Dozens of break-ins examined by The Wall Street Journal show how orders to secure the power grid have still left tens of thousands of utility substations vulnerable to terrorist saboteurs
By Rebecca Smith WSJ
An early morning passerby phoned in a report of two people with flashlights prowling inside the fence of an electrical substation in Bakersfield, Calif. Utility workers from Pacific Gas & Electric Co. later found cut transformer wires.
The following night, someone slashed wires to alarms and critical equipment at the substation, which serves 16,700 customers. A guard surprised one intruder, who fled. Police never learned the identities or motive of the burglars.
The Bakersfield attacks last year were among dozens of break-ins examined by The Wall Street Journal that show how, despite federal orders to secure the power grid, tens of thousands of substations are still vulnerable to saboteurs.
The U.S. electric system is in danger of widespread blackouts lasting days, weeks or longer through the destruction of sensitive, hard-to-replace equipment. Yet records are so spotty that no government agency can offer an accurate tally of substation attacks, whether for vandalism, theft or more nefarious purposes.
Most substations are unmanned and often protected chiefly by chain-link fences. Many have no electronic security, leaving attacks unnoticed until after the damage is done. Even if there are security cameras, they often prove worthless. In some cases, alarms are simply ignored.
Watch the video: A series of equipment failures and unexplained attacks have exposed the vulnerabilities of the U.S. electrical grid. Keith Cloud, head of security for the Western Area Power Administration, which controls portions of the grid in 15 states, says he doesn’t receive enough funding to secure his substations. Video: Gabe Johnson/WSJ. Photo: Mark Peterman for The Wall Street Journal
The vulnerability of substations was broadly revealed in a Journal account of a 2013 attack on PG&E’s Metcalf facility near San Jose, Calif. Gunmen knocked out 17 transformers that help power Silicon Valley; a blackout was narrowly averted. The assailants were never caught.
The following year, the Federal Energy Regulatory Commission, which regulates the country’s interstate power system, began requiring that utilities better protect any substation that could disable parts of the U.S. grid if attacked.
FERC’s new rule, however, doesn’t extend to tens of thousands of smaller substations, including Metcalf and the one in Bakersfield. Security experts say a simultaneous attack on several of these substations also could destabilize the grid and cause widespread blackouts.
Gerry Cauley, head of the North American Electric Reliability Corp., —which writes standards for the grid—was asked at a FERC hearing in June on grid security what kept him up at night. He said the prospect of “eight or 10 vans going to different sites and blowing things up.” Recovery from a coordinated attack, he said, could take weeks or months.
The Metcalf substation, while undergoing security upgrades, was hit again in August 2014. Intruders cut through fences and burglarized equipment containers, triggering at least 14 alarms over four hours. Utility employees didn’t call police or alert guards, who were stationed at the site, according to a state inquiry.
Three days after the break-in, Stephanie Douglas, PG&E’s senior director of corporate security, sent a memo to the utility’s president saying security was in a fail mode, and her department lacked clout and resources: She had 26 full-time jobs to protect 900 substations, as well gas pipelines and other utility assets.
Ms. Douglas, no longer with PG&E, declined an interview request. PG&E spokesman Matt Nauman said the utility has responded with a $200-million program that includes better security equipment, more training and hiring.
The sprawling U.S. electric system is regulated by government but mostly owned and operated by utility companies and grid operators that monitor electricity supply and demand every minute, every day. The system is always on—and for years few thought anyone would try to turn it off.
The motive of most substation break-ins appears to be theft. Intruders and, potentially, terrorists also could be trying to hack into control systems through computer equipment in substations—either to cause immediate damage or to gather information for later use.
“A substation is not an obvious target for criminals like a bank,” said Joseph Weiss, a security consultant to utilities. “Common sense says they want to get into the electric system.”
The U.S. power grid is like a giant puzzle that can be configured in different ways to deliver power where and when it is needed.
Major power sources—gas-fired generators and nuclear-power plants, for example—connect to substations that raise voltages to ferry electricity long distance over a network of power lines. At cities and other destinations, substations lower the voltage to safely deliver electricity to homes and businesses. Substation computers help grid operators control those electrical flows.
The grid was cobbled together during the electrification of the U.S. over the past 125 years. It is a fragile, interdependent system generally more vulnerable in summer when it is running closer to its limits. It is also at risk during low-demand periods, when power-plant operators and linemen perform maintenance. Fewer plants and transmission lines operating mean fewer options for delivering electricity during emergencies.
