Tesla 1Q24 Deliveries, What’s up With Tesla?, Ford Increases Bet on Hybrids, GM Shakes up Software Team

One member in the forum raised a good point regarding livestreaming Apple Immersive Video. Last year, Apple acquired WaveOne. We talked about the acquisition in the March 28th, 2023 update (available here). The company was in the business of AI algorithms for video compression. The takeaway from that acquisition wasn’t specific to livestreaming sports but rather the broader trend of consuming video and your surroundings on spatial computers.

Today’s update will be dedicated to the auto space.

A few quick notes regarding how we will approach the auto industry following Apple halting Project Titan. In summary, there won’t be any major issues to coverage.

  1. It is good to keep abreast of what’s unfolding in the car industry as the market is too large for Apple to ignore. While the ingredients may not be in ripe for Apple’s entry over the next few years, we can’t rule out the company having renewed interest down the road.

  2. Apple’s CarPlay initiative is one of the more promising integrations between first-party hardware and non-Apple hardware. There are plenty of related implications worth monitoring including Apple Services’ role on the road (maps, music, etc.). It is good to stay up to date as to how CarPlay is being embraced via vehicles sales trends etc.

Let’s jump into today’s update.

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Globalstar Signs Launch Deal With SpaceX, SpaceX on Apple’s Radar?

Hello everyone. We kick things off with Neil’s thoughts on Globalstar, the satellite operator that Apple is relying on for Emergency SOS via satellite, signing a $64M launch deal with SpaceX. The discussion then turns to answering the question: Does SpaceX’s dominance push Apple to become more hands-on with satellites? Let's jump into today's update.

Globalstar Signs Launch Deal With SpaceX

The direct-to-device satellite communications space is heating up.

Last year, Apple unveiled Emergency SOS via satellite for iPhone 14 and 14 Pro. Apple partnered with satellite operator Globalstar for the feature. Earlier this year, the two companies signed a ~$250M funding deal that boils down to Apple funding Globalstar's efforts to update its dozens of low Earth orbit (LEO) satellites in exchange for making the constellation available to Apple. Meanwhile, SpaceX is working with T-Mobile on providing cell phone users satellite service. AT&T is working with AST SpaceMobile to boost its coverage. Qualcomm has turned to Iridium with Android devices in mind.

As for Globalstar updating its constellation, here's SpaceNews:

“Globalstar has contracted SpaceX to launch Apple-backed satellites in 2025 to replenish its low Earth orbit (LEO) connectivity constellation.

The operator said in an Aug. 30 regulatory filing it will pay a total $64 million to launch the first set of satellites ordered last year from MDA, which is using Rocket Lab to supply chassis for the spacecraft.

While the company did not give further details about the launch agreement, its $327 million contract with MDA covered 17 satellites for deliveries anticipated in 2025. The manufacturing contract also includes an option for up to nine additional satellites at $11.4 million each.

Apple has agreed to reimburse Globalstar for 95% of the constellation, including manufacturing and launch costs. The smartphone giant is also lending Globalstar $252 million to help cover upfront costs.

In return, Apple would use 85% of the new network’s capacity to upgrade satellite services launched last year for its latest iPhone, which can connect with one of Globalstar’s 24 existing satellites for emergency services when cell towers are out of reach.”

Even though Globalstar relied on SpaceX to launch a satellite in mid-2022, this new deal will raise the level of awkwardness between the two companies.

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Tesla Earnings, Tesla's Cost Reductions, Apple’s Project Titan Implications

We kick things off with Neil’s thoughts on Tesla earnings. The discussion covers two themes that are beginning to appear in both Tesla’s results and the broader EV space. We conclude with how these trends stand to impact Apple’s transportation goals.

Happy Tuesday.

Before we get to today’s stories, a little follow-up to yesterday’s "Barbie" discussion. The $150M marketing budget for the film was an estimated figure. There is little to no disclosure regarding how much is spent marketing films.

While it would not be unprecedented for a film’s marketing budget to exceed its production costs, the thing that truly stands out about "Barbie’s" marketing budget is how unique the dollars were used. Warner Bros. was able to leverage its marketing budget. On Twitter, Aakash Gupta shared 50 Barbie marketing examples including building a Barbie house in Malibu, a Barbie-themed hotel, catchy billboards, and plenty of other websites, interviews, and licensing deals. The marketing wasn’t really about a movie, but rather about the Barbie brand.

