Apple analyst Ming-Chi Kuo has a good (if imperfect) track-record, but his latest note – in which he predicts that an Apple Car will go on sale sometime in the 2023 to 2025 timeframe – needs to be viewed in rather a different light to his usual ones.
Kuo has excellent supply chain contacts, giving him good insight into Apple’s short- and medium-term plans. Once a product is actually in production, the complexity of Apple’s supply chain means it’s hard to keep secrets.
But even before volume production begins, manufacturing lines need to be set up, molds need to be created, test-runs need to be carried out. So suppliers will be in a position to know a lot about Apple’s medium-term plans, and Kuo’s contacts can begin feeding him solid information …
However, his latest investment note looks far further ahead – and strikes me as far more speculative in nature. I don’t think Kuo is basing this one on solid supply chain reports so much as speculating about Apple’s strategic direction.
He’s perfectly entitled to do this, of course, as any of us are. But I don’t think his name, in this case, lends the kind of weight it usually does.
2023 is five years away. 2025 is seven years away. These are not timescales where supply chain reports tell you anything at all about Apple’s plans. This note is a pure op-ed on where Kuo posits theories about what Apple might be considering and why.
We can see this from the wording.
The reasons for this are as follows: (1) Potentially huge replacement demands are emerging in the auto sector because it is being redefined by new technologies. The case is the same as the smartphone sector 10 years ago; (2) Apple’s leading technology advantages (e.g. AR) would redefine cars and differentiate Apple Car from peers’ products; (3) Apple’s service will grow significantly by entering the huge car finance market via Apple Car, and (4) Apple can do a better integration of hardware, software, and service than current competitors in the consumer electronics sector and potential competitors in the auto sector.
All of these things are true, and form a perfectly valid basis on which to argue that it would make sense for Apple to make a car. But none of them amount to the smallest piece of evidence that it will do so – let alone by a specific date, or range of dates.
The evidence that does exist is inconclusive. Clearly Apple has hired a great deal of automotive talent. Clearly the company is experimenting with self-driving car technology. Clearly it has a keen interest in the sector.
It’s true, too, that some of the objections to Apple entering this field are weak. Some have suggested that setting up an entire car manufacturing operation from scratch would be a massively complex undertaking. Well, yes, it would: but Apple is a massive company; Tesla has demonstrated that it can be done; and Apple could take the same approach it does with its existing products, and use contract manufacturers. So making an Apple Car is certainly eminently possible.
But it would also be a massive gamble. Even for a company of Apple’s wealth and experience, there are so many things that could go wrong, and in ways that would risk the company’s most valuable asset: its brand.
I think it would take a phenomenally brave CEO to put everything on the line in that way – and while I’m an admirer of many of Tim Cook’s qualities as a leader, he doesn’t strike me as having the personality or personal ambition to take that great a risk.
My view remains that Apple’s most likely play here is to create a kind of HomeKit for cars. The ultimate version of CarPlay, if you will.
Apple could do what it does best: create a fantastic user-interface, which – like CarPlay – would be available as an option for existing car brands. Apple’s platform could control everything from the app interface to the car to controlling the self-driving car features.
You could get into a BMW or a Mercedes or a Buick or a Honda and deal with one, Apple-designed interface. Apple’s system would have heated or cooled the car to your preferred temperature before you got in. It would know where you are going, from your calendar, and know the address, from your contacts. It would know the playlists of music or podcast you like to listen to on this type of journey. It would know the lighting you like. It would adjust the seats to your preferred positions. In short, Apple could be in complete control of your in-car experience.
‘Never’ is a long time, so I won’t say that Apple will never manufacture a car. But if we’re talking 5-7 years from now, I think we are very much more likely to see an Ultimate CarPlay approach than an Apple-manufactured car.
What’s your view? Do you think I’m right, or do you think Kuo is on the money? As ever, please take our poll and share your thoughts in the comments.
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