Think you’re locked into a mobile OS now? Wait until it runs your car

Apple’s going to reveal more about the Apple Watch on March 9, but CEO Tim Cook has already started dropping hints during a trip to Europe. The latest tidbit comes from The Telegraph: The Apple Watch will be able to start a car.

Which cars? That’s a good question that the Telegraph article and Cook didn’t address. It’s possible that Apple doesn’t know yet, and it hinges on deals with automakers who may be generally resistant to Apple or its rivals taking over in-car computing.

But for people who are considering purchasing new cars today, Apple getting into the key fob game could end up having a significant effect on your resale value. After all, if your car’s ignition only works with iOS — or has no smartphone integration at all — it’s going to be significantly less attractive to Android users who are considering buying your car secondhand. And if your mobile hardware not only powers features on your dashboard interface like mapping or music but basic automotive functions like starting the car then it only becomes more important for the vehicle’s valuation going forward.

A recent report from Glass’s — the British Kelley Blue Book — concurred. “If you are a car manufacturer that has chosen to go with Android, can you still sell your car to a committed Apple smartphone user?” head of valuations Rupert Pontin wrote. “Backing the wrong horse could see their models become not just less attractive to a growing group of buyers but also see their residual values hit.”

The two big players at the moment for in-car software from Silicon Valley are Google, with Android Auto, and [company]Apple[/company], with CarPlay, both of which will roll out on new cars this year. Neither company appears to be going anywhere, but it was possible to say something like that about BlackBerry in 2007 when my family purchased its most recent car.

Your car choice could end up having an even more powerful lock-in effect on your mobile platform choice than, say, an app store. After all, even if you’re a huge app user, you don’t usually spend thousands of dollars on apps that you expect to keep for years. And you can’t sell your old apps when you want to upgrade to new ones.

To be clear: It’s entirely possible — almost certain — than some of the entertainment systems rolling out this year will support both Android Auto and CarPlay. Car makers and chip companies like Nvidia have no incentive to lock drivers in to a brand they don’t make. But anyone who follows mobile app development knows that often new features and bug fixes don’t come to both platforms at the same time — and sometimes never make it to the third and fourth place platforms. For now, CarPlay and Android Auto manage maps and music in your car, but when features are as eventually as critical as keyless fob-free ignition — or one day, autopilot — you probably will want to have the phone or smartwatch that updates come to first.

It’s already possible to start a car with an iPhone. Hyundai, which is supporting both CarPlay and Android Auto, mused about NFC ignition two years ago. A firmware update pushed to the pricey electric Tesla Model S back in September enabled the feature, but the changelog, highlighting the issue, said that the feature was coming to Android “in a few weeks.” Unofficial developers have already started working on Tesla apps for Apple Watch. (There are also unofficial Android Wear apps.)

What’s clear is that as car development cycles inch closer to the more rapid and iterative software and hardware development processes favored by Silicon Valley firms, it’s going to wreak havoc on secondhand values. The Wall Street Journal reported yesterday that some electric cars — except for Teslas — have seen their resale values tumble.

Of course, if you believe the rumors, Apple might solve this problem for iPhone and future Apple Watch users when it releases the car it’s supposedly working on. But for anyone purchasing a new vehicle before 2020, that doesn’t help very much.

Why Apple would benefit from building electric car tech

When the first report came out a little over a week ago that Apple has an internal team working on an Apple-branded electric car — that might or might not actually launch one day — it was easy to avoid weighing in. Apple no doubt has a lot of teams that work on new ideas and it’s no secret that tech giants like Apple and Google, which have transformed the cell phone market, have been eager to play a role in another screen in our lives: the auto dashboard.

But then more specific details emerged: A reported launch year for an Apple electric car (2020) and reports about specific employees that Apple poached for its electric car team — including people from Tesla, car battery maker A123 Systems (which is now suing Apple), several big auto makers and a series of auto supply firms. And then this weekend I finally got a chance to read the long New Yorker profile of legendary Apple designer Jony Ive, which referred to Ive and recently hired Marc Newson (who previously designed a Ford concept car) as “car guys” who “feel disappointed with most modern cars.”

