluctant to push battery and hybrid cars (in China). They fear losing valuable intellectual property to their (Chinese) joint-venture partners.”

Last but not least, the Bloomberg article doesn’t simply assume economies of scale will be required, it quotes somebody from the sector who might actually know better than they do – a senior executive from one of China’s largest car companies, Chery – to make this assertion for them: “’Chery’s Liu said as newer technologies are developed in the meantime, the strongest among the manufacturers with better resources will adapt to the market and continue to dominate. Those who currently are outrunning the others in EV’s will not necessarily continue to stay ahead,’ he said.”

Point-for-point, by my reckoning, the Bloomberg article is in every way superior to the AFR’s, pointing to another disruption that is occurring besides the two alluded to above. The disruption here though is not that of electric vehicles over I.C.E’s and China’s economic ascension, but that of media.

Bloomberg is a media service, and in the past, depended upon the traditional media’s means of distribution to reach its audience. With the coming of the Internet, Bloomberg is able to go directly to its audience. Looking to the future (and perhaps the present day) why does it need a legacy print media institution like the AFR when its content is superior and free and its reputation is as good as – if not better – than the AFR’s in the global marketplace? If the latter were not true, why does the AFR refer to Bloomberg? (E.g. Just one of many examples http://www.afr.com/news/cheap-wind-solar-will-make-australia-a-magnet–bloomberg-20170615-gwrwat ) The only reasonable answer I can come up with is that the AFR has a strong local reputation, providing local financial news (and I’m open to hearing others). Yet in an increasingly globalized economy (something that was occurring before the Internet, but has been accelerated by it), where global trends affect local trends more than vice versa, it makes me wonder if I should continue subscribing to the AFR.

 

Part 2: More than just a drubbing by Bloomberg – Lex is probably wrong

Even over-and-above the drubbing Lex’s column receives in comparison to Bloomberg’s, the thing that piqued my interest in the first instance is the complete lack of insight into two very important facets of financial news by the Lex column: 1) The future of the automobile industry and 2) The Chinese economy.

The article starts with two assertions, both of which may yet prove to be false: i) “China may learn techniques from the west (sic) …”, ii) “ … but adapt these for the local culture. So it is with electric vehicles.”

Let’s start with assertion i), ‘China may learn techniques from the West’:

Firstly, in the case of EV’s, it may not be the case that China has much to learn. When looking at EV’s, one should understand that EV’s, by their nature, are actually simpler than ICE vehicles. Some reports suggest that the Tesla drive-trains use as few as 20 moving parts, when compared to 200 for an ICE: https://forums.tesla.com/en_AU/forum/forums/model-s-vs-ice-how-many-moving-parts .

The main issue with electric vehicle adoption was not the motor technology, which was developed predominantly by the pioneers of electricity in the 18th and 19th centuries, and has remained essentially unchanged. The main technological hurdle has been with the battery technology. The power-to-weight ratio (or roughly, the ‘energy density’ and more precisely, the ‘specific energy’) of lead-acid batteries prohibited their usage in all but the most niche applications – e.g. to power the starter motor for the ICE. Lithium ion batteries improved that power-to-weight ratio markedly, but for a long time have been too expensive. The Lex article cites Bernstein to point out that a mid-size combustion vehicle costs $US15k to produce compared with $US24k for a comparable EV. The differential is down to the battery, which accounts for half of an EV’s cost. A combustion engine is just 15 per cent of a traditional car.”

So much is not in dispute – even though it ignores the rapidly decreasing price of lithium ion batteries: https://electrek.co/2017/01/30/electric-vehicle-battery-cost-dropped-80-6-years-227kwh-tesla-190kwh/ . Notwithstanding this short-sighted view of EV production costs, Lex goes on to conclude (Western car makers) ‘do at least have the scale to finance the necessary investment (in battery production). The clear implication being that the Chinese do not. This last point is in direct contradiction to the fact that a) numerous Chinese Gigafactories are coming online in the coming years http://fortune.com/2017/06/28/elon-musk-china-battery/ and b) Elon Musk (CEO of Tesla Motors) is looking to invest in a Chinese-situated Gigafactory https://electrek.co/2017/06/22/tesla-gigafactory-china/ . Yet another nail in the coffin for Lex’s claim above that Western companies will be reluctant to invest in China.

So if anything, the heavy investment in ICE technology by Western car manufacturers can serve as a disadvantage, compared to those who have less invested – like the Chinese. This is one of the key lessons from Clayton Christensen’s Innovator’s Dilemma: When new technologies cause great firms to fail, in which he coined the term ‘Disruption’ in its much over-used meaning in technology circles. Namely, it is because these (once) great firms were optimized for a past paradigm tends to mean they are less optimized for the new firm that takes into account the new paradigm.

A second line of reasoning relates to the widely acknowledged fact that Chinese manufacturers tend to disregard Western intellectual property (IP) laws has led to a vibrant and cut-throat technology scene: http://www.nesta.org.uk/blog/made-china-what-maker-movement-means-china-and-world; https://www.theguardian.com/cities/2014/jun/13/inside-shenzen-china-silicon-valley-tech-nirvana-pearl-river . Note, not only are they stealing from the West, but they are stealing from each other. As a result, they are much more dynamic in many areas of technological advancement than their counterparts in the West and in some cases are leaders.   It is likely this will be increasingly the case in many areas in the future. But which areas? This leads me to my next point …

ii) “The Chinese adapt techniques they learn from the West for the local culture”

This claim again may have firm roots in the past, but as every wise investor knows (one would presume, one of the AFR’s core readership segments?), the past is not necessarily an indicator of the future.

Is this the case for electric vehicles in China? My assertion is that the past habit of Chinese adapting techniques from the West for the local culture may prove to be incorrect in the context of EV’s. The reasons for this are two-fold. Firstly, car ownership is much lower in China than in most First World nations. Just as the Chinese are more ‘mobile first’ than Westerners (something reported over 30 months ago in this free ABC article: http://www.abc.net.au/technology/articles/2015/03/27/4206067.htm ) it is possible that China will lead in electric vehicle adoption and technology.

To understand this claim, one needs to understand how China came to be more ‘mobile first’ than Westerners, despite still lagging behind most G20 nations in per capita income and many other ‘quality of life’ measures. If you’re still grasping with this idea, check out this article here: https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/michelleevans1/2017/04/12/how-china-won-the-race-to-being-considered-a-mobile-first-commerce-nation/ .

My potted version is as follows:  In the recent past, China’s telephony infrastructure and logistics infrastructure were not as robust as what we were used to in First World nations. This is a natural consequence of having an entirely state-controlled economy for a large part of the 20th century, with its inherent lack of capital, lack of responsiveness to consumer demand and susceptibility to corruption (although I admit, the Eastern European public transport systems I witnessed soon after the Berlin Wall came down were well ahead of Sydney’s and many other Western public transport systems). The mobile boom occurred as China was opening up and as it adopted aspects of Capitalism in what was famously referred to as ‘Socialism with Chinese characteristics.’ This meant its mobile telephony infrastructure was simply more convenient to use, and could be used to leapfrog or bypass many of the annoyances that came with the old Communist-era infrastructure as well as the many intermediaries keen to take their slice from the consequent scarcity of distribution.

