Ford vs. Apple in the EV Space

In September 2021, Ford successfully poached Doug Field, the executive who led Apple’s secretive car project to become its own “chief advanced technology and embedded systems officer.”

Field was at Tesla to help launch the Model 3, and is considered one of the key figures in a new era where automobiles are increasingly turning into computers – relying nearly as much on software and the cloud as they do steering wheels and axles.

Ford is understandably excited.

CEO Jim Farley called the hire a “watershed moment for our company.” The auto industry, at varying speeds, is pivoting more to electric and autonomous driving features.

Apple is the opposite of pumped. Its Titan car project has gone through many ups and even more downs since starting in 2014.

Apple’s preliminary timelines on bringing an electric vehicle to market is always getting pushed back.

Losing Field could set a release back further. Will it be the end of Apple’s car ambitions?

It’s unlikely for now, but the car business is still manufacturing, which is incredibly hard to run on a cash flow positive basis.

Car companies that compete outside the luxury segment largely sell vehicles without margin and make money in after-sales cash flow (e.g., parts replacement, service).

Will Apple be able to build that ecosystem? Will there be enough synergies with Apple’s other business lines to make it worth it?

Electric vehicle stocks might be in a bubble, but they won’t be in one permanently when the reality of the economics catches up to the market.

The likely winners in the EV space

Established auto OEMs are likely to be the winners in the EV space.

They have established manufacturing operations and are already profitable from ICE car operations that have been established over 140 years.

GM, Ford, Toyota, VW, Honda, and others are likely to excel and continue their shift to EVs as the economics improve, which will go hand-in-hand with consumer demand.

Most consumers don’t care about the ICE vs. EV debate, but rather just want something reliable that successfully takes them from Point A to Point B.

Pure-play EV companies will continue to struggle when it comes to cash flow from operations.

There is lots of hype and promises, especially from the most promotional company (Tesla), but economic gravity is likely to catch up to those without existing cash-flow positive businesses.

Whether the iCar ever becomes a reality is purely a wait-and-see game.

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