Transfer of Power
Major power sources connect to substations that raise voltages to ferry electricity over a network of power lines. At cities and other destinations, substations lower the voltage to safely deliver electricity to homes and businesses. Substation computers help grid operators to monitor and control those electrical flows.
Step-up transmission substation
Increases the voltage to move large amounts of electricity over long distances.
•An individual substation is attacked.
High-voltage transmission lines
Reduces the voltage as electricity approaches its ultimate destination; can split and distribute power in multiple directions
•Simultaneous attacks at multiple substations.
•A substation break-in to hack system computers.
Located near the end users. Voltage is lowered again.
Reduces voltage for home and office use
Source: Energy Information Administration
There is so much variability in the grid that what causes a catastrophe one day might not the next, which makes security issues complex. Small problems can quickly spiral out of control.
On Sept. 8, 2011, equipment problems and human error caused a large transmission line in Arizona to trip out of service. The grid is supposed to withstand the loss of any one line. On this day, electric current shifted to nearby lines and overloaded them; that overtaxed transformers at two small substations, which shut down defensively to prevent equipment damage, and disruptions spread.
San Diego was blacked out 11 minutes later. Traffic snarled. Flights were canceled. Raw sewage flowed into the ocean. Altogether, 2.7 million utility customers lost power in California, Arizona and Mexico.
Federal officials have long known about the vulnerability of electrical substations. A 1990 report from the federal Office of Technology Assessment warned that “virtually any region would suffer major, extended blackouts if more than three key substations were destroyed.”
A 2012 report from the National Research Council of the National Academies of Sciences looked at different parts of the electric system and concluded that substations were “the most vulnerable to terrorist attack.”
“We’ve known we had an issue for a long time and have been very slow to do anything about it,” said M. Granger Morgan, a professor of engineering at Carnegie Mellon University who studied the San Diego blackout.
Security adviser James Holler said his company, Abidance Consulting, inspected nearly 1,000 substations over the past year for utilities in 14 states. “At least half had nothing but a padlock on the gate,” he said. “No cameras. No motion sensors or alarms.”
One utility lost a set of substation keys that were in a truck stolen for a joy ride. After the truck and keys were recovered, Mr. Holler said, the utility didn’t change the substation locks.
Richard Donohoe, director of security for the consulting firm Black & Veatch, said the security departments of utility companies are often so low in the pecking order that “the rest of the organization ignores them half the time.”
After the gunfire attack on the Metcalf substation, FERC required enhanced protection for individual substations “that if rendered inoperable or damaged could result in widespread instability,” or cascading blackouts in any of the three separate sections of the U.S. power grid.
A large security wall now surrounds the Metcalf electric substation near San Jose, Calif., which helps power Silicon Valley. The facility, owned by Pacific Gas & Electric Co., was attacked by gunmen in 2013 and burglarized the following year.
A large security wall now surrounds the Metcalf electric substation near San Jose, Calif., which helps power Silicon Valley. The facility, owned by Pacific Gas & Electric Co., was attacked by gunmen in 2013 and burglarized the following year. PHOTO: BRIAN L. FRANK FOR THE WALL STREET JOURNAL
That is a high bar. Utility experts aren’t sure how many substations the new rules cover but estimate it is fewer than 350 out of approximately 55,000. They say more protections are needed at smaller substations that could trigger blackouts if attacked in combination.
The exact combinations depend on energy demand and the direction of electricity flow. In spring, for example, hydroelectric power plants send electricity from the Pacific Northwest to California. In winter, electricity flows in the opposite direction, mostly from gas-fired and nuclear power plants in California and Arizona.
One security-focused nonprofit group called the Foundation for Resilient Societies has called for an analysis of the impact of simultaneous attacks, both physical and cyber.
Thomas Popik, chairman of the group, told FERC in June that existing grid protections were inadequate and his group believed the grid was “a battlefield of the future” that required military-type defenses for key infrastructure.
Michael Bardee, director of the Office of Electric Reliability at FERC, said the agency could do more to study security vulnerabilities at the thousands of substations not covered by the new rule. FERC expects a progress report on the new rule later this year.
“Clearly, there’s some sense that as events go on we may need to re-evaluate the applicability of this standard,” Mr. Bardee said, and possibly expand its reach.
The Vermont Electric Power Co. approved a $12 million program to beef up security at 55 locations after substations were penetrated more than a dozen times by thieves stealing copper during break-ins from 2012 through early 2014.