In addition to this, their mobile economy is much less fragmented than in the West. Where the free market prevailed in the West, leading to different players in different aspects of social media e.g. Facebook for long-engagement social media, Snapchat for transient social media, Google for search, Paypal for payments etc, many of these services are dominated by just one player in China; TenCent’s WeChat. This allows for a much smoother e-commerce experience than we have in the West. How WeChat came to dominate – whether by market forces, or by government intervention – is debatable, but it appears it is at least partly due to both: the superiority of its offering as well as being aided by the so-called Great Firewall of China and other Chinese requirements inhibiting the success of foreign entrants. See these articles for some commentary on these issues: https://stratechery.com/2015/aggregation-theory/ ; https://stratechery.com/2017/apples-china-problem/ ): https://www.ca.com/us/rewrite/articles/application-economy/wechat-a-do-it-all-app-thats-everything-to-millions-of-chinese-u.html ; http://exponent.fm/episode-113-wechat-china-and-apple/ )

But what has this to do with EV’s?

The automobile industry has similarities to the mobile market, in that China has started way behind the West in car ownership although unlike in mobile, it still lags. It is so far behind that its market will have stronger incentives to accommodate the next automotive disruption. No, I’m not talking about electric vehicles – technically a technological evolution and not a disruption (see this article for why: http://www.asymco.com/2015/02/23/the-entrants-guide-to-the-automobile-industry/ ).

The ‘next automotive disruption’ I’m referring to is self-driving vehicles (SDV’s). There is strong evidence that the introduction of truly self-driving vehicles that completely replace the driver, will eventually lead to a different business model, known as ‘transport-as-a-service’ (TAAS). Yes, it’s like Software-as-a-service (e.g. Salesforce, and Adobe’s Creative Suite has moved to that model as have most other desktop applications), Cloud services such as Dropbox, OneDrive and Amazon Web Services etc (a.k.a. ‘memory-as-a-service’). Behind the fancy jargon, it will be just like a taxi service – but for virtually every automobile trip you make – and without the driver.

The following research suggests how price-competitive a self-driving taxi service would be compared to car ownership, in a city as small as Austin (population around 1 million: https://en.wikipedia.org/wiki/Austin,_Texas ): http://www.caee.utexas.edu/prof/kockelman/public_html/TRB15SAVsinAustin.pdf

In short – ‘Very competitive’. Since most research shows that the average car owner only uses their vehicle for 4% of the day (e.g. http://www.cityofsydney.nsw.gov.au/__data/assets/pdf_file/0012/122502/CarShareEconomicAppraisalFINALREPORT.pdf ) a predominantly self-driving fleet of cars can be far less numerous than present-day car ownership quantities.

Not only will this mean less scale is required by TAAS ‘cab’ makers, than traditional auto-manufacturers (since there will be fewer cars), so too, with less car ownership, the average Chinese consumer has stronger incentives to adopt a TAAS model, in place of buying a car outright.

On top of this, the prospect of nearly 1 billion more cars on the road is enough to make even the stony faced apparatchiks of the CCP quail. The Chinese government (and most Chinese citizens and residents I’ve spoken to) probably doesn’t want each citizen to own a car for the aforementioned reason of pollution, as well as over-crowded road infrastructure. The Chinese government, thus has an incentive to legislate change for a TAAS model to occur. You think they won’t? They just announced their intention to ban I.C.E vehicles, remember? One advantage of their ‘Socialism with Chinese characteristics’ economic model is that the State has great power to force through change regardless of what a vocal minority or ‘swinging voter’ would dispute. Suffice to say, there is very little ‘NIMBY’ism’ (“Not In My BackYard!”- ism) in China.

The above paragraph is important in the context for the TAAS future, because it resolves the most difficult question we in the West face in coming to such an outcome. Nobody ‘in the know’ about self-driving vehicles doubts that TAAS will occur. How and when we get there is the big question.

For example, when will the (Western) government be satisfied that self-driving vehicles are safe enough to allow on the road in self-driving mode?

Note that this question is mainly a social question. Technically at least, 80% of daily trips could probably be covered by the autopilot systems available in cars such as those made by Tesla today: https://www.youtube.com/watch?v=VG68SKoG7vE . Highway driving is easy for the most sophisticated autopilot systems of today, and if everyone had autopilot in their car, it would be a lot safer too! This is because the hardest parts of self-driving are a) dealing with the unpredictability and fallibility of human drivers and b) ‘The last mile’ problem of transportation. In getting from A to B, it’s the first and last portion of the journey (e.g. from the winding suburban roads onto the highway, or from the home to the public transport hub; and then the bit from the highway to the car park or office, or the train station to the office) that tends to present the biggest problem for self-driving software. Take away these obstacles and the software doesn’t need to be as ‘bleeding edge’ as that being developed by the likes of Waymo (Alphabet/Google’s self-driving arm) or Tesla Motors.

A powerful government could easily make a legislative change that bans all but self-driving vehicles on highways, and organizes pick-up and drop-off points for passengers at transport hubs to cover the last mile of their journeys. And all of this is possible with today’s technology and a government as powerful (relative to its citizenry) as the Chinese Communist Party (CCP).

So just as China is not ‘learning techniques from the West’ in mobile, I suspect, China is likely to lead the way in terms of TAAS and the self-driving future.

So that’s my 2 Yen’s worth.  What’s yours?

Useful resources about quantifying cultural value

pmiy

Street Pianos (c) Luke Jarman

A quick scratch pad of useful reports to do with quantifying the value of arts and culture (and also a bit about alternative financing for a bit of light reading).

 

Understanding the alternative finance market (NESTA 2016)

Quantifying the social impact of culture and sports (UK 2014)

Quantifying and valuing the wellbeing impacts of culture and sport (UK 2015)

The 2015 report of the Warwick Commission on the Future of Cultural Value (UK)

Validating the links between arts and liveability (US)

 

Hot cognition – why learning through arts sticks

Sahakian_hot&cold.jpg

Cold and Hot Cognition, (c) Anders Gade 2013

The arts appear to involve what Abelson (1963) termed ‘hot cognition’. Hot cognition is learning that involves personal goals, motivation and emotion—cognition steeped in feeling. Cold cognition refers to flow‐chart thinking, or rule bound problem solving and decision‐making.

If you are interested, check out Catterall, J.S. and K.A. Peppler (2007), “Learning in the visual arts and the worldviews of young children”, Cambridge Journal of Education, Vol. 37/4, pp. 543-560

 

Why it is a good idea to talk about ‘ecologies’ rather than ‘economies’ when we talk about the arts

I was just reading some of Dr Ann Markusen’s work (Dr Markusen is the Director of the Arts Economy Initiative at the University of Minnesota), as you do. A few things cropped up which I wanted to flag here as interesting which I would love to hear others’ thoughts about.

