Speculation about whether Apple will build a vehicle has been a favorite topic of conversation in the tech and auto worlds all year. It’s also dominated the news at some auto shows, without Apple being present.
The rumors have been fanned by comments from Apple execs, the company hiring hundreds of automotive engineers and a meeting with BMW officials to tour its i3 electric car factory In May, it was revealed that Apple made inquiries into using GoMentum Station, a 5,000-acre former Navy weapons station east of San Francisco that’s now a secure testing facility for autonomous and connected vehicles.
Last week, meanwhile, it was discovered that Apple senior legal counsel Mike Maletic met with the California DMV to review “autonomous vehicle regulations.” Then on Monday, The Wall Street Journal reported that Apple’s car efforts were now a “committed project” with an eye on a 2019 ship date.
Apple Picks a Perfect Time
Taken together, this all clearly points to Apple entering the auto industry in some capacity beyond CarPlay and infotainment. Apple has move into other markets before, from portable music players to smartphones, only to redefine and dominate them. Entering the auto industry is complex and expensive (though if anyone can afford it, Apple can), but here are three reasons why the company has picked a perfect time to do it.
- Technology is transforming automotive
Almost from the beginning, automakers have sold vehicles mainly based on horsepower, utility, convenience, and in some cases sex appeal. But that’s changing. Since vehicles within a given segment have largely reached a level of parity on features such as performance, fuel economy, and safety, technology has become more of a deciding factor for consumers. People actually pick a vehicle based on whether it works with their smartphone, or at the very least based their satisfaction with tech features, as J.D. Power surveys have shown. With Apple’s tech and design expertise, an iCar could be a compelling choice for its legions of fans as well as many consumers.
- Shared mobility is the wave of the future
I don’t believe Apple—or Google for that matter—is interested in selling cars. Why would Apple enter a business with slim profit margins, massive regulation, and low-term product maintenance requirements when it’s making mountains of money selling portable devices that become obsolete within a year or so, compelling consumers to upgrade? If you look not only at where automakers such as Mercedes-Benz and Ford are making future bets but also Uber’s foray into building self-driving cars, it’s easy to imagine Apple making autonomous electric cars that can serve as shared mobility in urban areas. And it could have a captive audience for entertainment and ads via portable devices in the process.
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- The auto industry is ripe for disruption
Last year I attended an event at an automaker’s Silicon Valley lab at which it predicted that the automobile will change more in the next 10 years than it has in the last 50. I think it will change even faster. Look at how quickly Tesla has disrupted the lucrative luxury sedan business, and with an EV, which established automakers have struggled to sell. Five years ago, there were many in the automotive industry who doubted that Tesla could successfully bring a car to market, much less sell it directly to consumers and bypass the entrenched auto dealer network and lobby. But the company has proved them wrong, and leapfrogged the auto industry in areas such as EV fast-charging and over-the-air software updates.
If Apple were poised to enter the auto industry five years ago along with Tesla, I probably have been among the doubters. But with the way the automotive landscape has drastically changed in just half decade, there’s never been a better time for an Apple car.
