Apple wants the auto industry to build its car, but it isn’t interested in sharing the profits. Here’s how it’ll get out of the stalemate: Apple used to be famed for its ability to surprise the world before their product introductions leaked like a sieve. From the PowerBook G4 in 2001 through the Apple Watch in 2014, the company’s keynote speeches have been peppered with important announcements. But how plausible is it that Tim Cook will make another announcement at a future Apple event, this time revealing an automobile behind the curtain? It’s a rumour that’s been going about for years, and it’s recently gotten more traction. According to Ardnt Ellinghorst of Sanford C Bernstein, a vehicle industry analysis firm, Apple may have one eye on the industry for obvious reasons.
For almost a decade, futurists and analysts have predicted that automobiles will effectively become computers on wheels. Another factor is ego, according to Sam Livingstone, the founder and director of Car Design Research, an automobile design consulting firm. “Given that they’ve mastered the zeitgeist of appealing consumer durables, you’ve got to assume there are people at the top of the organisation who think this is the ultimate prize,” he says. On the surface, it appears to be a logical fit. Ellinghorst, on the other hand, began writing about a rumoured Apple car in 2014, when leaked documents describing a project codenamed Titan to develop an Apple vehicle first surfaced. We’ve now been seven years. For more than a decade, futurists and forecasters have claimed that we are now seven years into the future. What happened – or, more accurately, what didn’t happen?
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“I prefer to refer to it as the Loch Ness of the automobile sector,” says Ferdinand Dudenhöffer, director of the Duisburg-based Center for Automotive Research. “It’s like Nessie: every time you hear a news article about an Apple automobile, it vanishes.” For the past ten years, we’ve witnessed this. I don’t believe that a storey that takes ten years will ever come true. I don’t think they’ll go into hardware and build a car themselves, or that they’ll have a service provider do it for them. “For more than a decade, futurists and forecasters have predicted that Apple will have to go its own way if it wants to construct a car. The latest speculations in the industry seem to confirm this:
Apple may have to go its own way if it wants to build a car. It’s partly due to practical considerations: building automobiles is difficult, and Apple has the necessary expertise. It will need the support of a manufacturer to join the market, which will require it to try to sweet talk an industry that is notoriously protective of its own interests. Apple isn’t recognised for being the most cooperative corporate partner. After being dumped, Intel, one of Apple’s closest partners, has been left idle – and Steve Jobs was known for rubbing mobile phone network operators the wrong way when establishing the iPhone’s market position. It all boils down to Apple’s and the automotive industry’s tenacity, as well as the latter’s fight for existence.
Apple would most certainly be the 500lb gorilla in the corner if it entered the car business. According to Ellinghorst, if Apple enters the market in 2024 or 2025, it will be able to ramp up to 1 to 1.5 million automobiles by 2030. “Isn’t the auto industry competitive? And if Apple does enter, it’s apparent that they’ll go after the high-end of the market,” he argues. Others are less certain that this is the case. This premium market accounts for about 15% of the worldwide automobile industry, which has a total of 85 million vehicles. “Apple would make that field very congested, and carmakers are concerned that they will allow one of their largest competitors to enter the market,” Ellinghorst adds.
Automobile manufacturers are fiercely independent, and they rarely allow outside companies into their onboard entertainment and navigation systems for fear of losing valuable revenue. “Incumbent vehicle manufacturers can see this thing coming over the horizon at some speed,” says Livingstone, “which is that producing value will increasingly rely on the digital services delivered in the automobile. “He goes on to say that the danger is that automobile makers will supply the dull mechanical parts while businesses like Apple and Google would generate all of the creative, interesting technology.
Who wants to be the Foxconn of autos?” says Ellinghorst bluntly. Who wants to be manipulated? Apple is known for its tenacity when working with vendors. Who wants to be the one to open the door to one of the most well-funded tech businesses in the world?” Carmakers have traditionally outsourced major portions of their manufacturing process to third companies, but it’s typically in areas that customers don’t see: Lear Corporation, situated in Coventry, manufactures car seats for a wide range of manufacturers, but production margins are low, and passengers rarely scrutinise the seat before getting into a vehicle.
