There’s been much speculation over recent weeks that Apple are ramping up to enter the car market. The best guess scenario to date is that they will produce an electric vehicle around 2020 under the codename ‘Project Titan’, possibly shaped like a mini-van, that will compete with Tesla & GM and that it will be autonomous. We’ve blogged about autonomous vehicles before (here and here) and it would seem they are literally just a few years away with many of the systems already implemented in current high end vehicles.
Does it make sense for Apple to enter the car market? What is the game plan? Certainly they have the war chest to do so being the most successful company on the planet but the vehicle market is notorious for slim profits even in good times and in bad times the picture normally turns grim. Apple products as we are all painfully aware are not exactly on the cheaper end of smart devices with very healthy (some would say rip-off) profits.
Vehicles however in the not too distant future will be hi tech devices that happen to have four wheels. That’s already the case with the Tesla Model S where updates to the vehicle provide additional capability and do bug fixes – just like computers and smart devices do. Schedule your update and let the software take over to provide the latest version. That is exactly how it works. From a future tech perspective consider the Apple car as an i-device that happens to have wheels.
When you look at it that way it makes more sense. An Apple icar comes to pick you up having been summoned from whatever smart iapp you installed and you tell it where to take you. During the journey with all that time on your hands and no need to even watch the road, what will you be doing – getting iconnected of course. So is the end game a way to ensure Apple doesn’t hand that space to the likes of Google (who already have an autonomous electric vehicle)?
No one is quite sure what the plan is at this stage but we do know that Apple has been on an aggressive poach of battery maker A123 Systems employees. A123 Systems are so peeved about the way Apple has gone about things that they have brought a lawsuit against the company that is quite revealing. Not only have Apple been after A123 employees they have also been targeting battery personnel from the likes of LG Chem Ltd., Samsung Electronics Co., Panasonic Corp., Toshiba Corp. and Johnson Controls Inc.
It also seems that Apple has been hiring experts in robotics (think production line assembly) and Elon Musk stated recently that they have been trying to lure employees from Tesla (unsuccessfully it would seem despite the enormous cash incentives).
The thing about vehicle manufacture however is that it is not easy. The complexity of a new car company from scratch means it takes about 10 years to get a car to market. Apple it seems wants to do that in just 5 years. That would mean they would have to partner with an existing car manufacturer – possibly one in China.
It could also mean however that they simple buy the most advanced electric car manufacturer in the market and make a play for Tesla over the next 2 years. Tesla is currently valued at $25 billion. That’s loose change in the Apple war chest. They would of course come in with a bigger offer and a figure of $75 billion to buy out Tesla has been heard on the streets. 
Having built the most futuristic and fantastic production car on the planet, would Elon Musk hand his baby over to Apple? Anything could happen when the Gigafactory comes in to production and already 30% of that production is earmarked for home battery storage. With the alignment of Elon’s cousin Lyndon Rive at Solar City (where Elon is chair), will the serial entrepreneur move his sights more to the energy business and his mission to Mars?
With these disruptive technologies on the near horizon, (solar energy, home battery storage and autonomous electric vehicles), it must be said we do indeed live in interesting times.
Apple products sell well now because of their desirability relative to other devices. Desirability is a multi faceted phenomenon but includes that perfect blend of functionality, design, build and quality. Apple know this and how to present this emotional draw card better than most companies. The picture above of an Apple ‘iCar’ gives a good example of what may be expected. As mentioned in the blog, they also have the means to undertake almost anything they plan and can clearly see how EV architectures are the foundation upon which their new interconnected operating systems for autonomous cars will further disrupt and take profit away from the traditional automotive segment. Tony Seba, in his new book “Clean Disruption of Energy and Transport” (an essential and fascinating read) talks about the autonomous car as a service. His key point is that cars sit idle most of the time with an abysmally poor cost/benefit ratio for such an expensive asset. With driverless electric cars, such an asset could be utilised twenty hours or more per day instead of the current two hours or so. This will grossly enhance the cost/benefit ratio and open the way for innovative and highly lucrative business models, providing mobility-on-demand at a much cheaper cost than incurred through personal ownership as current business models assume. The car will become a service instead of something you own. Customers may choose a plan to suit their transport requirements in the same way one choses a mobile phone plan. You may pay up to $200 per week for this service BUT this is actually going to be cheaper than the current ownership – without the hassle and without any upfront costs. The flow-on effects are phenomenal: – No need for huge car parks; No employment for taxi or Uber drivers(unfortunate but real): fewer accidents as autonomous cars have centralised learned intelligence – the safety and navigation systems get smarter over time. Thus reduced death and injury rates; reduced medical expenses; reduced insurance costs. Less traffic congestion as autonomous cars can travel closer together, are better coordinated and parking will not congest local streets. Less wasted time for businesses in that more business can be done en route. Reduced government revenues via traffic infringement cameras: architectural and town planning priorities will also change.
The EV is only the start of the disruption – the FULLY AUTONOMOUS EV will be the biggest game changer. Seba predicts the transition to be complete by 2030!!!! But consider this .. as soon as a company offers such a service through a fleet of autonomous electric vehicles (and this will be a more cost efficient and profitable business model than current cab companies manage as no driver needs payment) why would someone fork out a small fortune to own a car that they use so infrequently if the new service enables a person/s to go where they want, when they want, more safely and at a relatively reduced overall cost?
I enjoy driving and love electric cars, but as I reflect most people similarly used to enjoy horse riding – until they didn’t need the horse!
Please note that most of these predictions are originated by Tony Seba in his new book “Clean Disruption of Energy and Transport”
Hi John – haven’t read Tony Seba’s book but have it on my reading list now. I couldn’t agree more with the sentiment however. I blogged about the end of car ownership over a year ago http://myelectriccar.com.au/car-ownership-dead/ with the advent of driverless cars. It just makes sense. The disruption to industries supporting individual ownership, petrol/diesel vehicles and owner driver vehicles will be immense. With the advent of the motor vehicle many industries associated with horse carriage were made redundant or had to make significant changes to adjust to the new conditions. It will be just the same with autonomous electric vehicles. I don’t think people fully grasp the scale of this revolution that is currently under the radar but about to emerge over the next few years.
I agree – people don’t seem to be able to imagine the change and how quickly it will occur. Many will look back and think ” there was a great opportunity I wish I had invested in” . The video on your blog regarding the EV rental businesses in China show just one simple example of what is already happening now on a large scale in other parts of the world. I think Australian culture is sometimes very insular, not because we as a nation don’t want to know about these things but because, unless one travels widely and has an open mind to such innovations and opportunities, then we are never informed. “Keep the people in the dark so they won’t know what they are missing; so they won’t challenge the status quo too much”. Cynical old bugger I can be, sometimes eh!