Unless you’re Seth Weintraub, the idea that Apple would more likely develop a car than a search engine would have been controversial — as shown above, even The Onion-level comical — 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 Different
Under 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 — 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 — 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 — 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 — a Jobs-caliber aim, perhaps beyond the typical Jobs budget — 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 — a dogfooding company if ever there was one — 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 — and that Apple is still actively hiring for it — 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 — 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.
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An article from last year; http://www.wired.com/2014/02/teslas-giant-battery-factory-save-apple/
“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.”
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
I would trust an Apple car. I love the idea of a self driving car. As far as Apple maps I have not run into any issues that would make me think twice about the operation of the vehicle. In recent cases I have seen it be more up to date then Google maps when my brother in law was using it.
We’ve yet to conclude that Apple’s first car will be self-driving. That Apple may be researching autonomy with regards cars by no means indicates their car will be in any way autonomous. Let them first just sell an battery powered car with great range and a great user experience. Self-driving can be part of car versions 3 or 4.
I think it all comes down to your point D. Who is going to afford an Apple Car? Not most people and ones who would be able to would rather be seen in a luxury vehicle brand with history or prestige not a tech companies side project. Middle America can afford a slightly more expensive iPhone they cant afford a 4 to 5 times more expensive automobile.
What about the statistical failures all car manufactures face, failures occasionally result in death s on the road. Suddenly ‘Apple Care’ seems like a cruel and bitter irony. The usual question; how many deaths before action is taken? Can you really see Apple applying their name into that question?
Five Reasons:
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.
1. NO. (this is self explaining)
2. well, maybe
3. no. it’s not loosing it’s charm and Apple will be successful in the market for 10 years at least if they don’t do anything completely ridiculous (which they are not known for), because they are “the” premium phone company, the “fashion” phone company and even with huge fallbacks (e.g. the years-long lack big phones) they are unstoppable
4. see 3, it doesn’t “really” matter and I’m sure apple is working on new products with relatively big improvements like last years TouchID in the 5S
5. did you see anything not working properly on the AppleWatch? EyeGlasses are not the future, they will never be the future, because nobody wants to wear them, they are, sorry for the word but, pure shit and even google got that by now. Technology small enough for contact lenses may change that in a far future…
Interesting takes. I personally think an Apple car is in the same category as an iPhone with sapphire display – not going to happen. I think Appple is developing something to be used with existing car manufacturers vehicles, that would explain them hiring people from those industries that would be more knowledgeable about how to integrate the tech with the cars.
So they are going to replace the transmission in your car? No!
Yet they have hired many people who’s only talent is creating innovative transmissions.
That doesn’t fit into your theory, does it?
The fact that Uber and Google are chasing this is very telling.
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.
Excellent analysis!!
The car is the next mobile computer. We know a lot about making cars, and modern robotics can make incredible cars very quickly. It’s not far-fetched all, in-fact it makes perfect sense. I expect Apple will make a car, will disrupt the industry, and will sell a LOT of them all over the world.
Oh, and the best way to improve Maps? Have you own cars on the road being driven by normal people in normal conditions.
Apple needs to find new product categories that really move the needle in terms of sales, difficult for a company that should exceed $200 billion in sales this year. They also need to maintain their very high margin.
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 am ready to buy one.
It seems that one of the possible reasons Apple thinks the car market is attractive is that they see similarities to the electronics market in terms of manufacturing. There is clear overcapacity in the car market and so just like PC manufacturing moved from in house to 3rd parties, I am guessing Apple sees the same happening with cars. By outsourcing manufacturing of cars, Apple can focus on what it does best, design, and leave the heavy lifting to the existing manufacturers.
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.
Apple needs a new cashcow:
The mobile phone is so powerful that it will take over the functions of other devices, you will soon just need a cheap shell that connects with the mobile phone. At that time, there are a lot of hardware revenue away. Apple knows that and put therefore now full to paid services like beats, iPhoto, Icloud ect.
The car can be the new hardware for Apple and the new cashcow. They will have to or they go the Nokia way.
Add this to the list of Apple Products that i’ll never need. I’ll just grab the train. It’s easier and cheaper anyway.
Stop talking about autonomous vehicles. It’s a stupid fantasy not happening for decades.
Apple’s car will be a nice electric car. That you actually have to drive.
You’re insane.
Mercedes S class can drive itself in rush hour traffic. The technology is here. It’s a matter of scaling it and making it more inexpensive. You don’t need 100% of autonomous cars communicating with each other for it to work. They just need cameras to see where things are and sonar/radar to detect distance (and therefore speed). Not incredibly crazy technology.
Every 5 years a revolution. 2020 car. 2025 autonomous robots. By then, the phone and watch will be as commodity as a current iPod.
I mostly agree with Jeremy, but… a car isn’t just a multimedia system, seats and an engine on top of wheels.
Sure, Apple might make it more like a Mini competitor (lifestyle kind of car) rather than a (Lotus) Elise competitor. I don’t see them going straight for the sports / luxury / “long range” vehicles (segment D and above), where other manufacturers have decades’ worth of experience, but I think they’ll focus on (sub)urban solutions (segments A or B, maaaaaybe C). This is where their (current) technological prowess and branding will shine the most. Everyday commuters.
My guess is they’ll be partnering with a proper car manufacturer for the actual car building process and maybe co-brand it with them, much like BMW and Kawasaki have partnerships with Kymco in the motorcycle world.
My views on an Apple Car? I’ll piggy back what @Israel Anderson mentioned in his post…fully agree.
@Jeremy, I know it’s not the point of the article, but I wouldn’t be so quick to dismiss Apple’s development of a search engine. I just think they are doing it quietly and slowly through the back door. Spotlight is getting more and more powerful each year. The internet is changing rapidly. It is not just indexed web pages anymore. I’m not trying to claim anything definitively, but I think Apple is very methodically and coyly marching in that direction.
They purchased several search related companies (albeit in the name of improving iTunes/App Store search) and could parlay that over into “web search.” I use the quotes because I think web search as we know it is over. Apps, connected devices, etc. are the internet. Searching and indexing those will be as important as indexing web pages.
Since I’m already on a tangent, I’ll flow in to the next one. I’m really interested in the relationship of the browser and the operating system. It seems that Apple and Google are both blurring this line, but from different angles. Google seems to want to bring the OS into the web browser and control things from there. Apple seems to want to bring the web browser into the operating system to gain the control. It’s interesting to watch. I think Spotlight is a catalyst for Apple to blur this line. Webpages becoming Apps is another way the OS and browser are converging. Misdirected rambling out.
My opinion… the Chinese beat everyone to the punch. They have no entrenched incumbent automakers to worry about, they already produce most of the batteries and they just acquired A123 and Fisker.
Maybe this is something a bit different? Apple has a hudge problem with maps. Mapping the world is a giant work. Why not developp a limited apple car, which is offered or rent to selected people, a car whicg^h would integrate a mapping system as the one seen ont eh vans, sending anonymously the data to Apple? That’s my idea…. :)
I don’t think the Apple Car is for consumers, instead it’s a highly efficient physical goods delivery systems. Kids are going to love chucking rocks and snow balls at these autonomous vehicles.