Apple Car wants the auto industry to build its car but isnisn’tterested in sharing the profits. Here’s it ‘let out of the stalemate: Apple used to be famed for its ability to surprise the world before its product introductions leaked like a sieve.
The company’s keynote speeches have been peppered with important announcements from the PowerBook G4 in 2001 to the Apple Watch in 2014. 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’It’srumor thathat’sen going about for years and it’it’scently 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 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.
“Gi” en that thethey’vestered the zeitgeist of appealing consumer durables, you you’ve to assume there are people at the top of the organization who think this is the ultimate prize,” h,” says. On the surface, it appears to be a logical fit. Ellinghorst, on the other hand, began writing about a rumored Apple car in 2014, when leaked documents describing a project codenamed Titan to develop an Apple vehicle first surfaced.
We’We’vew has been seven years. For over a decade, futurists and forecasters have claimed that we are seven years into the future. What happened – or, more accurately, what diddidn’tppen?
“I “refer to it as the Loch Ness of the automobile sector,” s”ys Ferdinand Dudenhöffer, director of the Duisburg-based Center for Automotive Research. “It”It’ske Nessie: every time you hear a news article about an Apple automobile, it vanishes.
” F” the past ten years, we’we’vetnessed this. I dondon’tlieve that a story that takes ten years will ever come true. I dondon’tink they’ll be into hardware and build a car themselves or let a service provider do it.
“Fo” more than a decade, futurists and forecasters have predicted that Apple will have to go its way if it wants to construct a car. The latest speculations in the industry seem to confirm this:
Apple may have to go its way to build a car. It’It’srtly 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 interests.
Apple isnisn’tcognised for being the most cooperative corporate partner. After being dumped, Intel, one of AppApple’sosest partners, has been left idle – and Steve Jobs was known for rubbing mobile phone network operators the wrong way when establishing the iPhiPhone’srket position. It all boils down to AppApple’sd the automotive indindustry’snacity and the latlatter’sght for existence.
If it entered the car business, Apple would certainly be the 500lb gorilla in the corner. 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.
“Is”Isn’te the auto industry competitive? And if Apple does enter, it’it’sparent that they’ll be after the high-end of the market,” h” argues. Others are less certain that this is the case. This premium market accounts for about 15% of the worldwide automobile industry, with 85 million vehicles. “Ap” le would make that field very congested, and carmakers are concerned that they will allow one of their largest competitors to enter the market,” E” Linghorst adds.
Automobile manufacturers are fiercely independent and rarely allow outside companies into their onboard entertainment and navigation systems for fear of losing valuable revenue.
“In”unbent vehicle manufacturers can see this thing coming over the horizon at some speed,” s”ys Livingstone, “wh” ch 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 dull mechanical parts. At the same time, businesses like Apple and Google will generate all the creative, interesting technology.
Who wants to be the Foxconn of autos?” s”ys 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?”
C”makers have traditionally outsourced major portions of their manufacturing process to third companies, but it’it’spically in areas that customers dondon’te: Lear Corporation, situated in Coventry, manufactures car seats for a wide range of manufacturers, but production margins are low, and passengers rarely scrutinize the seat before getting into a vehicle.
As firms like Epic Games and Spotify know all too well, Apple likes to drive a hard bargain – and an Apple-branded entertainment system would be much more in your face regarding consumer loyalty than a little tag on a seat. “If” you give away your carcar’serating system, you’re big trouble,” E” Linghorst 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 rest hardware deliverers,” s”ys Dudenhöffer. “Ha,” adware is a point at which you can say, if you dondon’tpply the proper price for our software, we wowon’tliver the software to you, and youyou’llve a problem. “Ca” makers are concerned that Apple may increase the percentage it takes from any manufacturer to produce its in-vehicle operating system, thereby enslaving its users.
According to Livingstone, even if Apple did not do so, there are additional issues. He adds, “Th”‘s There’s something about the very concrete manner the user would have to log in or be registered to become part of that service provision fundamentally separate from the relationship with the car.”
N” Nonetheless, rumors about AppApple’sray into the automobile industry remain. Project Titan continues to be the subject of stories. There are a slew of new contenders for AppApple’soposed vehvehicle’srdware 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.
AppApple’soperation with Foxconn might be the first step toward constructing its 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 line of vehicles, given that it already shares EV architecture across several of its brands.
“Th” re are two categories of companies that make sense in theory,” E” Linghorst explains. “On” may be a mass-market, lower-end player who claims, ‘I”I’mt competing in the high-end market, so they’re competition.’ That would be a Hyundai, Renault, Nissan, or a Chinese company – though I would be skeptical of a Chinese company because Apple would require worldwide manufacture. Cars cannot be shipped worldwide in the same way smartphones can.”
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Alternatively, despite all the doubts and failed prior attempts, Ellinghorst believes there is still a possibility for cooperation with a pre-existing, high-end manufacturer like BMW. Apple and BMW broke up talks in the mid-2010s, apparently because BMW diddidn’tnt to relinquish control over the production process and became a simple hardware supplier to Apple.
BMWBMW’sief finance officer claimed earlier this month that if Apple entered the car business, he’d “ep peacefully.” H” however, it would necessitate a radical and quick reconsideration of the relationship that both firms had hitherto been stuck on. “Yo” You’dve to strike an agreement with Apple and say, ‘Yo’You’ret my Foxconn, youyou’regenuine partner,'” ‘”linghorst says. “Yo” co-manufacture with us and have full access to our technology.”
A”though the latter may appear improbable, it may happen. “Th” There’spoint of friction: car companies know thethey’llse something if they relinquish control, but they also know they won won’t be able to deliver on the promises people will demand in that area as well as these well-known software companies,” L” Vingstone adds.
TheThere’sso 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 worworld’sst recognizable 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.