Arts and cultural ecology

In her recent work on the Californian creative economy, Markusen uses the same terminology that arts policy types in Australia have also been using for the last few years – ‘ecology’ rather than ‘economy.’ Since at least 2009 (and probably before), people working in arts policy and strategy in Australia have called the arts an ‘ecology’ or ‘ecosystem’, as a way to try to capture the the nature of the arts as a system of fluctuating relationships, and the primacy of authentic connection – between artists, organisations, audiences – the list goes on.

AV-Onion

Artistic Vibrancy Onion – a way for arts organisations to conceptualise their impact and strategic investment

This is kind of like my Artistic Vibrancy Onion, so named because I think of the arts as a web of relationships across different layers of society and culture (perhaps Artistic Vibrancy Spiderweb might be more apposite?)

Here is how I tried to conceptualise the arts ecosystem for the Australia Council for the Arts when they asked me to, last year.

 

Arts-ecosystem

Arts ecosystem – more useful than an arts industry supply chain, methinks

 

I drew it like this because a) I am a pretty crap drawer and b) it seemed a better way to describe the slightly miasmic soup in which artists operate, as opposed to the more traditional supply or value chain diagram of arts production.

The ecology concept allows us to think of arts happening in non-linear ways – as innovation does too. Arts happens in relationships and conversations, as does most human interaction and the fruits of human creativity. Rather than talking about it as an economy, or an industry, the arts is this space, a field (if we are going to get Bourdieuian, and why not?) in which people commune with each other and what’s going on inside and outside their heads, hearts and bodies.

Naturally artists also operate as economic actors. And some parts of the arts are industrial and could be described as an industry, which implies the making of stuff and selling it and creating economic value and employment. These terms are used interchangeably, but really depend on the political goal of the conversation. For example, we talk about creative economies when we want to make the point that arts make money and contribute to GDP. We talk about the arts industry for a similar reason – to be able to talk about it in the same breath as the car manufacturing industry, or the pharmaceutical industry.

When to talk about ecologies

And so we talk about creative and cultural ecologies and ecosystems when we want to make a different point. When I use the term arts ecology, I am trying to convey quite a lot in that one word:

  1. There are a myriad of inter-related factors that are prerequisites for the making of art. I make this point when advocating to funders to not get rid of one part of the ecology and expect the rest to continue to survive.
  2. Artists are not at their core, doing it for the money. Yes, they get paid, and they sell things. But intrinsic motivation is critical to the making of good art. Prioritising process over outcome. Journey vs destination. This is documented in the ‘flow’ and creativity research (Czsikmihalyi). This could apply to a number of other jobs too. I use the ‘ecology’ terminology to remind funders and policy makers that they cannot solely rely on industrial or economic rationalist modes of thinking when they make policies about the arts.
  3. Audiences are not just ‘consumers,’ but part of the ecosystem. In the arts, the experience of art is something that happens in a relationship between the art and the audience member. This is partly why products like the iPhone do so well – the makers of that object understood that people are not just consumers, but experiencers, and the ‘product’ becomes theirs – it changes and is modified by the person experiencing it. It’s the same with art – art cannot exist in a vacuum – it is experienced and therefore ‘created’ by everyone who experiences it.
  4. I know this sounds a bit fluffy, but it is essential to understand that the relationship between an artist and their work, the work and the audience, the artist and the audience, is a gift relationship as well as a consumer transaction. This means that audiences open themselves up and give something of themselves, more than just the money for the show. You see this understanding spreading to other sectors, like artisan foods and wines, or handmade gift products – people understanding that people don’t want to be mere consumers, – they want the things they eat and buy to be extensions of their identities, a gift to themselves or a gift of themselves to others. (OK, I might be writing my dissertation on art and writing as a gift. But you get my point!)

Jackie Bailey – Principal, BYP Group

Andy Grove’s legacy – a (slightly) dissenting view

Andy Grove - Legendary former CEO of Intel

Andy Grove – Legendary former CEO of Intel

With the recent passing of former Intel CEO, Andy Grove, there have been many tributes to his remarkable abilities and achievements,[1] not least of all, his ability to admit that he was wrong.[2]

This article is not going to say anything to attempt to detract from the great man he was, and his incredible achievements. But in the harsh glare of history, there was one key mistake he made that is oft overlooked. This article will examine that mistake with the benefit of ‘20/20 hindsight’.

A Great Legacy: Avoiding Disruption Pt 1

Firstly though, we should put into context Grove’s achievements which were truly World transforming. Grove is credited with being the man to execute upon his predecessor, Gordon Moore’s, famous ‘Moore’s Law’[3] . It was under Grove’s reign that much of this was achieved.

Tributes extend even further, to Grove’s epitomizing and propagating Silicon Valley’s culture of continual, relentless improvement. Also, when faced in the 1970’s with the existential threat of Japanese competitors ‘dumping’ dynamic random access memory (DRAM) chips – Intel’s core market at the time – it was Grove who suggested leaving the DRAM market to refocus upon the fledgling microprocessor business. One disruption event avoided!

The Celeron Chip

And again in 1997, Grove famously invited Clayton Christensen, the author of a now seminal book, ‘The Innovator’s Dilemma’ and the man attributed with coining the term ‘disruption’ in the sense we know it today, to speak to his employees. As this story from the New Yorker recounts:

‘Grove had sensed that something was moving around at the bottom of his industry, and he knew that this something was threatening to him, but he didn’t have the language to explain it precisely to himself, or to communicate to his people why they should worry about it. He asked Christensen to come out to Intel, and Christensen told him about the integrated mills and the mini mills, and right away Grove knew this was the story he’d been looking for.’[4]

From this meeting, it is said Grove famously decided to produce the Celeron chip – a cheaper, lower-powered chip than Intel’s core offering at the time.

The Orthodox View: Grove’s successor, Paul Otellini made the big miss for Intel

Consequently, Intel’s big ‘miss’, of not picking the mobile chip market, is seen as the fault of Grove’s successor, Paul Otellini.   A typical account is that portrayed by one of my favourite analysts, Ben Thompson on his Stratechery website, in this case relating a story told by Alexis Madrigal at The Atlantic:[5]

‘There is a sense, though, that the company’s strategic position is much less secure than its financials indicate, thanks to Intel’s having missed mobile.

The critical decision came in 2005; Apple had just switched its Mac lineup to Intel x86 processors, but Steve Jobs was interested in another Intel product: the XScale ARM-based processor.

The device it would be used for would be the iPhone. Then-CEO Paul Otellini told Alexis Madrigal at The Atlantic what happened:

“We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we’d done it,” Otellini told me in a two-hour conversation during his last month at Intel. “The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do…At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn’t see it. It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.”’

