Gus Carlson is a U.S.-based columnist for The Globe and Mail.
The consumer landscape is littered with the failures of companies, fuelled by equal parts deep pockets and delusional belief in the power of their brands, that didn’t stick to their knitting.
Think Cadbury’s instant mashed potatoes, Samsonite’s outerwear, Evian’s spring water-filled brassieres and Colgate’s frozen entrees. And remember when jeans-maker Levi’s introduced a line of men’s business suits called Tailored Classics? Probably not.
Now, add Apple AAPL-Q electric vehicles to the scrap heap of product brand extensions that went wrong because of hubris that muted leadership’s self-awareness about its own limitations and a conviction that anything is possible if you throw enough money at it.
News this week that the iPhone-maker is abandoning its EV initiative after more than a decade of development and billions of dollars of investment proves it takes more than money and moxie to succeed in the fast-evolving word of EVs, even if you are Apple.
In this case, the problem with Apple believing the hype around its ability to own any market it chooses is that sometimes reality gets in the way. But no one has ever suggested that arrogance isn’t a core competency at Apple.
Carlson: Pushing electric vehicles is virtue-signalling and fighting the free market
Apple followers point to a number of issues that prompted the company to scrap its high-profile EV push, including leadership’s underestimation of the cost and complexity of the auto market as well as internal squabbling about the direction of the EV program.
Market changes also played a hand. While Apple dithered, the early adopter surge that drove a spike in sales abated, as high sticker prices, range anxiety and lack of charging infrastructure spooked the next wave of buyers hesitant to stick their toes in the EV water. Despite its tech wizardry, the Apple concept of a US$100,000 EV quickly became a dinosaur as the market – and consumer tolerances – evolved.
To be sure, it’s been a bumpy road for EVs lately. Global sales are slowing, causing unsold new EVs to pile up on dealer lots. Ford Motor Co. announced last week that it is suspending shipping of its F150 Lightning pickup, its much-vaunted entry into the marketplace, for the rest of 2024 because of slow demand for the trucks and will shift resources back to gas-powered vehicles. The move will idle more shifts at its Michigan EV plant, which has already seen hundreds of layoffs.
And there are industry heavyweights such as Toyota Motor Corp. chair Akio Toyoda enraging the faithful who see EVs eventually ruling the world by suggesting the emperor has no clothes. Mr. Toyoda predicted recently that EVs would, at their peak, comprise only about 30 per cent of the global auto market, in large part because there are vast chunks of the world’s population who don’t have access to electricity and probably never will, making the practicality of EVs limited.
Despite the setbacks, suggestions by some auto industry observers that Apple’s move is a broad indictment of the electric vehicle value proposition are a bit Chicken Little-esque. They, too, seem to have drunk the Apple Kool-Aid that tastes like invincibility.
The truth is the EV market will do just fine without Apple’s offering. Tesla has already proved the ability to move beyond early adopters and capture the interest of the early majority of EV buyers. And new Chinese EV markers such as China BYD and Xiaomi are poised to further change the market dynamics, with models aimed at addressing two big hurdles hindering broad consumer adoption – high prices and low battery range.
While Apple groupies moan about the epic fail in Cupertino, investors – the people who bet on the ability of a company to monetize whiz-band ideas – cheered the company’s exit from the EV market, sending Apple shares up sharply on the news. They had watched for more than a year the widening gap between the Apple vision and the market reality.
Apple admirers shouldn’t feel too bad, though. No one can be great at everything. Look at the professional sports world. Multi-sport stars such as Bo Jackson and Deion Sanders are rare. Even phenoms like Shohei Ohtani, who breaks time-honoured Major League Baseball norms by hitting and pitching at all-star levels, come around once in a blue moon.
The one positive note about Apple’s move out of EVs: The company will refocus investment and reassign some of the 2,000 workers in its EV area to generative AI work. That’s seems to be more Apple’s kind of knitting.