Apple CEO Tim Cook waves during an Apple special event on October 16, 2014 in Cupertino, California.  (Photo by Justin Sullivan/Getty Images)

Apple CEO Tim Cook waves during an Apple special event on October 16, 2014 in Cupertino, California. (Photo by Justin Sullivan/Getty Images)

While many of the media reports seem a bit over blown (a minivan, guys?), clearly there’s something going on. It’s not that surprising that Apple would be so interested in investigating and internally building — and spending a decent amount of cash on — electric car technology. Whether the company will actually launch an Apple-branded electric car in 2020 is an entirely separate issue.

I would guess that Apple itself doesn’t yet know if it really wants to be an independent auto maker. That will probably depend on what Apple’s code-named “Titan” project actually produces.

But Apple probably has a variety of projects around electric vehicle technology, battery innovation, self-driving car software and more sophisticated car navigation tools. And investing substantially in exploring electric car technology could be highly beneficial to Apple is a variety of ways. Here’s why:

Inside Tesla Motors Inc.'s Flagship Showroom

1. Battery tech needs: With the emergence of electric cars, automobiles are essentially large consumer electronic devices. Battery technology that works in consumer electronics can either work directly in electric cars (as Tesla showed) or strongly influence the batteries used by electric cars. More than anything, battery development has been a pain point for Apple’s devices, and that will be increasingly true as Apple launches even smaller form factors that have less room for batteries, like wearable devices.

Apple has actually been aggressively amassing battery talent and intellectual property for quite some time now. Last summer, when I was thinking about this topic and I did a search, Apple had over a dozen openings listed for battery experts across battery chemistry and materials, battery management systems, battery system design and even battery manufacturing and supply chain.

I once heard a rumor that Apple had acquired some of the patents (like this one) and some of the team from a now defunct thin battery startup called Infinite Power Solutions. I wasn’t ever able to confirm that as more than a rumor, but Apple has scooped up talent from other ailing battery startups over the years.

Envia's battery factory

Envia’s battery factory

Former executives from Leyden Energy (which seemed to have wound down last year) and even Envia (which struggled mightily) now work at Apple. For folks who work in the difficult battery startup world, it’s clear that Apple has long had an oversized interest in recruiting.

A123 Systems has now filed a lawsuit about Apple’s poaching practices, and Tesla’s Elon Musk has complained that Apple has been offering Tesla employees $250,000 signing bonuses and 60 percent salary increases. That’s a suggestion that Apple has become somewhat successful at getting the talent it wants.

Apple Watch. Photo by Tom Krazit/Gigaom

Apple Watch

2. Keeping current talent inspired: The Wall Street Journal noted in its initial report that “Titan” “has persuaded many Apple employees who were thinking of leaving the company to stay and work on an exciting new endeavor without the pressure of churning new products every year.” The New Yorker profile of Ive quoted musician Bono as saying “What the competitors don’t seem to understand is you cannot get people this smart to work this hard just for money.”

The same type of engineers who work at Tesla work at Apple: They’re interested in mission-driven, globally important and difficult projects. That’s one reason why it’s been so important for Apple CEO Tim Cook to embrace the company’s 100-percent-clean-power mission. As Apple matures, it will have to keep finding these new points of inspiration for some of the smartest and hardest-working thinkers in the world.

Members of Apple’s design team, in particular, have backgrounds in design. Besides Ive and Newson, there’s Julian Honig, a respected former senior designer at Lamborghini and Audi, and Jim Cuseo, who led work at Ford, MIT Motorosports and MagCanica.

Apple's Jony Ive

3. Tesla isn’t Apple’s competition, Google is: I think that Apple’s interest in electric car vehicle tech — from batteries to self-driving software — is more inspired more by arch competitor Google than Tesla. For years, Google has been building its own electric cars, electric car software, and self-driving cars (which will be electric). Google also had a much earlier lead on building mapping and vehicle navigation systems, and look how that turned out for Apple. Apple needs more Google-style deep-tech R&D to maintain its growth in the future and get ready for the next waves of computing, from devices on the body to devices we drive.

A shot from one of our videos of the Model S. Image courtesy of Gigaom.

A shot from one of our videos of the Model S. Image courtesy of Gigaom.

4. The market for electric cars is early: If Apple plans to launch its own electric car some day, now is the time to get in. Tesla proved that there is an appetite for a user-centric, well-branded, well-designed high-end electric car, and Elon Musk has followed the Apple play book for many decisions, from launching Apple-style retail stores to maintaining a hardcore focus on product for the Model S. It’s almost as if Musk has been acting like a mini Apple testing the waters to see how some Apple-style car would fare in the world.

