Is Apple spending enough on R&D to be secretly developing a car?

If Apple is secretly working on a car, then surely that is going to send the company's R&D budget through the roof, giving us an indication that it's coming well in advance of a launch, right? Maybe not.
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

Over the past few days rumors have been circulating that Tim Cook and the crew over at Cupertino are working on a super secret Apple Car, codenamed "Titan."

When I first came across this rumor, my initial thought was "well, that's gonna distract the pundits from talking about a TV." While it seemed like the perfect tidbit of gossip to get fanboys and pundits into a lather over, it seemed more far-fetched than all the barren speculation over an Apple-branded TV.

Now don't get me wrong, I firmly believe that the car industry is a mess. Design is a mess, the engineering is a mess, and the way cars are bought and sold is a mess. It's a sector that could do with a company like Apple entering into it to shake things up and bring it into the 21st century. But it's hardly the only business that's still stuck in the dark ages. There are plenty of industries much closer to home for Apple that are a total mess. Think cellphone carriers or the TV industry.

Apple could no doubt shake things up here too.

This was churning around in my head over the weekend, then suddenly I had a brainwave. I realized that if and when Apple starts to get deep into car-related research and development (R&D) over in Cupertino, this is going to show up in the company's 8-K for filed with the U.S. Securities and Exchange Commission, and I could compare that with filings by other companies. After all, the R&D costs for cars are colossal. Then lo and behold, I came across a winter 2014 report by PwC Strategy& that listed the top 20 R&D big spenders, and six of the listings were automotive companies.

PwC Strategy&

Another point worth noticing is that Apple didn't even appear in the top 20 list. Apple is ranked 32nd when it comes to R&D spending, information which I gleaned from a list in the same document of the ten most innovative companies, of which Apple is in first place. Apple is pretty frugal when it comes to R&D spending.

But another company caught my eye in that list, Tesla Motors, which is ranked as the fifth most innovative companies.

PwC Strategy&

Sure Tesla's R&D spending for 2014 was through the roof, right? Wrong. According to the data, it spends only $200 million on R&D in 2014, compared to Apple's $4.5 billion. In fact, when it comes to R&D spending, Tesla Motors is all the way down the R&D spending list, at number 440.

So you don't have to spend a lot of R&D cash to make a big impact in the automotive market. And Tesla could be seen as paving the way for companies such as Apple because of its decision to make its patents freely available to competitors.

So you can spend a lot of money of automotive R&D, or you can get away with spending very little. Apple does a lot with little when it comes to R&D, so even if it does work on a car, I don't see the R&D budget reaching Volkswagen, Toyota, GM or Ford levels.

Do I think Apple is working on a car? Maybe, a company like Apple will have a lot of stuff going on behind the scenes, a lot of it that will never see light of day. I'm sure that there is an Apple branded TV on a wall somewhere inside Apple HQ. And I wouldn't be surprised in Apple was working on automotive project, not just ideas for cars but also ways to better leverage in-car entertainment. Do you really think that technologies such as CarPlay came out of nowhere?

But if you ask me whether we'll be seeing Tim Cook debut a car anytime soon, no I don't think so. To me cars seem like TVs - markets that businesses get into to lose money, and those don't appear to be markets that interest Apple.

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