Apple is building an electric car. Apple has 1000 engineers working on the project. Apple has made important hires from Ford, Tesla, and other automotive companies. Apple aims to have the car on the road by 2020.
Given that Tim Cook has stated that Apple is doubling down on secrecy, I’d have to say, on the surface, Tim, it’s not working.
Or maybe Mr. Cook and company have decided to have some fun with the rumor mill. Given the sheer number of leaks, and the detail, it stands to reason that these are controlled leaks, and Apple is the source. If true, the question becomes why?
What’s the endgame?
If, indeed, Apple is the source of these leaks, what is the fruit-flavored company hoping to gain here? It might be one of several things:
- Apple really is building a car and wants the world to know it is not only thinking different, but thinking big.
- Apple wants to buy Tesla, and is attempting to strong-arm Elon Musk into selling.
- Apple is getting into the auto equipment business.
Apple has a tremendous track record in entering and, eventually, conquering new markets. Digital music players. Mobile phones. Tablets. And, next up, wearables, starting with the Apple Watch. If any company could disrupt the automotive industry, Apple could do it.
On another front, there were rumors some months back that Apple was buying Tesla, and those rumors continue to crop up from time to time.
From my viewpoint, at least for the moment, the third option is the most plausible. I think it makes eminently more sense for Apple to build systems that go into automobiles (and other vehicles) built by other manufacturers. And this approach could certainly explain the recent spate of hiring that Apple has reportedly done.
Why Apple might not be building a car
Let’s start with the number of cars that are built on an annual basis. In 2014, reports have suggested 88 millions cars were built worldwide. Several things to consider:
First, when you take into account the multiple car makers out there, were Apple to join that market, the company’s share of the pie optimistically would be only a fraction of that 88 million. This could be a relatively small opportunity, when you consider that Apple sells 200 million iPhones a year.
Second, profit margins are low in the auto industry, around 2–8%. Apple averages almost 40% gross profit margins on its current product line-up.
Finally, there are a plethora of legal requirements and restrictions on auto manufacturing, which vary from country to country. It’s a complicated business.
But, let’s return to our third scenario. In addition to steel, plastic, nuts, bolts, and mechanical systems, automobiles are made up of multiple electronic and computerized components and modules. Devices.
And who is the preeminent device maker? Well, you get the picture. Let’s take a look at some possibilities.
In theory, there’s a multitude of keyless operations one could do with an iPhone. In addition to lock/unlock and remote start, how about disabling/enabling the car entirely? A handy feature should your car get stolen, or even as a way to prevent theft.
How about locating the car? Ever park in a mall parking lot and on your way out forget where you parked? That’s a good one for this aging brain.
I’m sure there are other possibilities…setting the temperature, turning on the defroster, pre-adjusting seats, mirrors, etc. for driver and passenger.
Navigation and connectivity
Apple’s Maps fiasco a few years ago notwithstanding, the company has made enormous strides in the maps and navigation capabilities of its mobile devices.
Lately, there have been a number of reports (for example, here) of minivans all over the country with what appears to be street mapping equipment strapped to their roofs. Reportedly, these minivans are leased to none other than Apple, Inc.
Navigation systems in cars are almost standard equipment, except for the low end of the market, and it certainly appears as if Apple is extending its capabilities here.
Further, navigation systems require connectivity to a mother ship somewhere. OnStar is one such provider, but Apple also could very plausibly play in this space, offering onboard GPS as well as cellular connectivity.
Music and media
And connectivity to the Internet while on the road adds a lot of other possibilities.
In 2014, Apple introduced CarPlay at it’s worldwide developer’s conference, and later in the year, we began to see it as an option from a number of auto and aftermarket manufacturers.
Apple undoubtedly will continue improving and expanding on the CarPlay platform.
One of the company’s advantages in this area is its ability to upload updates to existing systems that fix bugs, improve performance, and add new and improved functions.
Connectivity in the car would help that. I can also imagine iCloud connections where media (music, videos, games) stored in the cloud could be accessed in the car.
Diagnostic, safety, and environmental systems
When we go to have our cars inspected, as mandated now by many states, the inspection operator typically has a computer on wheels that he rolls up and connects to a computer system in your car. He initiates a process that diagnoses your vehicle to make sure it’s up to standard. The progress rolls by on a rather crude CRT display in dot-matrix print.
I could envision Apple modernizing this capability with iPads connecting to an Apple on-board computer through Bluetooth LE.
Easier for mechanics, programmable on a state-by-state, region-by-region basis, and less expensive.
In addition, we continue to see cars being outfitted with all kinds of sensors and environmental equipment. When you consider all the systems that Apple is building into its iPhones and iPads—motion detectors, gyroscopes, GPS, etc.—this is another area that the company could excel in.
A few other thoughts
When Steve Jobs was running Apple, his second-in-command was none other than chief operating officer, Tim Cook.
In that role, Cook developed Apple into the manufacturing logistics and inventory gold standard, and as CEO, Cook continues to refine Apple’s processes in every conceivable area. These efforts have not only saved the company billions of dollars, but have also diminished the capabilities of its competitors.
In addition, Apple has nearly $180 billion in its war chest. Like few other corporations, Apple can afford to invest far and wide in new products, industries, and markets.
Hey, maybe Apple is going to build a car…