“We haven’t seen a theft in over a year,” said Kerrick Johnson, a spokesman. The utility installed more secure fencing and better security cameras.
Most utilities are reluctant to spend money on security unless under government orders. They must justify their expenses to regulatory agencies to pass on the costs to ratepayers, said John Kassakian, an emeritus professor of electrical engineering at the Massachusetts Institute of Technology.
Security upgrades generally include cameras, lights and motion sensors, as well as password-controlled doors and gates that electronically monitor entries and exits. Terror threats, Mr. Kassakian said, probably seem less pressing than spending to comply with federal environmental rules.
Utilities don’t always report attacks despite a legal requirement to notify the Energy Department within six hours of any event that could interrupt electricity or if a break-in targets security systems.
No utility has been fined for failing to comply as far as he knew, said David Ortiz, deputy assistant secretary at the Energy Department: “I don’t have an enforcement team.”
The Journal found nine substation break-ins over the past two years where theft wasn’t the apparent motive. The tally and details of the break-ins were gleaned from interviews and public records requests. The count included attacks affecting the federally owned Liberty substation in Buckeye, Ariz.
The substation, about 35 miles west of Phoenix, is a critical link in the southwest power corridor, delivering electricity to heat homes in northwestern states during winter and cool buildings in the southwest during summer.
On Nov. 5, 2013, someone slashed fiber-optic cables that serve Liberty, as well as the larger Mead substation near Hoover Dam. It took workers about two hours to re-establish proper communications and normal controls.
Liberty is operated by the Western Area Power Administration, which controls 17,000 miles of high-voltage power lines used by utilities serving 40 million people in 15 states. If this system suffered a catastrophic failure, it would take down other utilities with it, experts said.
Alarms signaling trouble at Liberty began ringing at a utility operations center in Phoenix 13 days after the communications outage. Dozens of alarms sounded over two days before an electrician was dispatched.
The electrician expected a false alarm. Instead, he found the perimeter fence sliced open and the steel door to the control building “peeled back like a sardine can,” said Keith Cloud, the utility’s head of security.
The substation’s computer cabinets were pried open. The substation’s security cameras proved useless: eight of 10 were broken or pointed at the sky, Mr. Cloud said. Most had been out of operation for a year or more.
Two months later, on Jan. 30, 2014, Liberty was hit again. Two men with a satchel cut the gate lock and headed to the control building. They left after trying, unsuccessfully, to cut power to a security trailer outfitted with cameras and blinking lights, which were installed after the first break-in.
This time, Mr. Cloud said, utility officials found 16 of 18 security cameras had failed. Most were installed after the first break-in and hadn’t been properly programmed. Investigators retrieved a single fuzzy video from a thermal-imaging camera.
Mark Gabriel, WAPA’s administrator, said the utility has “taken steps to improve our physical security program and processes,” including creating the security department in 2013 that Mr. Cloud now heads.
A federal audit faulted WAPA in April for violations of security regulations, including broken or obsolete equipment, lax control over keys to critical substations and failure to install intrusion-detection systems.
Mr. Gabriel said WAPA spends a couple of hundred million dollars on capital improvements annually, which includes money for security improvements. “The bigger story is how that break-in and others in the industry changed the thinking,” he said.
Mr. Cloud said he has received about $300,000 for security upgrades at a handful of WAPA’s 328 substations, including Liberty. To protect the system’s 40 most important substations and control centers, he said, he needs $90 million: “I don’t have the authority or budget to protect my substations.”
Write to Rebecca Smith at email@example.com
http://bloom.bg/1OubYHH (See Video)
Superior electric cars are on their way, and they could begin to wreck oil markets within a decade.
It’s time for oil investors to start taking electric cars seriously.
In the next two years, Tesla and Chevy plan to start selling electric cars with a range of more than 200 miles priced in the $30,000 range. Ford is investing billions, Volkswagen is investing billions, and Nissan and BMW are investing billions. Nearly every major carmaker—as well as Apple and Google—is working on the next generation of plug-in cars.
This is a problem for oil markets. OPEC still contends that electric vehicles will make up just 1 percent of global car sales in 2040.Exxon’s forecast is similarly dismissive.
The oil price crash that started in 2014 was caused by a glut of unwanted oil, as producers started cranking out about 2 million barrels a day more than the market supported. Nobody saw it coming, despite the massively expanding oil fields across North America. The question is: How soon could electric vehicles trigger a similar oil glut by reducing demand by the same 2 million barrels?