Since that time, ARM Holdings have gone on to become ‘market dominant in the field of processors for mobile phones (smartphones or otherwise) and tablet computers.’ [6]

My dissenting view: Grove made the big miss for Intel

In contrast to this mainstream view, I argue that it was actually upon Grove’s watch that the mistake was made. In my opinion, it was at that fateful meeting between Christensen and the people at Intel in 1997, that a proper understanding of disruption theory as we now come to know it[7] would have pointed to the likely disruptor of Intel’s core business.

It appears that all Grove and his people took away was that the disruption was going to ‘come from below’ i.e. a cheaper competitor. Intel responded with the cheaper Celeron offering.

However, this was not the paradigmatic shift in thinking that Disruption Theory truly requires. Disruption Theory[8] goes further to suggest that the competitor was likely to be so ‘asymmetric’ that the incumbent would not even think of the disrupting force as a threat.

Disruption: Personal Digital Assistants (PDA’s) morph into Smartphones

In 1997 the eventual disruptor was already beginning to take shape in the form of personal digital assistants (PDA) handheld computers such as the ‘PalmPilot’[9].

One of the original Personal Digital Assistant's (PDA's) - the PalmPilot

One of the original Personal Digital Assistant’s (PDA’s) – the PalmPilot

With their puny processing power, limited functionality and gray-scale LCD screens, they were clearly no threat to the mighty Pentium processors for which Intel is still famous.[10] But in time, these PDA’s would become the basis for the first smartphones such as the Handspring Treo 180[11] which used the PalmOS operating system.

The Handspring Treo ran off the PalmOS operating system

The Handspring Treo ran off the PalmOS operating system

Disruption: About the business model, not just the technology

What is more, ‘disruption’ in the Christensen sense also tends to come with a new business model. In other words, it is not just the technology that disrupts, but the business models that the technology enables that do the disrupting. Think Dell’s business model (selling personal computers online sales) to the conventional retail model adopted prior to that point.

ARM Holding’s business model is a classic case of this. Rather than investing hundreds of millions in a chip fabrication plant, instead they focused upon licensing the designs of the chips for others to fabricate.

To be fair to Grove, it is impossible to be omniscient – especially after he managed to avoid one major disruption. Instead, I look at the contribution (or failure?) by Christensen, who in his account[12] of the meeting professed to his clients at Intel that he didn’t know anything about the chip industry. But even a rudimentary understanding of the chip industry would have suggested the Achilles Heel of the chip industry was in the expense of the chip fabrication process. This barrier to market entry, or ‘moat’ would be flipped on its head by a business model such as ARM Holdings’.

These two clues – the easily dismissed processors in the meager hand-held devices, and the inversion of the business model of processors – should be apparent to anybody studying disruption theory today. However, we cannot blame Andy Grove for not being able to better articulate the ‘gut feeling’ he had in the late 90’s that disruption was about to befall Intel, when the father of Disruption Theory himself was still decades away from being disrupted on this point. Grove and Christensen, both great men, but not infallible.

[1] http://venturebeat.com/2016/03/21/silicon-valley-legend-and-former-intel-ceo-andy-grove-passes-away-at-79/

[2] http://www.linkedin.com/pulse/time-andy-grove-came-fortune-refused-meet-editors-rik-kirkland

[3] “Moore’s law” is the observation that, over the history of computing hardware, the number of transistors in a dense integrated circuit has doubled approximately every two years. Source: https://en.wikipedia.org/wiki/Moore%27s_law

[4] http://www.newyorker.com/magazine/2012/05/14/when-giants-fail

[5] https://stratechery.com/2016/andy-grove-and-the-iphone-se/

[6] https://en.wikipedia.org/wiki/ARM_Holdings

[7] Arguable one more sophisticated than even Christensen himself understands – See my earlier post citing the Techcrunch article that points this out.

[8] http://www.claytonchristensen.com/key-concepts/

[9] https://en.wikipedia.org/wiki/PalmPilot

[10] Grove is also credited with the ‘Intel Inside’ and Pentium promotion that made ordinary consumers stop and consider the CPU in their machines.

[11] https://en.wikipedia.org/wiki/Handspring_(company). Nerd that I am, I owned one of these when they first came out.

[12] https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma

Reference vehicles and calculations for my ‘Apple Car’ model

Below are some of the cars I have used to inform my speculations on the size, shape and characteristics (performance and ‘smart’ technologies) of the Apple Car.  I have also included the scale calculations for the models I used in my earlier piece.  Together, this data informs my reasoning in the articles posted here and here.

Toyota i-Road Concept Car

Toyota has not released full specifications on this vehicle, but they have allowed several test drives mainly for the automotive media since the 2013 Geneva Motor Show.

Toyota i-Road demonstrating 'active lean' technology

Toyota i-Road demonstrating ‘active lean’ technology

Development status: Working concept car

Length: 2,345 mm

Width: 870 mm

Height: 1,455 mm

Wheel base: 1,695 mm

Tire size: (Front)80/90-16 (Rear)120/90-10

Minimum turning radius: 3.0 m

Occupancy: Japan:1   Europe:2 *1

Curb weight: 300 kg *2

Powertrain: 2 electric motors

Maximum speed: Japan: 60km/h   Europe: 45km/h *1

Cruising range on a single charge: 50 km*3

Battery type: Lithium-ion

  • *1 In accordance with European regulations for vehicles in the i-Road’s category
  • *2 Vehicle weight without occupants or cargo
  • *3 Target distance when traveling at a fixed speed of 30 km/h

Comments: The Toyota i-Road is the closest concept I have seen to what I think the Apple Car, or some other motorcar ‘disruptor’ will look like.  It is primarily designed for solo transport (but fits 2 at a pinch – an adult passenger can tuck behind the driver with knees akimbo).

To make this product more ‘accessible’ and ‘desirable’ I imagine Apple will seek to improve the following:

– Appearance of safety: Although the i-Road already has an airbag in its steering wheel, perception matters.  Perception of safety could be influenced perhaps by adding smoother curves and reinforcing around the side to bring it in line with nearly the thickness of a conventional car door – say 10cm.

– Convenience: A hidden issue with motorcycles, bicycles, electric bicycles, scooters etc is that they all require some degree of ‘preparation’ by the riders as well as on-going maintenance.  By ‘preparation’ I mean, for example, putting on protective equipment such as helmet, protective riding leathers, high visibility clothing, locking (e.g. to a nearby pole, as bicycle stands are relatively few and far between), charging, turning on/off safety equipment e.g. flashing lights, helmet storage, strapping of cargo/luggage.  By maintenance, motorcycles and bicycles require considerable maintenance relative to a car.  Taken together, these issues form a ‘sub-conscious’ impediment to many prospective users of those modes of transport.   A future micro-vehicle should be able to easily overcome these issues.