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Apple, as firms like Epic Games and Spotify know all too well, likes to drive a hard bargain – and an Apple-branded entertainment system would be lot more in your face in terms of consumer loyalty than a little tag on a seat. “If you give away your car’s operating system, you’re in big trouble,” Ellinghorst warns. It would give Apple immediate power over the destiny of your automobile company as a manufacturer. “If you give up control of the software system, you’re just hardware deliverers,” says Dudenhöffer. “Hardware is a point at which you can say if you don’t supply the proper price for our software, we won’t deliver the software to you, and you’ll have a problem. “Carmakers are concerned that Apple may increase the percentage it takes from any manufacturer to produce its in-vehicle operating system, thereby enslaving its users.
Even if Apple did not do so, there are additional issues, according to Livingstone. He adds, “There’s also something about the very concrete manner the user would have to log in or be registered, to become part of that service provision that is fundamentally separate from the relationship with the car.” Nonetheless, rumours about Apple’s foray into the automobile industry remain. Project Titan continues to be the subject of stories. There are a slew of new contenders for Apple’s proposed vehicle’s hardware partner. Magna already produces cars for BMW and Jaguar Land Rover, and has previously held talks with Apple; Hyundai confirmed earlier this year that it was in talks with Apple; and Foxconn itself, as Ellinghorst suggested, could become the Foxconn of automobiles: it confirmed in late February that it would be developing an electric vehicle with Fisker, with production set to begin in late 2023.
Apple’s cooperation with Foxconn might be the first step toward the company constructing its own vehicle with one of its long-time manufacturing partners. That knowledge, obtained from Fisker, might be conveyed to Apple via Foxconn. Alternatively, an automotive conglomerate like Geely, which makes Lotus, Volvo, and Polestar among other names, may be wooed by Apple to develop its own line of vehicles, given that it already shares EV architecture across several of its brands. “There are two categories of companies that make sense in theory,” Ellinghorst explains. “One, it may be a mass-market, lower-end player who claims, ‘I’m not competing in the high-end market, so they’re not competition.’ That would be a Hyundai, Renault, Nissan, or a Chinese company – though I would be sceptical of a Chinese company because Apple would require worldwide manufacture. Cars cannot be shipped around the world in the same way that smartphones can.”
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Alternatively, despite all the doubts and failed prior attempts, Ellinghorst believes there is still possibility for a cooperation with a pre-existing, high-end manufacturer like BMW. Apple and BMW broke up talks in the mid-2010s, apparently because BMW didn’t want to relinquish control over the production process and become a simple hardware supplier to Apple. BMW’s chief finance officer claimed earlier this month that if Apple entered the car business, he’d “sleep peacefully.” However, it would necessitate a radical and quick reconsideration of the relationship that both firms had hitherto been stuck on. “You’d have to strike an agreement with Apple and say, ‘You’re not my Foxconn, you’re a genuine partner,'” Ellinghorst says. “You co-manufacture with us and have full access to our technology.”
Although the latter may appear improbable, it is possible that it may happen. “There’s a point of friction: car companies know they’ll lose something if they relinquish control, but they also know they won’t be able to deliver on the promises people will demand in that area as well as these well-known software companies,” Livingstone adds. There’s also fomo at work: while no car company wants to risk being a junior partner in an agreement, they also know that an Apple car will be such a big deal that if one company blinks and signs on, everyone else will lose out by not being associated with one of the world’s most recognisable brands. If an Apple automobile collaboration is to see the light of day in the next few years, both the computer giant and the car industry will have to modify their minds. It has proven to be an impossible circle to square thus far. Apple, on the other hand, is never short on surprises.