That’s the subject of the first installment of Bloomberg’s new animated web series Sooner Than You Think, which examines some of the biggest transformations in human history that haven’t happened quite yet. Tomorrow, analysts at Bloomberg New Energy Finance will weigh in with a comprehensive analysis of where the electric car industry is headed.
Even amid low gasoline prices last year, electric car sales jumped 60 percent worldwide. If that level of growth continues, the crash-triggering benchmark of 2 million barrels of reduced demand could come as early as 2023. That’s a crisis. The timing of new technologies is difficult to predict, but it may not be long before it becomes impossible to ignore.
Musk Bulks Up Tesla Batteries in Leap Beyond Cars to Grid
Billionaire Elon Musk thinks he can pave the way to a better energy future by turning the mattress-shaped batteries in Tesla’s electric car into upright pillars so they can be used to power homes, businesses and even utilities.
Musk will lift the veil Thursday on a new generation of batteries designed to store growing volumes of solar and wind energy. If he gets it right, Tesla Motors Inc. will have spun a significant second business off the technology originally designed for its electric vehicles — and will gain a toehold in a business projected to generate tens of billions of dollars in a decade.
Nobody in the power industry has yet been able to come up with a cost-effective way to store large volumes of energy for later distribution. Tesla is making a bet that its huge $5 billion “gigafactory” currently under construction near Reno, Nevada, will enable the mass production needed to drive down the cost of batteries and make them competitive for a broad range of customers, including traditional suppliers of electricity.
Tesla has scheduled an event Thursday at its design studio in Hawthorne, California, to announce both a Tesla home battery and what it called last week in a note to investors “a very large utility scale battery.”
“Whatever Tesla announces on Thursday is just the beginning,” said Peter Rosegg, spokesman for Hawaiian Electric Co., where 12 percent of the utility’s customers have rooftop solar panels. “Tesla doesn’t have to go after the market — the market will come to them. We’re very eager to see what they have to say.”
Tesla, based in Palo Alto, California, has its eye on a business that’s poised for tremendous growth. As homes, businesses and utilities use more renewable energy generated by sun and wind, the need to provide for reliable power grows. Batteries can be used to store electricity during peak production times, and then dispense it later when the sun isn’t shining or the wind isn’t blowing.
Musk tweeted a teaser about their Thursday announcement: “For the future to be good, we need electric transport, solar power and (of course) … the missing piece,” he posted on Twitter Tuesday. Tesla fell 0.8 percent to $228.63 at 10:58 a.m. in New York.
A January report from Navigant Research estimates that worldwide revenue from grid-scale energy storage could total more than $68 billion by 2024 as renewable resources multiply and electricity grid operators seek ways to balance their mix of generation assets.
Tesla is already supplying batteries to homes and commercial businesses such as Wal-Mart Stores Inc. through pilot projects and a supply agreement with SolarCity Corp., a relationship that generated $2.7 million in revenue for Tesla in 2014, according to a recent regulatory filing. That’s less than 1/10 of 1 percent of the automaker’s total for last year.
But Tesla is thinking much bigger, saying in job postings that its energy-storage business will soon grow to billions in sales. Musk plans to combine the strengths of the company’s patented lithium-ion batteries, which currently can run a car for about 265 miles (426 kilometers) per charge, with its expertise in power management software.
Musk’s green power ambitions involve three inter-connected enterprises: SolarCity, where he serves as chairman, the battery factory in Nevada, and the Tesla car business. With the move into energy storage, Tesla can help green the grid that fuels its cars while offering solar customers a way to store any excess electricity in batteries for use during hours of less sunlight and greater demand.
An even larger potential market will be utilities that have traditionally generated power with coal and natural gas.
“Tesla isn’t just going to sell batteries to SolarCity,” said Ben Kallo, an analyst with R.W. Baird & Co. “They are going to sell to project developers, wind and solar developers, and directly to utilities. The residential product isn’t going to be a huge needle mover in the near term, but the numbers are very big on the utility side.”
Tesla will face competition from other battery makers such as Korea’s LG Chem Ltd. and legacy U.S. power providers such as AES Corp. and startups such as JLM Energy Inc. It will have to navigate regulatory hurdles in a state-by-state market with varying degrees of subsidies and incentives for the technology.
Utilities, more cautious by nature, have been slow to adopt storage on their own.
