Unless you’re Seth Weintraub, the idea that Apple would more likely develop a car than a search engine would have been controversial â€" as shown above, even The Onion-level comical â€" two weeks ago. That’s changed. Following public sightings of Apple-leased vans that looked a lot like street view mappers, numerous reports have substantially confirmed that Apple’s working on an electric car, quite possibly a self-driving car. Blessed with great insight (and sources), Seth already highlighted some of the big picture reasons Apple would get into the automotive industry before most people had accepted it as reality.
Now that the dust has settled, and even non-believers are acknowledging that an Apple Car could be coming in the not-too-distant future, it’s time to look at the big picture for Apple and the automotive industry. Below, you’ll find five big reasons the Apple Car is happening, as well as five big potential issues worth considering.
Here’s Why The Apple Car Is Happening
1. Apple’s Actually Thinking DifferentUnder Steve Jobs, Apple remained a computer business even after the word Computer dropped out of the company’s name. The iPhone was a computer in your pocket, the iPad a computer for your sofa, and the Apple TV a computer for your television. Even the Apple Watch, a project started soon after Steve’s death, is a computer for your wrist.
Apple’s decision to develop a car is not as simple as saying that computers are ubiquitous, inside basically everything at this point, so “why not a car, too?†Developing a car is a huge undertaking, requiring even more engineering, safety, design, marketing, and retail talent than Apple already had â€" arguably an entire second company worth of highly specialized people. This isn’t a project that happens on a lark: it is a deliberate, bold statement that Apple isn’t going to be constrained to making products that can be carried around. Whatever you think about the sanity of Apple taking on something this huge, it certainly doesn’t lack either ambition or confidence.
2. The Auto Industry Is Ripe For Disruption
Years ago, some fairly high-level people at Apple told me that working with the auto industry on car integration solutions was a nightmare. The cars produced today were by and large designed six to seven years ago, a lag that has given automakers plenty of time to transition their concepts from clay models into manufacturable components and finished products. That timeline doesn’t work for technology companies, particularly Apple. Someone at Apple has already developed an in-car iBeacon system to automatically open your garage rather than requiring you to press a garage door opener. But it’s probably sitting on a shelf because car makers won’t be ready to implement it until 2020.
Apple loves going after profitable, slow-moving targets that don’t think it has a chance of disrupting their industries. Even if Apple’s development efforts fall a year behind, these companies are the least capable of changing course in time to stop Cupertino from making another big dent in the universe. And Apple has a real chance of changing the world here.
3. The “Center Stack†Is A Mess
The portion of your car’s dashboard that contains a screen is called a Center Stack, and if you haven’t already noticed, it’s a trainwreck. Old resistive screens, map technology that hasn’t substantially changed in a decade, and menu after menu of buried options â€" it’s no wonder that people would sooner use their iPhones in the car than depend upon the car for mapping, entertainment, or communications. Apple has known all of this for years and been forced to cooperate with less capable software and hardware companies just to get iPhones to work in (most) cars.
At an absolute minimum, Apple’s work could lead to a hugely better center stack experience for users â€" radically simplified in-car environmental controls that coordinate everything from music and communications to temperature, ambient noise, and the display of maps. But Apple doesn’t appear to be aiming that low. The people it’s hiring have expertise in the mechanical systems and industrial designs of cars. Sure, all of them could be tied into a radical reengineering of the center stack, but most of the expertise is a lot too specific for that. Apple’s CarPlay team reportedly consisted of one engineer and one manager; you don’t need an army to build just a better in-car computer.
4. Electric Cars Have Created An Opening
This one almost goes without saying, but the automotive industry is in the midst of a historic pivot away from gas engines to partially and fully electric vehicles. Change is coming, and fast, presenting a one-time opportunity for companies with the right combination of technology and money to become major players in a historically chummy business. Apple has so much cash on hand that it’s been literally taking advice from shareholders about how to give it away. This is a chance to leverage those dollars for a better purpose.
5. Autonomous Vehicles Match Apple’s Simplifying and Quality of Life Philosophies
Apple’s defining philosophy during the Steve Jobs era was to make complex things simple. Tim Cook appears to be expanding that theme outwards, suggesting that Apple is here to improve the quality of peoples’ lives. Making a car easier to drive and enjoy riding in would have been a pretty big step forward â€" a Jobs-caliber aim, perhaps beyond the typical Jobs budget â€" but a car that can drive itself goes past that into the realm of near-utopian, science-fiction fantasies. If a company with no automotive track record like Google can chase it, so can Apple.
Five Big Apple Car Issues To Consider
A. Who Is It Going To Be For? Historically, Apple products were expensive, and there are very few examples where the company has actively chased the lowest end of a market it’s entered. Moreover, Apple’s recent hires for its wearable division have substantially been experts in selling and marketing luxury products, signaling a potential shift away from the days of $149 iPod nanos towards not-terribly-dissimilar $349 Apple Watches.With multimillionaire executives whose taste leans towards ultra-premium cars, it’s hard to imagine Apple â€" a dogfooding company if ever there was one â€" releasing a popular but typically dowdy minivan, or a tiny, cramped car designed to milk maximum power from a rechargeable battery pack. Tesla’s initial focus on upscale vehicles must have been inspirational to Apple here, but who knows what form the first Apple Car would take, and who it will be targeted towards?
B. Is It Ever Really Going To Happen?
Apple’s projects tend to take years before coming to market, and the company famously says no to a thousand things for every yes. That this many people are apparently working on the project â€" and that Apple is still actively hiring for it â€" suggest that this project got a big yes and isn’t getting shut down over small hurdles. But there are a lot of steps left to take before a car comes to market, and the timeline for release is certainly years (plural) away, at the earliest.
