What we think.

With the release last week of a report in Reuters on Apple’s autonomous electric car (aka project Titan), Apple’s stock rose three percent, adding $62 billion to their market capitalization. Meanwhile, GM’s current market value sits at $58 billion. Their entire value is less than this momentary uptick in Apple’s stock. In Apple versus GM for building an autonomous car, who really wins?

Let’s look at hard facts. GM has put close to billions of cars on the road. They have over a century of expertise in building cars. GM has more than a decade of experience in vehicle OTA updates. Their Super Cruise autonomous/ADAS system is extremely-well performing and is better in many cases than Tesla’s autopilot. Meanwhile, Apple has never built any vehicle let alone anything bigger than a monitor. As tough as phones may be, they’re not expected to survive ten years of weather extremes, salt, and rocks like cars are.

Could the Apple brand promise be mostly a mythology we believe from strong and persistent messaging? It really doesn’t matter.

Is the market insane? If you’re an industry die-hard, you’ll think the answer is yes. It seems clear that GM has the edge in technology and knowhow to build self-driving cars. But could the market be right – could Apple really have the advantage? Here’s how I parse the Apple stock spike: people believe that Apple is more likely to build a self-driving car than GM. This is quite a leap of faith – one that translates into $62 billion. So where did this belief come from and what does it mean for the automotive industry moving forward?

Belief is built on brand

This disparity of belief is in the domain of marketing: more specifically, brand. The impression of a brand is not only what a company states, but what it does or fails to do. While you can steer your brand with careful marketing, your brand messaging doesn’t happen in a vacuum. Your company has to deliver on your brand’s promise. Without careful stewardship of the brand, you may not be cultivating the impression you want.

That’s why, despite spending umpteen millions of dollars in marketing, GM has a brand image that overall isn’t terribly favorable. They are seen by many insiders as a large, slow moving, technology adoption laggard. While they may be famously too big to fail, they’re also too undirected to succeed. There are plenty of actions you can point to that leave people with this impression:

• Failure to embrace EVs until Tesla’s success forced the issue. And while managing to build EVs, not appearing to do it very thoughtfully (killing EV1, killing the Volt)
• Needing a government bailout to prevent going bankrupt
• Spinning off Maven without appearing to know what they’re doing with them and then shutting them down
• Investing a half-billion into Lyft. However, not seeming to clearly understand why they made that investment or how car sharing fits into their business model

And the list goes on. Not to mention the hard-to-shake legacy of poorly built domestic cars in the 70s and 80s. This ended up permanently ceding the “quality car” territory of the consumer’s mind space to Japanese and German automakers. They’ve made remarkable progress on that front – GM cars are no longer crappy – but it’s a hard perception to shake.

Even though GM should have every technological edge over Apple in building a mass market self-driving EV, their engineering experience is up against the market belief of what GM can achieve.

Apple stands for something

Now let’s look at Apple’s brand in comparison. You don’t have to be an Apple fanboy to know that Apple stands for great design. The company is known for carefully designing even the smallest details in their products. Their products are natural and intuitive but at the same time push at the edge of innovation. You can find failures in Apple’s delivery too. Remember their antennas that didn’t work when the phone was being held? And who could forget their map application that generally sucked? But the company’s response to their missteps has generally been to own their mistakes, correct the problem, and move forward.

Could the Apple brand promise be mostly a mythology we believe from strong and persistent messaging? Or in other words, is it all due to excellent marketing? It really doesn’t matter. The market believes that when they design a product, that product will deliver an amazing user experience.

The GM robo-car

So that’s the rub. Even though GM should have every technological edge over Apple in building a mass market self-driving EV, their engineering experience is up against the market belief of what GM can achieve. Few actually seem to believe they have the single-minded vision or laser-focused execution to pull it off.

We’ve all seen GM squander numerous opportunities to be a leader, even if it’s a do-or-die situation. Arguably, staving off obsolescence by beating Tesla, Apple, Alphabet, and Uber to a robo-car future should be that wake-up call. Yet GM’s existential threat is being met by a slowly plodding “minimal risk” response. You can’t beat disruptors when you’re operating at a turtle’s pace and are afraid to stick your neck out.

The Apple car

Despite not knowing how to build a car, or perhaps because of it, Apple won’t solve problems like GM did decades ago. They’ll encounter roadblocks, sure, but they’ll find new ways to approach these problems. Even finding out that project Titan isn’t delivering on time or requires a massive restructuring isn’t enough to puncture Apple’s strong brand promise.

Tesla took about a decade to learn enough about designing, building, servicing, and selling cars to become profitable, and those birthing pains have in fact given all the disruptor upstarts a boost, Apple included. Tesla provides definitive evidence that says a technology-focused company with zero auto experience can bootstrap themselves up the car creation curve.

And the winner is…

From where I sit, Apple (and the rest of the upstarts) will win the fight against GM hands-down. Tech companies seem to want to spend gargantuan sums of money and create millions of headaches for themselves just to get into the car market. However, they do want to get into the market, and if they persist, they’ll do a great job of it. Apple will release their first car that will be so compelling and so well designed, it’ll attract an instant audience, despite any inevitable launch issues.

Can GM even stay in the fight? GM has the engineering chops and the person-power to deliver if they really want to. What they don’t have is the corporate willpower to pick a compelling brand vision and to do whatever it takes to meet it. This involves a huge amount of risk. (They could take a lesson from Volvo on this one.)

If my time at OnStar has taught me anything, it’s that the General Motors organism has an overactive immune system full of anti-risk antibodies that work to suffocate any revolution too drastic. I’m not laying this at Mary Barra’s feet either – it’s not something she can fix. The company is so large, so entrenched in existing ways of business, and so beholden to shareholders that I don’t think anyone could steer them away from the upcoming iceberg.

Unfortunately, I’m afraid similar issues plague any of the traditional automakers.