“Storage doesn’t neatly fit into transmission, distribution or generation categories so it can be tough for utilities to justify investing in storage projects,” said Brian Warshay, an analyst for Bloomberg New Energy Finance. “Some utilities, like the California investor-owned companies, are getting into storage because their regulator basically told them they have to.”
In Tesla’s home state, a groundbreaking energy-storage mandate requires PG&E Corp., Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric to collectively buy 1.3 gigawatts of energy storage capacity by the end of 2020. New York is also pushing utilities to use storage to relieve congestion on transmission lines and plans for the retirement of the Indian Point nuclear power plant.
All these companies are potential customers for Tesla. The automaker has been in talks to provide its batteries to Oncor Electric Delivery Co., the largest power-line owner in Texas.
“Batteries really are kind of a panacea for the grid,” said Don Clevenger, senior vice president of strategic planning for Oncor. “They provide better reliability.”
TOKYO — The 13 commercial nuclear reactors clustered along the short, rugged coastline of Fukui Prefecture in Japan have earned the area a reputation as a political stronghold for the atomic power industry.
Nuclear-friendly politicians dominate most of Fukui’s government offices, and some of the area’s reactors continued to operate for a time after the meltdowns at the Fukushima Daiichi plant four years ago, even as others elsewhere shut down because of safety concerns. The region is nicknamed Genpatsu Ginza, or Nuclear Alley.
Currently, none of the 48 usable reactors in Japan are producing power. Japan’s carbon emissions have risen as a result, and business groups say delays in returning some plants to service are hurting the economy.
The price of electricity has increased by 20 percent or more, reflecting the cost of importing more oil and natural gas. That translates to the equivalent of several tens of billions of dollars a year in added expenses for households and companies.
Now, a local judge has made Fukui an unexpected focus of antinuclear activism and turned the prefecture into a battleground for Prime Minister Shinzo Abe’s government, which is seeking to rebuild the nuclear industry and reverse the economic impact of the reactor shutdowns.
On Tuesday, the judge, Hideaki Higuchi, issued an injunction forbidding the restart of two nuclear reactors at the Takahama plant in Fukui. The plant’s owner, Kansai Electric Power Company, had intended them to be among the first in the country to be returned to service after the introduction of post-Fukushima safety standards two years ago.
Five Ways That Apple Is Already Positioned to Be a Car Company
By Tim Higgins – Feb 14, 2015, 8:02:51 PM
Bloomberg Photo Service ‘Best of the Week’: Tim Cook, chief executive officer of Apple Inc., center, arrives to speak with Gary Cohn, president and chief operating officer of Goldman Sachs Group Inc., right, at the Goldman Sachs Technology And Internet Conference in San Francisco, California, U.S., on Tuesday, Feb. 10, 2015. Apple Inc., which began flirting with a record valuation of $700 billion during midday trading in November, ended the day at $710.7 billion, marking the first time a U.S. company has reached that milestone. Shares rose 1.9 percent to $122.02 at the close in New York. Photographer: David Paul Morris/Bloomberg *** Local Caption *** Tim Cook; Gary Cohn
Apple Inc. may already be positioned to evolve into a global automaker in many ways that other Silicon Valley companies aren’t.
The Cupertino, California-based tech company has put a few hundred employees to work on a secretive project to develop an electric automobile, a person familiar with the matter has said. While Apple often tests ideas that don’t get released, the work underscores the company’s long-held desire to play a greater role in the automotive space, which is ripe for more of a merging with users’ digital lives.
“It makes a ton of sense,” Gene Munster, an analyst with Piper Jaffray Cos., said Saturday in an interview. “If you would’ve said 10 years ago, ‘Apple is going to be in the car business,’ I think people would’ve said you’re crazy — because it would’ve been crazy — and today it’s a much different company that’s able to tackle these massive addressable markets.”
Apple, with a market capitalization that’s more than $700 billion, needs to continue growing sales in iPhones, its largest revenue generator, while also expanding into new markets, such as automobiles, if it’s to reach a $1 trillion valuation, Munster said. He added that he doesn’t think Apple would bring out a car in the next five years.
Nonetheless, Apple boasts some advantages versus other Silicon Valley companies with car ambitions. Tesla Motors Inc., which delivers less than 10,000 vehicles a quarter, surprised investors last month when Chief Executive Officer Elon Musk said the company wouldn’t be profitable until 2020.