Of course, beyond the similarities, Tesla has loads of electric car intellectual property amassed over the years. Musk says he wants to be more open source about Tesla’s patent portfolio. I wonder how he’d really feel about Apple using his patents to build its electric car, while it’s offering his talent $250,000 signing bonuses. Or maybe he wouldn’t see that as using Tesla patents “in good faith.”

Musk ultimately “opened” up Tesla’s patents because he knows that the electric car market needs to grow on its own for Tesla to do well. The company made 35,000 cars in 2014, an impressive feat, but the market is still tiny. If Apple did one day launch an electric car, it would no doubt help to grow the electric car market considerably. In that sense, it could be a good thing for Tesla.

The patent wall in Tesla, following Tesla's move to embrace an open source philosophy for its patents. Image courtesy of Tesla.

The patent wall in Tesla, following Tesla’s move to embrace an open source philosophy for its patents. Image courtesy of Tesla.

What would be really cool — but doesn’t seem probable — is if Tesla and Apple actually worked together. Tesla worked with third-party car companies regularly in the past, but in recent years it has moved on from those projects in order to focus on the Model S, X and 3. Tesla could provide the “Intel-inside” for Apple’s car hardware and software designs. Now, I would buy that.

5. Self-driving cars and transportation software: Beyond electric cars, there’s no doubt that transportation in general is changing, and Apple and Google are prime companies to own future transportation operating systems. Someday self-driving cars will be much more common, and they’ll be driven by software, leveraging sophisticated data sets.

The Googles, Amazons, and Ubers of the world are already getting ready for this type of ecosystem, not the Detroit automakers. Apple most likely has projects in this area, even if it doesn’t involve electric cars. But having its own hardware to test out in these environments could be beneficial.

Apple CEO Tim Cook speaks during an event introducing new iPads at Apple's headquarters October 16, 2014 in Cupertino, California.  (Photo by Justin Sullivan/Getty Images)

Apple CEO Tim Cook speaks during an event introducing new iPads at Apple’s headquarters October 16, 2014 in Cupertino, California. (Photo by Justin Sullivan/Getty Images)

6. Now for the speculation: O.K., say Apple does launch an electric car in 2020. No way it’s going to be a minivan. Apple designers would never be inspired by launching a minivan, and I would guess it’s being confused with this Apple minivan project.

I think that Tesla probably inspired Apple, but Apple probably doesn’t fear competing with Tesla. Apple has $178 billion in cash and a market cap triple that of Toyota’s. Musk said on Tesla’s most recent earnings call that Apple spends money like it’s water. He also said that Tesla could be as big as Apple in a decade if it hits the milestones he expects. Looking back at Tesla’s earnings call, come to think of it, there was a lot of Apple talk.

The really exciting part about Apple launching an electric car would be what the company could do to speed up the adoption of electric cars, pushing the fossil-fuel car into the past. Apple and Google singlehandedly changed the cell phone industry, so why not the car industry? To maintain its current crazy growth trajectory, Apple needs entirely new markets — like the trillion-dollar auto industry.

Tesla’s strategy for the launch of the Model 3 slowly emerges

Since Tesla was founded over a decade ago, the company’s long term goal has been to bring a low cost, long-range electric car to market for the masses at a price of around $35,000. Today, that car, now named Model 3, is still at the heart of everything that Tesla does — it’s why Tesla is building its massive battery factory, and it’s one of the reasons why Tesla CEO Elon Musk thinks Tesla could be worth as much as Apple in a decade.

But launching the Model 3, which is supposed to come out first in 2017 and have its first full year of sales in 2018, will no doubt be risky. It will be Tesla’s riskiest move to date, following the launch of its initial car, the Roadster. While the subsequent Model S was by all accounts a success, a low cost, long range vehicle with a brand new platform design is a new beast entirely, and one which will be affected by thousands of difficult decisions Tesla makes, not to mention a variety of external factors like what are competitors launching and the cost of oil that year.

Inside Tesla Motors Inc.'s Flagship Showroom

And it’s now clear that Tesla has decided to try to minimize some of the risks with the Model 3 car by taking lessons learned from some of the choices it’s made on its other cars in the past, and looking to apply them to the design, engineering and launch of the Model 3.