– Comfort (seating & ride): For a vehicle of this type to appeal to people of all ages and physical abilities, the seat would need to be softer and more ‘plush’ than the cheap, thin vinyl seats provided on the i-Road, though not as substantial and soft as a car seat.  Some suspension would also be expected.

– Comfort (noise levels): Some effort will go into sound suppression, although making it too quiet will make this vehicle dangerous to pedestrians.  Electric motors of the size used here tend to have a high-pitched whine which will be difficult to suppress in any case, although road noise could be reduced by more sound and temperature insulation.

– Comfort (protection from elements): Expect this to be high on an Apple Car’s list.  A major inhibitor to people using motorcycles, scooters and bicycles more often is the level of physical comfort and protection from the elements.  To serve as a commuter vehicle, it must enable people to arrive at work without being sweaty, drenched, hot, cold or exhausted.

– Comfort (entertainment system, ‘smart’ technology):  This is a given in a proposed Apple Car, considering Apple’s known foray with CarPlay and Apple Maps.  Ease of integration with Apple products and sophistication of smart technologies would be one of the key differentiators of an Apple Car to future competitors, such as the i-Road.

– Performance: For the vehicle to succeed in the First World markets, it would need to be more versatile than purely a ‘last mile’ commuter (e.g. to the shops and transport hub).  Rather, the vehicle should be able to be used on the highway ‘at a pinch’.  Consequently, increasing top speed to 80-110km/h would be likely.  It is likely these performance improvements will be possible considering the 6-10 year span between the i-Road’s debut at the 2013 Geneva Motor Show and the Apple Car’s earliest launch date.

– Price: No price has been provided by Toyota, but a price under $10,000 has been suggested.  This would bring it in line with the critical threshold I believe it would need to achieve to provide a sufficient ‘value proposition’ in the mind of the consumer.

 

EO Smart Connecting Car 2

The EO smart connecting car 2

The EO smart connecting car

Technical Details

 

Size: 2.58 m x 1.57 m x 1.6 m; Or rather 1.81 m x 1.57 m x 2.25 m (The indication of the length of the vehicle depends on the type of tire / tyre section. The values have been recorded with tires of type 200/60 R 16 79V.)
Weight: 750 kg
Power supply: 54V – LiFePo4 battery
Speed: 65 km/h (40 mph)
Actuation/ Engine: 4 x 4kW wheelhub motors; 10 x longstroke-Lineardrive with 5000N 1 x Folding Servo
Sensors: Hall-effect as well as string potentiometer sensors for angle and length measurementStereo-Kameras at the front and at the back32-Line Lidar for 3D-scans of the environment6 ToF 3D cameras for near field overview
Communication: CAN-Bus RS232 RS485 LAN

Comment: The EO Smart Connecting Car demonstrates (or at least conjectures) the types of technologies that would be important in solving important ‘jobs to be done’ e.g. parking and traffic (through it’s convoying/platooning idea).

 

General Motors EN-V 

One of the EN-V concept car variants

One of the EN-V concept car variants

Specifications

Dimensions:

Jiao (Pride)        1,500 mm (L) x 1,425 mm (W) x 1,640 mm (H)        [59” x 56” x 64.5”]

Xiao (Laugh)      1,540 mm (L) x 1,420 mm (W) x 1,770 mm (H)        [60.5” x 56” x 69.5”] Miao (Magic)             1,520 mm (L) x 1,405 mm (W) x 1,635 mm (H)        [60” x 55” x 64.5”]

Overall Track:   1,150 mm [45”]

Weight:

Jiao (Pride)             400 kg [880 lb]

Xiao (Laugh)           410 kg [900 lb]

Miao (Magic)          415 kg [910 lb]       

Chassis Platform      210 kg [460 lb]

Body Construction:           Painted carbon fiber

Closures:                 Front access (single door, with polycarbonate glazing)

Seating:                  2 passengers side by side, fixed bucket seats

Chassis Construction:      Magnesium casting (lower chassis)

Aluminum box (battery and gearbox housings)

Stainless steel (guide rails)

Wheels and Tires:              MC 120/70R17 on 17” x 4” wheels

Performance

Top Speed:                    40 km/h [25 mph]

Range:                     40 km [25 miles]

Energy Consumption:       70 Wh/km [125 Wh/mile]

Turning Radius:         1.74 m [68.5”] wall to wall diameter

Propulsion System

Motor Type:           Brushless DC motors for propulsion, braking and steering

Power:             440 Nm (max. torque) and 18 kW (max. power)

Battery Type:        Lithium-ion phosphate (air cooled)  

Output:              3.2 kWh and 5 kW (regenerative braking)

Autonomous Systems

Sensors:         Vision, ultrasonic and Doppler sensors

Wireless:          5.9 GHz dedicated short-range communication and GPS

Autonomous Functionality

–       Automated retrieval, via app-linked smart phone

–       Automated door opening, via app-linked smart phone

–       Platooning

–       Infotainment options (geo-locating other vehicles, audiovisual information)

–       Web-conferencing (social networking)

–       Collision avoidance between vehicles

–       Object detection

–       Automated parking, via handheld device

 

2016 Morgan EV3 specifications[1]

The Morgan EV3. Note, I think Apple would use a more conventional four-wheel layout should it attempt a micro-car.

The Morgan EV3. Note, I think Apple would use a more conventional four-wheel layout should it attempt a micro-car.

Development status: Mooted for production some time this year. Debuted at 2016 Geneva Motorshow (early March 2016)

Year: 2016

Make: Morgan

Model: Three Wheeler

Horsepower @ RPM: 62 (46.2kW)

0-60 time: 9 sec.

Top Speed: 90 mph

Weight: <500kg

Passengers: 2 adults, side-by-side

Battery pack: 20kWh lithium battery

Range: 150 miles on a single charge (241km)

Dimensions:

Price: (Estimated) US$38,375 to $42,640 (NB: Morgan is a ‘prestige’ car maker)

 

2013 Renault Twizy specifications[2]

The 2013 Renault Twizy. It has recently been suggested with two electric motor configurations.

The 2013 Renault Twizy. It has recently been suggested with two electric motor configurations.

Smart Fortwo electric. Note how heavy this is at over 800kg.

Smart Fortwo electric. Note how heavy this is at  880kg.

Specifications

Development status: Concept car

Year: 2013

Make: Renault

Model: Twizy

Passengers: 1 adult

0-60 time: 6 sec.

Top Speed: 68 mph

 

 

2013 Smart Fortwo Electric Drive Specifications

 

SPECIFICATIONS:

Production status: In production since 2009 (2nd generation model)

Year: 2013

Make: Smart

Model: Fortwo

Price: € 18910

Engine: 55 kW

0-60 time: 11.5 sec.

