Will Apple build a car?
In Dec 2020, we started hearing more reports even from verified sources that Apple is planning to release a vehicle in the next three to five year with Reuters reporting Apple targeting car production by 2024. But this was not the first time the rumours about Apple’s plan to build a car have surfaced, there were rumours about a secret project of apple named “Project Titan” aimed to design and build a vehicle of its own from scratch. But the present rumours are more certain and are being speculated widely than ever before.
Apple has a legacy of disrupting and changing the whole industry with their innovation, be it with their iPhone or iPad or even the now obsolete iPod, they were able to innovate in a way that changes the market and able to differentiate their product from those of its competitors.
But the car industry is a different ball game altogether, as reported by CNBC, the global auto and mobility market is valued at $10 trillion, where the Apple’s smartphone market cap will only be a fraction of the car industry. With this in mind, Apple with its huge cash reserves and a great brand, will they be able to change the automotive market? Let’s dig deep into various hurdles and the strengths of Apple in overcoming those to make an entry into the automotive industry.
What will the Apple car be like?
Apple products are known for its seamless integration of both software and hardware experience, with product design that distinguish themselves in the market. There is a lot of speculation in the air trying to figure out what an apple car will look like, will it follow the same materialistic design of MacBooks and iPhones?
One breakthrough technology that Apple is working on ,as per the Reuters report ,is that they are working on a technology that will revolutionise the battery technology. One major development area for an electric vehicle is to develop a battery technology that provides better mileage and less charging time, solving these issues will help Apple to make a grand entry to the market as it has done for other products.
Apple products are known for its single use and being not so repair friendly, Apple’s strategy on this will be important as cars have more moving parts and a lot of things can break down. One of the important drivers of car sales is the after sales services and being able to repair vehicles using third parties. Making a product that is not so repair friendly will make the path difficult to follow for Apple, and they will have to develop a solution that provides more efficient after sales service and to allow independent third party repair solutions.
Unlike smartphones, vehicles have an average life of 10 to 15 years, people will not be replacing cars as frequently as smartphones, Apple cars should be appealing to the mass market not just catering to few peoples taste. They can also choose to build a modular car which allows them to swap car parts with upgraded ones which can help them to build a loyal customer base and constant source of income. With the current business history of Apple that is something we cannot expect in the near future.
They might be choosing for a model Tesla chosen by going for the upper end market with releasing high priced sports vehicles and this allows them to innovate with minimum risk as someone who is paying such a high price won’t mind some flaws unlike mass released will have the risk of recall and PR nightmare.
How will Apple build its vehicle?
One of the important questions that is puzzling the Apple car enthusiast is how is Apple going to build its own car, will they be outsourcing the production? Or will they be building it their own by buying up existing car companies?
Hyundai has confirmed that Apple has approached it and other companies about producing the Apple Car. Such advanced talks are indicative of outsourcing the production, which is similar to Apple’s current strategy which allows them to focus on the designing and marketing. This also will allow Apple to leverage these partnerships to enter different geographical areas helping them to bypass the potential threats on entry. They can also choose different partners for different locations allowing them to avoid various regulatory hurdles and also reduce the time to market.
How will existing players react?
EV are the future mode of transportation, with self-driving features and fast charging will be the most sought out features (for the foreseeable future). With Apple entering into the automotive business and introduction of electronic vehicles will bring major changes to the automotive industry. There will be huge disruption in the auto market and we will be seeing various restructuring and mergers between existing companies.
