Apple recently decided to cancel its electric car project, a move that was applauded as “absolutely right” by Li Xiang and left Lei Jun feeling “extremely shocked”. What is the highlight information?

Apple’'s Decoupling Dilemma: A Struggle for Manufacturing Might

This recent behavior of Apple may be attributed to a common cause - Decoupling from China.

Starting with the disappointing performance of the iPhone and MacBook, followed by the strange high-pricing low-production of Vision Pro, and now the complete cancellation of the electric car project, all these signs seem to point to a common symptom of “manufacturing capacity gap” caused by an effort to disengage from China.

Due to Apple’s decoupling, production capabilities are being transferred to countries with less advanced manufacturing sectors like India. This has profoundly affected iPhone production, leading Apple to slow down its product research and development to avoid posing an overwhelming challenge to the already precarious decoupled supply chain.

Due to a decoupling strategy of “avoiding another Vision Pro China-based production chain,” Apple has been compelled to reduce Vision Pro output while swallowing the bitter pill of high costs that has drastically limited product sales.

If Apple could shake off its fear of Chinese manufacturing, it’s hard to imagine that the production and pricing issues of Vision Pro would remain unresolved. Currently, the high price severely impedes the product’s potential, as a significant number of users opt for a full refund after a week’s trial given the considerable expenditure. The small number of remaining users then leads to wide-scale losses for developers.

If it weren’t for political tensions leading to Chinese suppliers being set aside, these suppliers and the Chinese government, which values the Apple production chain, would be determined to make sufficient investments to secure long-term contracts in dominating future Apple production chains. However, we only see minimal, almost “trial” level cooperation. This can perhaps be understood as Apple’s serious precaution against further deterioration of the US political climate, which might result in a potential crisis of severed supply chains.

Looking forward from this direction, even if Apple had completed the product design and R&D for the electric car, it would be designed with the principle of “entrusting future production to the Chinese car industry chain to ensure the best product power.” However, this “entrusting cost issues to the Chinese industry chain” plan is no longer feasible. Looking around at the remaining chains without “policy risks” such as Mexico, India, and Australia, they find that they either have to compromise on quality and delivery time or produce ultra-high-priced products that feel almost mythical. Either way would lead to disastrous results. Why continue bleeding from a wound?

The “decoupling from China syndrome” is quite tough for Apple. The cancellation of the car project is just a slight issue.

The real challenges lie in how Apple plans to address problems related to core businesses in smartphones, tablets, computers, particularly spatial eyeglasses.