Top Speed: 78 mph (125.5km/h)

Passengers: 2 adults, side-by-side

Specifications for the Smart Fortwo in non-electric configurations:

Production 2014–present
Body and chassis
Body style 3-door hatchback2-door cabriolet
Related                         Smart Forfour (C453)Renault Twingo
Powertrain
Engine                         0.9 L turbo I31.0 L petrol I3
Transmission 5-speed manualtwin clutch automated manual
Dimensions
Wheelbase 1,873 mm (73.7 in)
Length 2,695 mm (106.1 in)
Width 1,663 mm (65.5 in)
Height 1,555 mm (61.2 in)
Kerb weight 880 kg (1,940 lb)

Specifications from Wikipedia for 3rd generation Smart Fortwo electric engine:[3]

Power: peak power output of 55 kW (74 hp)[5][28]

Torque: 130 newton metres (96 lbf·ft)

Top speed of 125 km/h (78 mph)

0 to 100 km/h (0 to 60 mph) in 11.5[43] seconds and 0 to 60 km/h (0 to 37 mph) in 5 seconds

Battery capacity: 17.6 kW·h lithium-ion battery by Deutsche ACCUmotive[44]

Range: 145 km (90 mi)

Miles per gallon equivalent: 122 MPGe city, 93 MPGe highway, 107 MPGe combined[45]

Artificial warning sounds for pedestrians automatically activated in the U.S. and Japan, and manually activated in Europe.[46]

 

Kyburz eRod

Specifications (translated from the Kyburz website using Google Translate)

The Kyburz eRoad electric kit car

The Kyburz eRoad electric kit car

Weight: 570 kg (incl. Bat.)
Battery: 18 kWh, 100 V / 180 Ah
Power: 40 kW / 140 Nm
Range: 100 – 130 km
Drive: brushless AC motor on the rear axle
Braking recuperation: switchable
Helmet compulsory: No

Price: US$28,000 unassembled. US$38,000 assembled.

Comment: The eRod is almost twice the width and 25% longer than what I expect a future disruptive vehicle would look like.  However, it does have the tubular frame I anticipate will be key and helps illustrate the sparseness of the underlying chassis that the ‘future car’ might have as its underpinning.  Recall, Gordon Murray’s ‘iStream’ car manufacturing methodology that seeks to scale the types of methods used in the manufacture of Formula 1 race cars.  Note, the weight would need to be significantly reduced (to about 2/3rds or 400kg) – probably through super-strong composites.  An enclosure for passengers is a given.

 

Specifications for Mini Cooper S

I used a Mini Cooper remote control car as a model for illustration purposes.  The Mini Cooper S has very similar dimensions, and they are provided here for reference.

Mini Cooper S

Mini Cooper S

Production 2006–November 2013 (Hatch)2009–present (Convertible)
Assembly Plant Oxford, Cowley, England
Body and chassis
Class Supermini
Body style 3-door hatchback2-door convertible
Layout FF layout
Related Mini Coupé, Mini Countryman, Mini Clubman
Powertrain
Engine 1.4 L Prince I4 (One)1.6 L Prince/BMW N16 I4 (Cooper)1.6 L Prince turbo I4 (Cooper S)1.6 L Peugeot DV6 diesel I4 (Cooper D and One D)2.0 L BMW N47 diesel I4 (Cooper SD)
Transmission 6-speed, automatic or manual
Dimensions
Wheelbase 2,467 mm (97.1 in)
Length 2007–2010: 3,698 mm (145.6 in)2007–2010 S: 3,713 mm (146.2 in)2011–2014: 3,729 mm (146.8 in)
Width 1,684 mm (66.3 in)
Height 1,407 mm (55.4 in)
Kerb weight 1,150 kg (2,535 lb) (Cooper)1,210 kg (2,668 lb) (Cooper S)
Chronology
Predecessor Mini (R50/53)
Successor Mini (F56)

 

Honda Accord dimensions:  The Honda Accord is used as an example of a typical ‘family sedan’.

Honda Accord 2015. Our proxy for a 'typical family sedan'

Honda Accord 2015. Our proxy for a ‘typical family sedan’

Dimensions
Wheelbase Sedan: 2,776 mm (109.3 in)Coupe: 2,725 mm (107.3 in)
Length Sedan: 4,862 mm (191.4 in)Coupe: 4,806 mm (189.2 in)
Width Sedan: 1,849 mm (72.8 in)
Height Sedan: 1,466 mm (57.7 in)Coupe: 1,435 mm (56.5 in)
Curb weight 3,193 lb (1,448 kg) sedan[51]

 

Calculations from Mini Cooper remote controlled car model

Actual Mini Cooper S dimensions: 3.7m long, 1.68m wide, 1.4m high.

Mini Cooper remote control car model dimensions: 200mm long.

The remote control model Mini Cooper I used to give a sense of scale

The remote control model Mini Cooper I used to give a sense of scale

 

Calculation of scale ratio:

(Actual length) 3700mm to (Model length) 200mm = 37:2 = 18.6:1 ratio.

Therefore width converts to: 90mm

Therefore height converts to: 76mm

Hence, the speculated dimensions of ‘future car’ converted to 18.6:1 ratio are:

 

Unscaled dimensions of the Apple Car:

Length: Approx 1.5 to 1.6m

Width: Approx 1m

Height: Approx 1.5 to 1.6m.

Scaled dimensions of the Apple Car:

Approximate Length: 81-86mm

Approximate Width: 54mm

Approximate Height: 81-86mm (can be lower, but it means for a very reclined seating position, possibly requiring seat adjustment technology)

Apple Car Model Dimensions used in photographs:

The roughly-to-scale Apple Car model we used.  Assembled from my 4 year old's Duplo.

The roughly-to-scale Apple Car model we used. Assembled from my 4 year old’s Duplo.

Length: 96mm (1.79m)

Width: 58mm (1.08m)

Height: 72mm (1.34m)

 

 

 

[1] http://www.topspeed.com/cars/morgan/2016-morgan-ev3-ar172651.html#main

[2] http://www.topspeed.com/cars/renault/2013-renault-twizy-f1-concept-ar153883.html

[3] https://en.wikipedia.org/wiki/Smart_electric_drive#Third_generation

 

Specifications of the Apple Car

In this piece I drill deeper into speculating what the Apple Car may be like, contemplating its likely specifications and performance characteristics, based upon existing cars.

Following on from my piece that sought to describe the physical parameters of the Apple Car, in this piece I go one step further (too far?) and attempt to apply performance characteristics to the Apple Car. Using specifications from existing and upcoming micro-cars (REFERENCE LINK), I attempt to extrapolate the likely possible specifications for a future ‘disruptive’ micro-car[1], scheduled for 2019-21 release.[2] The existing micro-cars that I referred to, and their specifications can be found on the next blog post here.

For the purposes of our exercise, we anticipate that the future ‘disruptive’ vehicle will have the following characteristics:

Passengers: 1 adult (with some type of convoying technology required to link other cars of the same type, either ‘in-line’ or side-by-side.) In Australia research suggests that over 90% of trips only carry the driver.[3] But note, that percentage would count a trip to drop off the kids at school as 2 trips, with one of those trips, the return trip, likely to be only 1 passenger.]