Apple’s strengths as a potential automaker include:
1. $178 Billion
The automotive industry churns through cash at an astonishing pace. Apple, as it turns out, has a cash hoard of almost $180 billion. As Musk said last week, Apple is “just running out of ways to spend money. They spend money like it’s water over there and they still can’t spend enough of it.”
While the old rule of thumb was that it cost about $1 billion to develop a new car, those costs are now being spread over more vehicles as traditional automakers work to use vehicle platforms for more models, said Dave Sullivan, an automotive industry analyst with AutoPacific. That would be one challenge for Apple, as would a lack of experience building cars, though Thilo Koslowski, vice president and automotive practice leader at Gartner, said they could acquire those manufacturing skills.
“It’s well understood because it has been around for 100 years,” he said of building cars. “What isn’t that well understood are the pieces that Apple would potentially bring to the table.”
2. The Ultimate Mobile Device
Apple has built its fortune on creating products that are compellingly designed and that integrate software in such a fashion that immerses users’ lives deeper into the Apple world, further hooking them for future upgrades. And it already has car-suited technology — mapping software, for instance — ready to go.
“The car is one of the most important and critical pieces of the puzzle that you need to master if you want to interact with customers wherever they are,” Koslowski said. “It’s pretty important to have a phone that’s connected, and can show you your calendar and do all kinds of other things, but now extending it to this other device that happens to have four wheels.”
3. Car Guys?
The car business seems simple to outsiders, tempting some to think they can do better than Detroit, which spent a generation sliding toward bankruptcy reorganizations before re-emerging to new profits.
But the modern automotive industry has a mixed record on how outsiders perform. For every Alan Mulally, who jumped from Boeing Co. to oversee Ford Motor Co.’s renaissance, there’s a Bob Nardelli, the former General Electric Co. executive and Home Depot Inc. CEO, who was at the helm of Chrysler during its bankruptcy. Tesla has so far succeeded while Fisker Automotive, another high-profile electric car company, had its assets sold off in bankruptcy.
Apple, meanwhile, has a unique mix of executives with tech and auto experience. The company has long hired engineers from the automotive space, often with experience in supply chain management, battery technology and user-interface experience.
Luca Maestri, Apple’s chief financial officer, spent 20 years at General Motors in areas of finance and operations. Eddy Cue, the influential senior vice president of Internet software, is a car enthusiast and on the board of Ferrari. Steve Zadesky, vice president of iPhone product design, who is leading Apple’s car effort, spent time working at Ford earlier in his career. Marc Newson, a well-regarded industrial designer who joined Apple’s secretive design team last year, did a high-profile concept car for Ford in 1999.
4. Retail Network
One of the strengths — and weaknesses — of traditional automakers has been their dealer networks. It’s hard to open up store fronts around the world fast enough to get the scale needed to sell cars. In the U.S., there are added complexities such as state franchise laws that often prohibit manufacturers from selling cars directly to customers.
That’s something Tesla has sought to upend. Rather than selling through franchised dealers, the Palo Alto, California-based automaker operates its own showrooms — which were created by a former Apple executive — and takes orders over the Internet. The approach has drawn the ire of franchise dealers and the automaker has butted heads with dealer groups last year in Georgia, Missouri, New Jersey, New York, Ohio and Pennsylvania before reaching compromises.
Apple, of course, already has a giant retail network through its hundreds of Apple Stores worldwide, from Brazil to Sweden to Turkey.
5. Apple Does Global
The automotive business has a global complexity like few other industries, with regulatory, marketing and logistics issues that can trip up the capital-intense business on any given day.
Apple, which designs its products in California but depends upon contractors to assemble them mostly in Asia, is used to managing an on-time supply chain around the world — something Google Inc. doesn’t do in its day-to-day Internet search business — and handling the complexities of currency swings throughout global markets. CEO Tim Cook built his reputation at Apple for his ability to navigate those global operations.
“That would be a huge plus should they decide to manufacture cars,” Tim Bajarin, president of Creative Strategies, said.
He said he remains skeptical that Apple wants to get into the actual business of selling cars, rather than just moving deeper into creating operating systems for automakers.
“Doing cars is not in Apple’s wheelhouse,” Bajarin said. “It’s more likely they are trying to create a richer, more immersive electronics experience tied to iOS where not only the audio system but the information and possibly new levels of security through sensors and cameras would be part of what they would offer to other carmakers.”
Apple could be creating concepts, or reference designs, to integrate technology to demonstrate to automakers, he said.
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