A couple years ago, Tesla’s Chief Designer Franz Von Holzhausen told me that the Model 3 could potentially have a much more provocative and expressive look than the pretty standard Model S sedan. But during Tesla’s earnings call last week, Musk indicated that Tesla might launch a more conservative and basic initial Model 3, but follow-on versions of the car that could be more avant garde.

Moderated by: Katie Fehrenbacher — Senior Writer, Gigaom Speaker: Franz von Holzhausen — Chief Designer, Tesla Motors

Moderated by:
Katie Fehrenbacher — Senior Writer, Gigaom
Franz von Holzhausen — Chief Designer, Tesla Motors

Why? Tesla’s Model X car — which is an SUV/minivan cross vehicle based on the Model S platform — has been much delayed and most of that delay has seemed to come from getting the unusual “falcon wing” door and the second row of seats operating properly. The Model X door is the world’s first double actuating gull wing door, and Musk said it’s been “extremely difficult,” noting “there’s a reason others haven’t done this before.”

Musk said:

[blockquote person=”” attribution=””]Going to Model 3, we don’t want to have something – at high volume — that for this feature we lose a year of production. It would make more sense to go with something that we know that people would love and make a beautiful car and then innovate in more avant garde directions on that platform with future iterations, where we can then put aside any schedule and volume concern.[/blockquote]

The Model X debut.

The Model X debut.

Elon Musk is known for having a massive appetite for risk. He runs a rocket ship company, chairs a solar panel installer firm, leads Tesla, and also has investments in all of his companies. But even he feels the need to move slightly more conservatively here. The battery factory itself has enough risk to make anyone a bit nervous.

Some analysts have expected the Model 3 car to deliver 40,000 in sales in its first year, with a potential ramp up to 150,000 in 2020, and 400,000 by 2028. That’s a lot cars to ship, particularly on an initial more conservative platform and more provocative cars there after. In comparison, Tesla has shipped around 60,000 Model S and Roadster cars in total between 2008 and today.

Tesla owners take a ride in the new Tesla "D" model electric sedan after Elon Musk, CEO of Tesla, unveiled the dual engine chassis of the new Tesla 'D' model, a faster and all-wheel-drive version of the Model S electric sedan, at the Hawthorne Airport October 09, 2014 in Hawthorne, California. (Photo by Kevork Djansezian/Getty Images)

Tesla owners take a ride in the new Tesla “D” model electric sedan after Elon Musk, CEO of Tesla, unveiled the dual engine chassis of the new Tesla ‘D’ model, a faster and all-wheel-drive version of the Model S electric sedan, at the Hawthorne Airport October 09, 2014 in Hawthorne, California. (Photo by Kevork Djansezian/Getty Images)

At the end of the day, the original vision of the Model 3 as ‘the people’s’ electric car might have to be altered slightly. The expected price of the car — which for a long time was projected to be $30,000 or less — has creeped up to $35,000 and some analysts predict it will land somewhere between $35,000 and $40,000. But beyond that, analysts expect the average transaction price (with the added features) to be closer to $60,000, and in that way, it wouldn’t necessarily be a mass market car; more of a luxury mid-range car.

On the earnings call last week, an analyst asked Musk why if Tesla was taking so many cues from Apple on execution and product, it wouldn’t continue to focus on higher end luxury products like its new Model D? Apple wasn’t focused on launching a $30 iPhone, noted the analyst. To that Musk replied:

“The goal of Tesla has always been to accelerate the advent of sustainable transport, and make electric cars happen faster. We need to make a lot of electric cars [for that to happen] and make them more affordable.” And in that way, he’s not like Apple’s former CEO Steve Jobs at all.

It’s official: GM’s 200-mile, $30K electric Bolt car will be produced

Last month GM showed off an electric concept car called the Bolt, which was widely seen as a competitive shot at Tesla’s planned lower cost Model 3 car. Now on Thursday, ahead of the Chicago Auto Show, GM announced that the Bolt, indeed, will go into production.

[company]GM[/company] says the car will be built at the company’s Orion Assembly facility near Detroit, and GM will spend an initial $200 million to get the car into production, including $160 million for tooling and equipment, and $40 million for new dies.

The electric Bolt concept car from GM.

The electric Bolt car from GM.