Dimensions: Not much bigger than an electric wheelchair – perhaps slightly longer and wider for safety reasons and cargo capacity i.e. Length: Approx 1.5 to 1.6m; Width: Approx 1m: Height, Approx 1.35 to 1.6m (similar to a Mini, 1.4m, or ‘Smart Fortwo’, 1.56m)

Weight: Less than one quarter the weight of a conventional family sedan, or 300-450kg; Less is more due, to the weight of batteries. I anticipate it to use super-strong lightweight materials like carbon-fibre, perhaps custom-made for the ‘Apple Car’ similar to Gorilla Glass or the gold alloy used in the Apple Watch. Note, the Morgan EV3 is said to be less than 500kg and will be larger than this vehicle. I therefore anticipate it should be capable of reaching 2/3rds to 80% of its weight. However, it is also likely to have more ‘mod cons’ than the Morgan EV3 (e.g. a ‘hardtop’ roof; air conditioning; entertainment system; ‘smart’ technologies/sensors etc, which might take the weight from say, 400kg to 500kg.)

Engine: 30kW to 55kW (I anticipate it to be similar to the electric Smart Fortwo, or slightly less to give it similar performance but with lower weight.)   Weight calculation: [Est. 400kg + 100kg (large male) = ] 500kg vs [880kg +100kg (large male)] = 980kg. Consequently, I anticipate a 30kW engine could have the same performance specifications as the electric Smart Fortwo. Elsewhere I suggest that those performance characteristics are all that are needed.

Battery capacity: Approximately the same as for the Smart Fortwo i.e. 17.6 kW·h lithium-ion battery by Deutsche ACCUmotive[44]

Range: Approximately 200-300km. This should account for more than 95% of trips.[4] 145 km (90 mi) range is available from the electric Smart Fortwo. Note, the range could be much higher considering the anticipated reduced weight of the proposed Apple Car. Consequently, it may be possible to have a smaller battery, reducing weight considerably. I think the weight/battery/performance/range equation will be a very well optimized balance.

Top Speed: Not capable of doing much more than maximum speed limit in most Western Countries’ i.e. 125 km/h (78 mph). This is the top speed of the electric Smart Fortwo. This speed was chosen because Apple has a strong tradition of not competing in ‘specification wars’, eschewing adding specifications for the sake of them, and instead aiming for qualitative benchmarks. For example, its iPod was not the smallest music player, nor the music player with necessarily the largest memory. Instead it went for ease-of-use. Likewise, the Apple Car will not be built for the purposes of drag-racing conventional motor cars. It just needs to get the passenger/driver from A to B.

Price: Comfortably below multi-passenger micro-cars, with multiple Apple Cars being about the same as a mid-luxury family sedan (e.g. Honda Accord) i.e. Sub US$13,000. Preferably under US$7-10K. Note, because it’s only a single passenger vehicle it may need to be substantially cheaper than most of the two seaters to provide a convincing ‘value proposition’. This is also why the ‘convoying’/platooning capability described in the earlier article is so important. There may also be economic pressures for this vehicle to be a subscription vehicle or some other business model of usage/ownership. (See other article on ‘Thinking behind Apple Car speculation’). Most micro-cars are sub US$15,000. It may be possible to achieve price ranges below US$10K with sufficient economies of scale e.g. Dediu’s suggested ‘1 million car’ mark for an Apple Car to be ‘meaningful’.

Smart Technologies: Pontooning/convoying’ technology will be important to allow for the Apple Car to disrupt the family car. An example of this concept is given for the EO Smart Connecting Car 2.

The EO Smart Connecting Car 2 imagined in 'convoying' mode

The EO Smart Connecting Car 2 imagined in ‘convoying’ mode

 

 

[1] Due to the highly speculative nature of this article, I am attempting to cover my bases here. Perhaps if Apple doesn’t make this, someone else will???

[2] According to the Wall Street Journal (WSJ) the Apple Car is scheduled to be released in 2019. Dediu notes this usually means the product would be available to the public one year later (2020) at the earliest. More recently, Tim Cook, when asked about the Apple Car did not deny the rumour, but instead implied it was a lot further away than people were expecting, saying: ““Do you remember when you were a kid, and Christmas Eve, it was so exciting, you weren’t sure what was going to be downstairs? Well, it’s going to be Christmas Eve for a while.” Source: http://www.businessinsider.com.au/tim-cook-on-apple-car-its-going-to-be-christmas-eve-for-a-while-2016-2?r=US&IR=T

[3] http://chartingtransport.com/tag/car-occupancy/

[4] http://spectrum.ieee.org/cars-that-think/transportation/efficiency/stop-worrying-your-electric-car-will-have-plenty-of-range and http://jalopnik.com/the-chevrolet-bolt-will-be-a-200-mile-electric-tesla-fi-1678649485

What will the Apple Car look like?

This article provides a playful look at what the Apple Car might look like. For the (slightly) more serious reasoning on how I came to the parameters of the possible Apple Car, please click here and for the performance characteristics click here. For the specifications of existing micro-cars I used as reference points to inform the parameters, please click here.

Duplo model courtesy of my 4 year-old daughter

Is this what the Apple Car might look like? (Duplo model courtesy of my 4 year-old daughter.)

In this piece, I seek to flesh-out and illustrate the likely ‘envelope’ and specifications of the Apple Car. In an earlier post, I described the broad characteristics of what I imagined the Apple Car to look like, drawing upon the thinking of well-known Apple observer and analyst, Horace Dediu.

Primary Parameters for the Apple Car

Together, Dediu’s criteria and my own reasoning pointed towards the primary characteristics relevant to visualizing and specifying the Apple Car as being:

  • A small vehicle, likely a ‘microcar’ or ‘autocycle’
  • It would fit only one or two people – we will assume one person here
  • It was a given that it would use a large amount of ‘smart’ technology e.g. autopilot, collision prevention, auto-balancing/leaning technology etc., but only that likely to be available at its speculated time of release in 2019-2021.
  • It would likely be electric
  • It would be unlikely to compete with the specifications of a conventional vehicle, making performance trade-offs to more specifically focus upon the job to be done (taking a person from ‘A’ to ‘B’)

    A comparison of a (very) rough scale model of the Apple Car to the contemporary Mini Cooper. In the photograph, the stack of Duplo blocks at top right is a rough proxy for a 1.75m (5’8″) person. For my calculations on the models and scales click here.

Dimensions of the Apple Car

Consequently, I arrived at the following dimensions for the future Apple Car (assuming of course, one is ever made):

Length: From 1.2 to 1.6m long or comfortably less than half the length of the average modern family sedan[1]. An important criteria is that the vehicle can park ‘nose to kerb’ and not be wider than a conventional car.

Width: Approx. 1 metre; or more than half but less than 2/3rds the width of the average modern family sedan. This is to enable the division of the regulation traffic lane into two, hence potentially doubling the carrying capacity of existing infrastructure.