C. What About Apple Maps?
Pointing to a widely-publicized though arguably trivial iOS app screw-up might seem like a cheap shot to take at the future of a self-driving car, but the core of any Apple-developed autonomous car would be an Apple-designed navigation system reliant on Apple-sourced maps. Even today, years after Maps first debuted, a very substantial number of iOS and Mac users ignore it in favor of Google Maps. Most of the Apple Maps app’s and service’s roughest edges have been repaired, but the messy launch hasn’t been forgotten, and Apple’s going to need to show that a self-driving car is on much firmer ground.
D. What Sort of Sales Potential Does An Apple Car Actually Have?
When you consider various pricing scenarios for a first-generation Apple Car, it’s clear that initial sales aren’t going to be huge â€" and Apple’s production capabilities probably will be limited, as well. Over the course of the Roadster’s lifetime, Tesla sold fewer than 2,500 of its first car, though the price tag was over $100,000. The subsequent Model S has sold a total of roughly 57,000 units with a starting price of roughly $60,000. These days, Tesla has announced $55,000 and $35,000 cars as its next two steps.
Compare that with Ford’s Focus, the best-selling car in the world, which now sells over 200,000 cars every year. The base MSRP is around $17,000. Despite the fact that Focuses are safe and entirely adequate vehicles for millions of existing customers, it’s a safe bet that Apple’s not going to attempt to compete with that sort of pricing for years.
E. Will Apple’s First-Gen Track Record Mean A Particularly Slow Burn?
Apple’s track record with first-generation products is decidedly checkered, and it’s widely understood that the original MacBook Air, Apple TV, and iPhone had some design and manufacturing issues that required substantial changes; each went on to much greater success in subsequent generations. Sensing a similar potential for issues with the upcoming Apple Watch, many people have said that they’re planning to hold off and see what comes next.
But even that checkered track record most recently includes some major first-generation hits, notably including the iPad and iPad mini, which had no serious defects after launching (even if they did get substantially better only a year later). Moreover, most people are using the third- or even seventh-generation versions of Apple’s products at this point, and have such hugely positive impressions of their MacBooks, iPhones, and Apple TVs that past versions are practically ancient history. It’s safe to say that there will be enough people interested in an Apple Car that concerns like these won’t stop it from being a success, at the right price.
Readers, what do you think? Is Apple going to release a car? When? What segment of the market would it likely target for the first release? Share your thoughts below.
Apple’s electric car plans
Reuters: Apple’s electric car is ‘all about autonomous driving’, Apple is in talks with automotive suppliers
“Earlier this month, as rumors swirled that Apple might want to buy Tesla, San Francisco Chronicle reported that Tesla CEO Elon Musk had indeed met with the iPhone maker. Musk later confirmed that Tesla and Apple had talked, but he wouldn’t say what about.â€
I am sure I read more articles about some sort of Apple/Tesla deal with the new Nevada Gigafactory but I can’t find them
1. It seems that Apple has a better battery on its hands and wants to sell it as cars instead of phones.
2. Current traffic problems might be solved only with autonomous cars.
3. Mobile market is loosing its charm since anybody can produce almost similar products.
4. Nothing interestingly new can be added over current smart-phone tech.
5. Smart watch, eye glasses, etc. tech needs 3-4 years to work properly.
Yet they have hired many people who’s only talent is creating innovative transmissions.
That doesn’t fit into your theory, does it?
When my car can drive itself, and presumably without anyone in it, all sorts of opportunities open up within the software ecosystem. Apple may price the car at $30,000 (the average price of a new car today) but that car might easily earn back it’s monthly payment if I make it available to hire / hail as an operator-free uber vehicle. Imagine signing up for Uber by downloading the app to my center stack, assign the times it’s available (while I work and sleep) and let it do it’s thing. I can hail it back or take it offline any time when I want to use it. Now instead of that car costing me $30,000, it has earned me $36,000 in 3 years. Apple will take their cut of those transactions either via standard Apple Pay transaction fees or some other network-operator or 70/30 CarPlay app store commission.
Now electric cars are available to everyone, anywhere, transport is safer, more efficient and better for the environment, car ownership is not as necessary or burdensome and Apple profits like a maniac.
And that’s just one potential app. Nevermind that these things are each one giant roving sensor uploading real-time data about user transport habits, traffic, weather, 3D mapping radar and imagery, like Waze on steroids.
Oh, and the best way to improve Maps? Have you own cars on the road being driven by normal people in normal conditions.
To my mind the Mini with about 300,000 unit sales per year would seem a likely target market for Apple. Were Apple to sell 300,000 units year one at, say, an average of $40,000, that’s still only $12 billion in sales, maybe 5% of Apple’s total likely annual sales at that point.
BMW, Mercedes and Audi each sell in the range of 1.5-2 million cars a year at an average unit price in the $40-50,000 range. Could Apple sell 1,000,000 cars a year at $40,000 for a total of $40 billion? Possibly. But that would still only add maybe 15% to their sales.
All back of the envelope navel gazing, but I don’t see the potential for seven figure sales at much above an average $40K ASP and I can’t see Apple very profitably selling an EV for much less.
PS: Ford sells over 1 million Focus models yearly, not 200,000.
I do wonder if they are up to the task though. Apple is the company that told its users that they were holding the phone wrong in 2010 when they had antenna issues. And Apple Maps is still subpar app even after 2.5 years.
The other issue is that cars are significant purchases that are meant to last a decade or more, vs Apple’s iOS 8 update made my iPad 2 almost unusable. I may upgrade my iPhone every two years but I am driving an 11 year old vehicle and plan on driving it for at least a few more years. And how does Apple plan on servicing my vehicle? Just seems like this is a bit of a reach given Apple’s competencies.