GM says the Bolt will “leverage” the battery tech used in the Volt, but if the range is supposed to be 200 miles on all-electric then the Bolt will have to use more advanced battery technology than the Volt. Quartz reported previously that LG Chem will supply the 200-mile battery for the Bolt.

GM has long had the idea to build this lower cost, longer range electric car, and the company has been shooting for a launch in 2017, potentially as a 2018 model. But the release on Thursday didn’t detail any type of timeline for the production Bolt.

GM's 2016 Chevy Volt

GM’s 2016 Chevy Volt

While GM’s Volt has been one of the best-selling electric cars out there, its sales numbers for 2014 were slower than in previous years, and in 2014 GM sold 18,805 Volts (down from 23,094 in 2013). The lower Volt sales last year were partly due to everyone waiting for GM’s 2016 Volt, which also launched at the Detroit Auto Show last month. The 2016 Volt has a 50-mile battery range before it kicks into gas mode.

GM has had some fits and starts getting this Bolt concept car together. The company previously was working with startup Envia Systems on a 200-mile range battery, but that deal collapsed after the technology didn’t end up working as promised.

Tesla misses expectations, but says battery factory to come early

Tesla is slightly ahead of schedule with its gigafactory and now plans to begin producing batteries there by the end of 2016, according to the company’s fourth quarter shareholder letter. Previously Tesla said it would deliver batteries starting in 2017.

Construction of Tesla's gigafactory is underway.

Construction of Tesla’s gigafactory is underway.

Construction on the enormous factory’s structure began two months ago, according to the letter. Equipment installation will begin later this year.

But Tesla missed analysts estimates, which were expecting earnings of 32 cent per share for the quarter. Tesla posted a loss of 13 cents per share instead. As a result Tesla’s shares dropped close to 3 percent in after hours trading.

Tesla built 35,000 Model S vehicles over the course of 2014, but, as projected at the end of the third quarter, it wasn’t able to deliver all of them. Instead, 1,400 vehicle deliveries were pushed to the first quarter of 2015.

Tesla attributed the delivery delays to “one-time manufacturing inefficiencies” created by the introduction of new features and the dollar’s strong performance.

By the numbers:

  • Revenue for the fourth quarter (GAAP) was $957 million, up from $615 million for the fourth quarter in 2013.
  • Net loss (GAAP) was $108 million or $(0.86) per share, up from $16 million or $(0.13) per share in the same quarter in 2013.
  • Automotive gross margin (GAAP) for quarter four was 22 percent.

Tesla expects to deliver 55,000 Model S and X cars in 2015, compared to 35,000 in 2014. It expects to produce 10,000 of those in the first quarter.

This is Tesla’s first battery swap station (photos)

Last month Tesla announced that it would soon start trialing its first battery swap station in private beta to invited customers, next to its super charger station at Harris Ranch in Coalinga, Calif. Soon after the announcement, customers on Tesla forums started asking each other if anyone had received an invite or used the battery swap site yet — no one seemed to — and one customer posted photos of the site that at the end of 2014 that was under construction.

So this week I decided to drive down to the battery swap station — about three hours southeast of San Francisco along U.S. 101 — to see how far along the site really was. My assessment? It looks like Tesla’s first battery swap station at Harris Ranch is close to being finished. On my visit, I could see that the battery swapping compartment in the ground of the station was constructed and the station’s signs were in place.

Tesla's battery swap station in Coalinga, Calif.

Tesla’s battery swap station in Coalinga, Calif. Shot from the back of the station. Customers enter from the left through the door shown, and exit from the right in this photo.

Tesla’s first battery swap station is located just across the street from its chargers at Harris Ranch, and it’s placed right next to a Shell Station. The station itself appears to be a former car wash that was gutted and converted into enough space for a single Tesla car to get its battery swapped out. There’s already working restrooms at the station, and a picnic table with benches that both likely were already in place to support the gas station and former car wash.

The exit of Tesla's battery swap station.

The exit of Tesla’s battery swap station. Inside a worker is using a service vehicle to carry equipment in and out of the station.

When (if) the site is available to the public, drivers will be able to enter the station through the entrance closest to the road, drive over the battery swap compartment, and then leave through the exit farthest from the road. Tesla has said that the swapping process could take a few minutes, and potentially less time than it takes to add gasoline to a traditional car. Tesla’s super charging stations can take 20 to 30 minutes to add about 150 miles worth of charge.

A shot from the entrance to the station looking in. The battery swapping compartment is in the ground.

