Apple Car is for China
Thoughts on Apple Car, Part 16
The New York Times ran an interesting story a few days ago, putting the finger on why China may be poised for adoption of autonomous cars more than any other country.
Here are four key excerpts (emphasis mine):
1. Some argue that conditions in China are actually more favorable for quick adoption of driverless cars, in part because of more aggressive support from the national and local governments.
2. Car ownership has spiked in China, of course. And in recent years, it has become a middle-class status symbol to own a car.
3. But enormous traffic jams in China’s largest cities can make driving a less-than-romantic experience. Why not let a machine built with artificial intelligence inside do the work for you?
4. Research done by the Boston Consulting Group suggests that within 15 years China will be the largest market for autonomous vehicles.
It’s no secret China will be Apple’s most important market
Apple is approaching the point where its home country isn’t its largest market anymore. The US just can’t compete with China’s growth of the middle class, and the market opportunities seem endless there.
Still, all new Apple products launch first in the US, but ramping up distribution in China was the focus of the latest introductions of iPhone (the 6s line launched in China on day one) and Apple Watch. Keynotes have long ago started to talk about China, retail is seeing phenomenal success, and with Apple Watch one could observe the top priority given to the country in terms of marketing and PR efforts.
Soon the world’s biggest country will be the most vital market for the world’s largest company. – The Verge
This implies that the next product category Apple enters will be made for China, first and foremost.
Apple Car is not for the US
As my four takeaways from the NYT piece above suggest, China is better positioned to adopt Apple Car than the US – from a legislation perspective, as well as from a consumer experience and status POV, and finally from a business perspective as the car market expands like nowhere else.
- Governments in China support the idea of autonomous cars based on their own need to drive employment and entrepreneurship in their country, as well as to tackle pollution and mobility issues for its many people. The US is not as incentivized, and Google’s negotiations with the state of California have shown that.
- Cars just now became a status symbol for the middle class, which means they are not as deeply entrenched with the decades of legacy that we have seen in the West for generations. The Chinese may be more open to the idea of giving up driving.
- Traffic jams are nowhere else as bad as in China, which is the second turbo for adoption – this time from a negative experience. While the Chinese middle class is new and explorative to car ownership (positive turbo), they probably have immediately experienced the downsides.
- Finally, Apple does not go into declining markets, but expanding ones. Compare this to the state of the smartphone market in 2007. Opportunity. They can bring something new to the table.
Tesla is not for China
Although we don’t know the geographical split of Model 3 preorders, Tesla’s offering is rooted in the legacy mindset of the car industry – mostly from a product design and experience perspective.
Two of my favourite analysts, Ben Thompson and Neil Cybart, have agreed in their subscriber emails this week:
Tesla’s amazing feat of preorders for Model 3 is actually a key indicator for Apple that there is tremendous interest in new mobility products from premium brands.
This for the US, and one can only wonder what that would look like in China.