Top view of a scale Apple Car model to the Mini Cooper. Note: Four Apple Car’s could be linked together in a 2x2 pattern and be roughly the same width and length as a family sedan. No more arguments over air-conditioning temperatures!

Top view of a scale Apple Car model to the Mini Cooper. Note: Four Apple Car’s could be linked together in a 2×2 pattern and be roughly the same width and length as a family sedan. No more arguments over air-conditioning temperatures!

Height: 1.35-1.6m or around 10-15cm less than the average modern family sedan. Note this dimension is one of the most constrained due to the assumption of a normal seating position. Going too far from a normal seated position risks alienating many people (the old, inflexible, tall, overweight, unfit, unusually proportioned etc). Historically, this is something Apple has sought to avoid.

Side-on view of a (roughly) scale Apple Car model to the Mini Cooper. Note, having owned a Mini Cooper, the seating is quite low. It will be difficult to push much below the 1.4m height of the Mini Cooper, unless the driver’s position is reclined steeply.

Side-on view of a (roughly) scale Apple Car model to the Mini Cooper. Note, having owned a Mini Cooper, the seating is quite low. It will be difficult to push much below the 1.4m height of the Mini Cooper, unless the driver’s position is reclined steeply.

Figure 5. Rear view of the Apple Car model compared to a model Mini Cooper

Rear view of the Apple Car model compared to a model Mini Cooper

[1] For comparison, the Honda Accord is 4.86m long. See the blog post here for the vehicles I have used for reference.

Marc Tarpenning 2013 talk – A summary of thoughts from Tesla Motor’s co-founder

As I have noted elsewhere in this blog, some in the car industry remain skeptical of Apple’s ability to make a great car. Their reasoning is essentially, since Apple has no history in making cars they can’t appreciate the difficulties in making a car. They are mainly software engineers and mobile phone engineers and won’t understand the important mechanical aspects and all other important things in making a great car. This 2013 talk by Marc Tarpenning, one of the co-founders of Tesla Motors, shows how a group of archetypal ‘Silicon Valley types’ did just that. Their cars have won many major car awards.[1]

Some interesting thoughts and statistics from the talk:

Why he formed Tesla Motors: Tarpenning sought to solve a large world problem.  As a firm believer in ‘Peak Oil’, he thought the electrification of cars would be a worthy problem to solve.  Noting the failure of earlier electric cars, he reasoned that one issue was the misdiagnosis of the true market for electric cars.  Rather than poor people seeking to save on petrol, the experience of the GM Volt and Toyota Prius was that the buyers were mostly wealthy people who were seeking a ‘green’ car as a type of status symbol.  Thus, he diagnosed the ‘job to be done’ as being to provide wealthy people with a ‘green status symbol’.

– Efficiency/Sustainability of Electric Cars: Early on he answers the question ‘Why electric cars?’. Answer: They are much more efficient than petrol. Interestingly, he calculated that even electric cars recharged by coal power plants are better than petrol in terms of efficiency of resource usage.

– Batteries are getting cheaper (and better): Batteries have gotten 7% cheaper every year for many years.   Near the end of his talk he also mentions this decline in price may accelerate due to the ‘sheer amount of money they are putting into this thing.’ By ‘thing’ he means, for example, the Tesla ‘Gigafactory’[2] and various other large manufacturing facilities that are starting around the World.

– Most car manufacturing is outsourced: In answer to the doubts about whether a newcomer can make a car, the obvious retort is that most of the car business as we know it today is outsourced.  What most car manufacturers actually do is just the internal combustion engine – thus the car company’s internal vested interests and politics against electric. The car manufacturers have mostly outsourced the rest.  E.g. Transmission is outsourced.  Styling is frequently outsourced, I already knew things like brakes, suspension, electrical, entertainment systems etc, are outsourced.

– Incumbent car industry inertia – It’s ‘worse than he thought possible’: In response to a question asking how quickly he thinks the incumbent car industry will adapt to change, he is quite clear.  He describes them being ‘worse than he thought possible’.  He explains the internal politics that occurs within such incumbent car companies.  From the above point regarding outsourcing, we can see that all that remains of most incumbent car companies is the internal combustion engine engineers.  Tarpenning argues that the internal resistance comes from car companies belated realising they sacked the wrong people.  They got rid of their electrical engineers (through outsourcing), and now would have to admit they were wrong and rehire them.

– Battery companies reawakening by Tesla Motors: Battery companies such as Panasonic and Sony thought their addressable market was to sell 7 battery cells per person (e.g. one in the mobile phone, one in the tablet, etc etc). Tesla Motors advised them that their customers would need 7000 battery cells just for one Tesla car. What happened next is kind of funny.

– Tarpenning isn’t always right: Tarpenning got the oil forecast wrong: He got the oil forecast wrong, saying we’d reached ‘peak oil’.  The oil price plummeted below the US$60-70/barrel he said it cost to drag this stuff out of the ground. He did not anticipate that about 2 years later, OPEC would slash oil prices to drive out US CSG oil production. The move by OPEC also might be seen as a prescient move against the electrification of cars, which would severely reduce demand for oil. In the US, they use 28% of their energy to move people and goods.[3] Personal vehicles use 60% of that 28%, and buses and trains use 3% of that 28%.

– Where Tarpenning is putting his money: Note also where Tarpenning and his Tesla co-founder Martin Eberhard have invested their money – to an electric motorcycle maker called Alta Motors (formerly BRD Motorcycles) which they did in 2014 (Source: http://blogs.wsj.com/venturecapital/2014/10/01/brd-motorcycles-raises-4-5-million-to-ship-its-all-electric-racing-bikes/).  Readers of this blog will already know that I believe disruption of the automotive industry will come from the ‘lower tiers’ of the personal transport vehicle, probably from a vehicle that the incumbents deride as not a threat. Of course, the more obvious play for Tarpenning and Eberhard is to simply do to the motorcycle industry what Tesla Motors did to the sports car industry. However, with the Redshift, released in October 2014,[4] carrying a 5.2kWh battery weighing 70 pounds (approx. 32kg), producing 40hp (roughly 30kW) we are talking about a power plant that is already capable of powering a ‘disruptive’ micro car at acceptable performance specifications as we have envisaged in other posts (e.g. top speed of 110km/h, range >150km etc). Their bikes sell at US$15,000 so we imagine that the greater economies of scale achieved by a consumer motorcar, when compared to a luxury sports bike, it would be possible to bring the price of a ‘future car’ below the critical US$10,000 mark.

 

[1] https://en.wikipedia.org/wiki/Tesla_Motors#Model_X

[2] https://en.wikipedia.org/wiki/Gigafactory_1

[3] http://needtoknow.nas.edu/energy/energy-use/transportation/

[4] http://www.autoblog.com/2014/10/17/brd-now-altha-motors-reveals-new-redshift-electric-motocross-bike/