A shot from the entrance to the station looking in. The battery swapping compartment is in the ground.

Battery swapping isn’t exactly advanced technology. After a car drives over the battery compartment in the ground, a robotic arm (the same type used on Tesla’s factory floor in Fremont) will reach up and turn the bolts on the bottom of the car, remove the discharged pack, replace it with a fully charged pack, and reconnect the bolts.

Tesla created the Model S to have a swappable battery from a very early stage in its design, in case it later wanted to implement this technology. Tesla’s CTO JB Straubel told me back in 2011 that if battery swapping ended up becoming common for electric cars, then Tesla will be prepared. Making the battery swappable also made it easier to install the battery on the manufacturing line, Straubel said.

A closer shot of the ground battery swap compartment.

A closer shot of the ground battery swap compartment, at Tesla’s first battery swap station in Coalinga, Calif.

Tesla’s first battery swapping station is quite small. You can walk around it in less than 30 seconds and Musk has said that it will be operating in limited private beta. The technology is not yet receiving an aggressive investment and push by the company. Each battery station, though, reportedly could cost about $500,000 to build.

Some critics, like this Forbes column, are speculating that Tesla has built this battery swap station so that it can re-qualify for zero-emission vehicle credits in California. Tesla can qualify for new credits if it has a rapid refueling station, that is sufficiently used, according to the report. Tesla used ZEV credits back in mid 2013 to help it reach its first quarter profit, and 12 percent of its then quarterly revenue, or $68 million, came from selling ZEV credits.

The entrance to Tesla's battery swap station in Coalinga, Calif.

The entrance to Tesla’s battery swap station in Coalinga, Calif.

While the swapping tech isn’t rocket science, the business model and the battery swapping pricing could be more difficult to figure out. Customers could pay $50 to $60 for a battery swap, and then either pick up the fully charged battery on the way back, pay extra to have the battery shipped to them, or pay the difference in the lifespan of their battery compared to the new one.

A sign at the entrance of Tesla's battery swap station.

A sign at the entrance of Tesla’s battery swap station.

Tesla is just starting to experiment with battery swapping, but the idea of battery swapping isn’t a new idea, and a lot of people think this could be an important option for electric cars and vehicles one day. Better Place is the most famous company that tried to tackle battery swapping, but unfortunately the company wasn’t able to execute on that vision and filed for bankruptcy after failing to sign up enough customers to buy its cars and use its infrastructure. New startup Gogoro is looking to build a business off of battery swapping and electric scooters in Asia megacities.

Elon Musk makes peace with U.S. Air Force over satellite contracts

In a busy year where he retooled his Tesla fleet and launched reusable rockets, Elon Musk also found time to pick a major fight with the defense industry: he sued the Air Force last April, claiming his company SpaceX had been wrongfully shut out from lucrative contracts to launch satellites.

According to Musk, the Air Force had breached procurement policies by giving an exclusive deal to a consortium run by Lockheed Martin and Boeing without giving [company]SpaceX[/company] the time to navigate a complex certification process.

The contract in question, which involves sending up 36 rockets to deliver satellites and other payloads, is worth billions of dollars with Musk claiming that SpaceX can do it far cheaper than what the incumbents are bidding. Musk has also made provocative comments about the cozy nature of defense contracting:

“Essentially we’re asking them to award a contract to a company where they are probably not going to get a job, against a company where their friends are. So they’ve got to go against their friends, and their future retirement program. This is a difficult thing to expect,” he told Bloomberg.

Now, however, he appears to have won at least a partial concession. In a Friday news release, SpaceX said it is dropping the lawsuit as a result of the Air Force improving the competitive landscape for the Evolved Expendable Launch Vehicle program.

“The Air Force also has expanded the number of competitive opportunities for launch services under the EELV program while honoring existing contractual obligations,” the release added.

The resolution comes at a time that SpaceX appears to have made major progress in developing reusable rockets and booster stages, which could significantly lower the cost of sending objects and people into space.

The Silicon Valley lab is officially a defensive strategy

“Is Ford cool?” asked a curt tech reporter during the auto company’s grand opening of its new computing-focused Silicon Valley center in Palo Alto, California on Thursday. The reporter likely meant: Will Ford be able to attract the best Valley talent when it’s competing with the hottest companies and startups from Twitter to Uber to Tesla to staff its new center with up to 125 employees by year’s end?

