Apple May Build a Car. But Should It?
Timing may be key to the success of an “iCar”
Titan has risen. Again.
Not your average Greek god, but rather the much deified “Apple Car,” generally referred to as Project Titan.
This has happened every very few years since 2014. Some industry insider gets a whiff of some conversation about Apple’s automotive plans — and off we go. A Taiwanese newspaper recently reported that an Apple Car will be on sale by September 2021. Hyundai also released a statement that it’s in talks with the iPhone maker to build an autonomous electric vehicle, before backtracking from any specific reference to Apple. There’s even speculation on who will build the car. Canada’s own Magna International’s manufacturing arm, Magna-Steyr, has been named as the most likely candidate. (Although new developments point in the direction of Foxconn, the Chinese company that makes iPhones).
Apple’s overall automotive interests are not unknown. It aligns with much of the FAANG club, which has been heavily investing in or partnering with the vehicle industry, one way or another. Alphabet / Google has been developing its autonomous interests with Waymo. Amazon is working with Rivian to build self-branded electric delivery vans. Silicon Valley is right in the thick of the race for connectivity, autonomy and electrification in transportation.
But, it’s one thing to develop technologies around the modern vehicle, and another thing to build an entire one. There’s little doubt that Apple has an automotive unit busy at breaking new ground in vehicle operating systems, battery technology and other advanced vehicle functions. Indeed, Apple already has a bag of neat patents covering in-car virtual displays, smart tinting, vehicle charging, and a few others. (This CNN article lists some of the key ones.)
But the question is: is Apple building, or more importantly, should Apple build a car of its own? How does it benefit the company, beyond short-term spikes in stock valuation, and a big ‘take that’ to new tech-kid-in-town Tesla?
There’s a case to be made for a lineup of Apple cars, purely from a product and branding angle. Apple’s future may hinge on its services but it didn’t get to be the most admired — and valuable — brand in the world through Apple Music or iTunes. The company’s legend rests squarely on teasing poetry out of technology, on creating the perfect blend of design and functionality in its products — iMac, Macbook, iPod, iPhone. Apple has of course done exceptionally well with iterative improvements, and using these products as vessels for its line of services. That’s been the recipe for much of Apple’s profitability in the latter half of the last decade.
But glory fades, products plateau, launch lineups gets shorter. When was the last time anyone got excited about an Apple release?
The immediate future doesn’t look that inspiring either. Other than an expected virtual-reality (VR) headset, there aren’t any game changers incubating at One Infinite Loop.
Unless it’s the rumoured electric autonomous iCar.
Apple has a lot of money to burn. It ended its last quarter with about $79 billion USD of net cash. True, Steve Jobs took many product risks to get here. But it’s one thing to spend R&D and production dollars on personal electronics, but another to sink cash into the development, manufacturing and regulatory headaches of building what will likely be a $50,000+ product.
Of course, Apple may choose to contract out the production, as the current chatter suggests, but it will still have to settle for the low-profit environment of the automotive industry. Does Apple have the appetite? Can it live with a big dent in cash flow? How will the stock market react? I am not sure if it will be nearly as frothy as Tesla because Apple is a 45-year-old company with an enviable financial record, and an automotive foray won’t be kind to that vaunted balance sheet.
Tim Cook could take a different route. He could choose to co-brand with mainstream automakers such as VW or GM for “i” versions of their models. Think iGTI or MacS4 — vorsprung durch Apple technik. The move would allow the company to stretch beyond Carplay and reach deeper into the vehicle. Long-range electrification batteries. Autonomous operating system. UX / UI design. The possibilities are endless.
I foresee a fundamental problem with this approach though. As we know, Apple likes to own its ecosystem. Its identity is rooted in close-ended, parallel environments — it’s the unAndroid or unMicrosoft. Co-branding goes against its DNA. I personally think its DNA should evolve, but I doubt that will fly in the board room (although the rumoured Hyundai tie-up belies this assumption).
Apple could also wait and watch. Timelines on Apple car vary. Reuters reported that the company is eyeing a 2024 release. I think that would be too early. The market will be jammed with new electric vehicle models over the next 4–5 years. Best case scenario in North America: electric car share may jump from the current 2% to 5%–6% by 2025, a number that would still be tool small to meaningfully accommodate so many models. I believe many will die a painful death.
If Apple is seriously targeting an e-car, it should aim closer to 2030. The market will likely settle around this period, with more steady consumer appetite for electrification. Just as Tesla disrupted the premium vehicle market (no, it did not upend internal combustion engines but that’s a story for another day), Apple could re-invent the electric car segment. Just as it did for the smartphone and portable electronics in general.
And just in time for the iPhone 21 Pro.