 
 

As we see with other shows like "Ted Lasso," it is possible for other films and shows to play in the zeitgeist. In some ways, that is the goal every streamer is going for: to have some shows become part of culture. Warner Bros. succeeded in that goal with "Barbie." However, the question still remains, what would alternative methods have looked like for "Barbie" distribution? What if David Zaslav had introduced an ultra-premium tier to Max that allowed fans to watch "Barbie" at home, at the same time as the theatrical release?

Tesla Earnings

In a sea of change and evolution, we are starting to get glimmers of a trend materializing in the auto sector. This trend was seen with Tesla’s latest earnings release that came out last week.

A few weeks ago, Tesla reported 2Q23 delivery and production volume. The numbers were good. However, we needed to wait for earnings to see how profitable those vehicle sales were.

Not surprisingly, Tesla’s auto margins are falling. Higher sales volume has not offset the negative impact on margin from substantial price cuts.

The following comment from Elon Musk on Tesla’s earnings Q&A jumped out at me:

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Apple’s Transportation Ambition, Tesla 4Q22 Deliveries, Tesla’s Problem (Daily Update)

We begin with some words on Project Titan. Two weeks ago, the newest Above Avalon Report, “Project Titan: Apple’s Transportation Ambition,” was published. The discussion then turns to Tesla. The company reported 4Q22 delivery data. We go over the numbers and what Neil views as a problem for Tesla.

Hello everyone. Welcome to 2023.

If you took time off, I hope it was a good and relaxing stretch. Some people are still away from the office this week, so we will use the next two days to return to a regular routine.

Several members emailed me over the break about Apple topics and developments that popped up in the news (China, stock price volatility, demand issues, risks in 2023). We will get to those topics, including my broader thoughts heading into 2023.

For today, we will focus on a topic that was initially not going to be on my “key discussion topics” list for 2023: electric vehicles.

Let’s jump right in.

Apple’s Transportation Ambition

Two weeks ago, the newest Above Avalon Report, “Project Titan: Apple’s Transportation Ambition” was published. You can find the report in your inbox – it was sent out December 22th at 10:48 pm ET. To those members who recently joined, you can access the report via the archive here.

Having a report dedicated to Project Titan has been on my to-do list for some time. It had become difficult for members to go through dozens of updates to piece together the history and motivation behind Project Titan.

Over the years, the Project Titan topic has become unwieldy at times. Periodic reporting has had a very short-term perspective, rarely providing readers the big picture. One is typically left with the impression that Titan is a revolving door within Apple with management constantly changing long-term objectives. That’s not reality.

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Disney Fires Bob Chapek, Bob Iger’s Return, Disney M&A (Daily Update)

We kick things off with the big news from Disney. The discussion begins with Neil’s thoughts on why Bob Chapek got fired and what it tells us about Disney’s board. Attention then turns to the most surprising part of Iger returning as Disney CEO. We conclude with a look at Disney M&A and how Iger as CEO impacts the probability of Disney pursuing content M&A.

Hello everyone. Happy Monday.

We have big news from Disney that we will focus on today. There is a lot to talk about.

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Let's jump into today's update.

Disney Fires Bob Chapek

In what will turn out to be one of the top stories in the media space this year, here’s Disney:

“The Walt Disney Company announced today that Robert A. Iger is returning to lead Disney as Chief Executive Officer, effective immediately. Mr. Iger, who spent more than four decades at the Company, including 15 years as its CEO, has agreed to serve as Disney’s CEO for two years, with a mandate from the Board to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term. Mr. Iger succeeds Bob Chapek, who has stepped down from his position.

‘We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,’ said Susan Arnold, Chairman of the Board. ‘The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period.’

‘Mr. Iger has the deep respect of Disney’s senior leadership team, most of whom he worked closely with until his departure as executive chairman 11 months ago, and he is greatly admired by Disney employees worldwide–all of which will allow for a seamless transition of leadership,’ she said.”

The following chart likely played a major role in this announcement.

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