In response, the company’s enthusiastic CEO Mark Fields, shouted “Yes!” That led the dozens of Ford engineers standing behind the exec to cheer wildly and pump their fists. If they’re not exactly cool yet, they’re definitely nerd-cute and will fit right in with the legions of T-shirt-wearing, mountain-bike-riding engineers who currently fill the South Bay.

A Ford engineer works on a sensor device for the biking data project.

A Ford engineer works on a sensor device for the biking data project.

But the awkward question does make me wonder: does launching a presence in Silicon Valley really work for these types of big industrial companies? The region is filled with Silicon Valley branches of huge global tech firms like Nokia, Samsung, and Orange, retailers like Walmart and Target, infrastructure giants like GE, and, increasingly, auto companies, all trying to tap into the ever-elusive means of creating innovation that seems to thrive in the Bay Area like no other place on earth.

Fields told the group of reporters “we want to be viewed as part of the ecosystem of Silicon Valley,” noting that Ford originally came to the region with a small group of eight in 2012. By the end of the year, Ford hopes to have “the largest dedicated automotive research team in the Valley.” Ford’s CTO, Raj Nair, said the center will help the company “accelerate innovation.”

Ford has created an experimental car swapping app for employees to test out.

Ford has created an experimental car swapping app for employees to test out.

The company is using all the right buzzwords. But most of the projects we checked out in the center on Thursday are, well, pretty tame. There was little evidence of the type of counter-culture thinking, and risk-taking, that often comes with the Valley’s truly disruptive innovations.

[pullquote person=”” attribution=”” id=”909051″]All companies are tech companies and if you don’t recruit talent from the epicenter of the tech industry you’ll be leagues behind.[/pullquote]

For example, the company is experimenting with car swapping internally for its employees and it has built a nicely-designed mobile app that facilitates the process. It probably won’t ever be a commercial product and execs said that they’re experimenting with the service to see how Ford cars operate under such conditions.

But car sharing isn’t exactly an emerging phenomenon. Zipcar, now owned by Avis, is a large, profitable 15-year-old company, and its customers’ reserve Zipcars every six seconds. There’s a wealth of data on car sharing in the real world out there, some of it even published.

A Ford engineer remotely drives a golf car on a parking lot at Georgia Tech.

A Ford engineer remotely drives a golf car on a parking lot at Georgia Tech.

Another project at the lab is focused on allowing Ford to easily upgrade the hardware infotainment systems in its cars, when pushing software upgrades to the dashboard just won’t do. The execs explained that gadgets and phones are upgraded every year or two, but the same cars will be used for six or seven years. This isn’t so much innovation, but a way to defend the real estate that is being usurped by the rate of innovation that’s happening with the cell phone.

Don’t get me wrong, Ford’s new Valley center seems like a positive step for the company. But these types of Valley labs these days are more of a defensive strategy than an offensive one. A company like Ford can’t afford not to have a presence in the Valley, as technology continues to cannibalize other sectors, and “software eats the world.” All companies are tech companies and if you don’t recruit talent from the epicenter of the tech industry you’ll be leagues behind.

Ford has created a virtual test bed, called aDRIVE, for testing algorithms for its autonomous vehicle tech.

Ford has created a virtual test bed, called aDRIVE, for testing algorithms for its autonomous vehicle tech.

Yet these types of Valley labs seem like they mostly have only geography in common with the high-stakes brutal world of startups and venture capital in the Bay Area where entrepreneurs gamble everything and often times lose. The billion dollar “unicorns” (as Fortune’s latest cover describes startups that became rapidly valued at billions of dollars) are inspiring, disruptive tech stories that keep the Valley going but they have little in common with these types of satellite corporate facilities.

Innovation doesn’t usually act like osmosis (though sometimes it can), where big thinking will just seep into the culture because there are big thinkers near by. Yet a company like Ford will need an increasing presence in the Valley if it wants to do deals and have partnerships with the tech leaders.

Of course not all the tech companies in the Valley are disruptive startups, but some of the most established internet companies like Google and Facebook are well versed on how fast innovation and disruption can fade in big corporate environments. That’s why Google launched Google X and its 20 percent time projects, and why both companies aggressively buy startups way outside of their core businesses.

If Ford really wants to embrace the innovation and disruption of Silicon Valley, it should mimic the way these older Valley giants try to constantly kick start their cultures.

