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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We begin today’s update with Neil’s thoughts on the Bloomberg article about Project Titan. The discussion then turns to an in-depth examination of Apple Car from a design perspective. We conclude with a look at what Neil positions as Apple’s largest risk.

Hello everyone. Happy Wednesday. We have a lot to discuss so let’s jump right in.

Apple’s Electric Car Plans

Over at Bloomberg, here’s Mark Gurman:

“Apple Inc. has scaled back ambitious self-driving plans for its future electric vehicle and postponed the car’s target launch date by about a year to 2026, according to people with knowledge of the matter.

The car project, dubbed Titan inside the company, has been in limbo for the past several months as Apple executives grappled with the reality that its vision for a fully autonomous vehicle — without a steering wheel or pedals — isn’t feasible with current technology.

In a significant shift for the project, the company is now planning a less-ambitious design that will include a steering wheel and pedals and only support full autonomous capabilities on highways, said the people, who asked not to be identified because the information is private.”

Gurman’s article came across as something of a catch basin for everything we already know about Titan. Most of the details we have discussed in the past either in these updates or over at AboveAvalon.com. For example:

Apple VP of technology Kevin Lynch’s involvement (more detail here).
Apple’s vehicle proving grounds in Arizona (more detail here).
Former BMW executive and Canoo co-founder Ulrich Kranz’s involvement and Apple’s interest in the company’s unique approach to automobiles (more detail here).
Apple’s land purchases around San Jose International airport strongly pointing to being car related (more detail here). It's not clear if Apple still plans on putting affordable housing on some of the land, as Apple said it would back in 2019.
Canadian involvement regarding QNX (more detail here).
Lidar/radar usage, along with cameras.
Apple's R&D explosion over the years (more detail here).

Bloomberg once again tried to position its report as AAPL stock moving news, which is unfortunate.

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

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Apple’s Electric Car Plans, Apple Car Design Questions, Apple’s Largest Risk (Daily Update)

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