Obama touts fast networks, cyber security in State of the Union

Some familiar tech topics turned up in President Obama’s annual State of the Union address on Tuesday, including a pledge to build “the fastest internet” and the need to ensure hackers can’t “shut down our networks [or] steal our trade secrets.”

This year’s speech, which focused heavily on themes of education and the middle-class, also included shout-outs to four Silicon Valley companies — [company]Google[/company], [company]eBay[/company] and [company]Tesla[/company] and [company]Facebook[/company]’s Instagram — while praising America’s advances in solar and wind energy.

Obama also emphasized the need for more broadband in building the economy:

I intend to protect a free and open internet, extend its reach to every classroom, and every community, and help folks build the fastest networks, so that the next generation of digital innovators and entrepreneurs have the platform to keep reshaping our world.

An online version of the speech also included a graphic that hit a tech trifecta of open internet, crowd-funding and solar energy:

SOTU image

(Close observers of the net neutrality debate may note, however, that Obama’s speech did not repeat his call last year for the FCC to employ a common carrier law called Title II to ensure net neutrality.)

At a time when cyber security and surveillance remain front and center in light of the Sony attacks and ongoing Snowden revelations, Obama delivered what was perhaps a mixed message. On one hand, he called for tighter security and new laws to protect privacy:

We are making sure our government integrates intelligence to combat cyber threats, just as we have done to combat terrorism. And tonight, I urge this Congress to finally pass the legislation we need to better meet the evolving threat of cyber-attacks, combat identity theft, and protect our children’s information [..]

As Americans, we cherish our civil liberties?—?and we need to uphold that commitment if we want maximum cooperation from other countries and industry in our fight against terrorist networks. So while some have moved on from the debates over our surveillance programs, I haven’t. As promised, our intelligence agencies have worked hard, with the recommendations of privacy advocates, to increase transparency and build more safeguards against potential abuse. And next month, we’ll issue a report on how we’re keeping our promise to keep our country safe while strengthening privacy.

But on the other hand, the President did not address his government’s controversial policies to undermine encryption (which offers the best guarantee of privacy and security), and nor did he speak to the ongoing legal challenges to the NSA’s collection of meta-data and internet communications.

Another tech issue that failed to make the cut was patent reform legislation, which the President said in last year’s speech was needed to ensure companies could “stay focused on innovation, not costly, needless litigation.”

And while Obama did address drones, which are a hot topic for the tech sector, he only did so in terms of civil liberties, claiming the government has “worked to make sure our use of new technology like drones is properly constrained.”

Ultimately, the most memorable tech aspect of the speech may turn out to be how the White House delivered it: instead of following the past practice of issuing copies to favorite media outlets, the Administration posted it to the buzzy publishing platform Medium before Obama even delivered it, and invited the public to follow along and “tweet favorite lines.”

Elon Musk: Tesla can make a few million cars a year by 2025

Electric car company Tesla’s stated long-term goal has been to make 500,000 electric cars a year by 2020, but on Tuesday at the Detroit Auto Show, Tesla CEO Elon Musk raised the bar even higher. He said in an onstage Q&A, (live blogged by the Verge), that he thinks Tesla can make a few millions cars a year by 2025.

[blockquote person=”” attribution=””]
“We’re going to keep driving our volume as high as we can because our goal is fundamentally to transition the world to electric cars.”[/blockquote]

Elon Musk, CEO of Tesla, unveils the dual engine chassis of the new Tesla 'D' model at the Hawthorne Airport October 09, 2014 in Hawthorne, California. (Photo by Kevork Djansezian/Getty Images)

Elon Musk, CEO of Tesla, unveils the dual engine chassis of the new Tesla ‘D’ model at the Hawthorne Airport October 09, 2014 in Hawthorne, California. (Photo by Kevork Djansezian/Getty Images)

In [company]Tesla[/company]’s most recent earnings, the company was estimating that it would ship about 33,000 vehicles in 2014, and that’s with selling the Model S only. Tesla’s Model X goes on sale later this year, and down the road its third car, the Model 3, will launch as well.

Musk told the interviewer that by 2020, with the Model 3 on the market and with 500,000 cars sold, it will be a safe bet that Tesla will start turning a profit. Musk said to make the Model 3 work, economically, Tesla has to make everything with the car cost about half as much.