Don’t get too excited about the Apple car becoming a reality. There are several big reasons why Apple won’t make an iCar now or in the future, despite what we might love to speculate about. Here’s a collection of the biggest reasons why Apple’s future may lie in car tech, but never in car production.
1. The Project Is Not Yet Clearly Defined
What we know is that there’s a secret “Titan” program in Apple designed to make…something. We don’t really know what that is. Apple has not confirmed any rumors so far, and while it is possibly something related to car tech, there’s just no sign that the project is focused on making the fabled Apple car. The closest we’ve gotten is “people with knowledge of the matter,” a nebulous source at best. Excitement and media attention is not the same thing as fact.
2. Apple Doesn’t Make Cars
At this point it isn’t clear what kind of car Apple would even make. Would it be self driving? Would it be completely electric? No one is sure. But one thing is sure: Apple has no experience in making cars. Vehicle production is an entirely different ballgame from manufacturing compact electronics. It requires new supply chains, new contracts with new manufacturers, a deep understanding of production and materials, and a lot more investment per product unit, not to mention in facilities and equipment. Apple just isn’t a car company, and that matters more than many people seem to realize.
3. Apple Doesn’t Sell Cars
Even if Apple could produce cars, vehicles aren’t part of the Apple brand. The qualities that draw people to Apple are not qualities that people look for in automakers. Vehicle buyers want experienced auto manufacturers that can churn out high safety ratings, sleek builds, lots of horsepower, or in some cases niche markets for electric and urban vehicles. How is Apple supposed to market any of that? People like Apple because of the Mac experience, iOS qualities, and its electronics design. From an advertising perspective these just don’t translate well into selling vehicles, and penetrating a new market would be a nightmare for Apple executives.
4. The Profit Margins Don’t Really Work Out
You can look at a more in-depth discussion of this point, but essentially, even if Apple could make and sell cars, it couldn’t easily get the same profit margins as the company earns by selling electronics. Vehicle profit margins tend to be very low, even for companies that sell millions of vehicles a year and have production down to a hard science. Additionally, car demand in the United States has been in stasis or even falling since the 1990s, which means that almost all buyers already know where they are buying cars from…and have little desire to upgrade.
5. Deals with Automakers are More Lucrative Anyway
Another excellent reason for not making an iCar is that Apple already has a great strategy in place when it comes to car tech. CarPlay is still in the early stages, with the very first examples of the iOS software in cars barely appearing in the newest models. Apple has much more to gain from contracting with current automakers to get its tech – and full iOS compatibility with other Apple products – into cars made by someone else. Consumers get a car from a trusted brand and the Apple platform (with touchscreens, apps, etc.) that they want. Everyone wins, and there’s no need for an Apple car.
6. The Project Would Be Too Long-Term for Apple
Apple’s business model depends on regular product turnover, along with a healthy amount of expansion in emerging markets where possible. That’s why every couple of years you see a big announcement of the new iPad, new iPhone, new Mac, Apple Watch, etc. Apple needs customers to purchase products at regular intervals. Number one: Cars don’t sell like that, and most buyers go through long, long periods without making a new purchase. Number two: If Apple started trying to produce a car yesterday it would still be many years before the company could get a product on the market, and that’s a timetable that Apple prefers to avoid when possible.
7. Google and Others Have a Head Start
Even though Google has a current working prototype, it isn’t necessarily guaranteed that Google will pursue making a self-driving car – and this is a company that already has a prototype. If Google isn’t sure that making a car is viable (this is the company creating Internet networks with hot air balloons), the same is probably true of Apple, which competes against Google on several levels already. A several-year head start is not a good reason for Apple to bump up against Google yet again. Additionally, many automakers are working on their own high-tech and self-driving car models. This is a field rife with experienced competition.
8. Imitating Companies Like Tesla is Asking for Trouble
“What about Tesla?” some may be asking. This small electric car startup is stirring up a lot of attention and seems like a great model for Apple to follow. The company is already hiring Tesla battery specialists and auto transmission experts, so it looks like this is the direction the company is moving, right? Not so much. Tesla is a small company working in a very limited niche market that has a chance of (hopefully) growing bigger. It is, in many ways, the opposite of Apple. Trying to act like Tesla will only run Apple into trouble when the company tries to market outside of the electric niche – not to mention when it faces Tesla’s increasingly impressive lineup. There’s no reason why those battery and transmission experts aren’t simply working on an improved version of CarPlay, which would be modus operandi for Apple.
9. This is Not the First Apple Car Rumor
Be wary of media frenzy – this isn’t the first time people have claimed that Apple was making a car. Back in 2013 everyone was sure that Apple was building the Apple Car, with confirmed rumors and widespread speculation. What did that turn out to be? The iBeetle, a car built entirely by Volkswagen, which had a few pre-CarPlay iPhone compatibility features. It was almost entirely a marketing ploy to build buzz. Does that sound familiar?
10. Investors Prefer Dependability
Ultimately, you have to look at what investors want. Right now, investors are happy. Apple’s revenues are ginormous: It’s selling devices around the world like hotcakes, and it has found a way to do it with healthy profit margins. Entering the auto world would be a tricky step requiring a huge amount of resources, new types of talent hiring, and entirely new divisions for planning and production. In other words, Apple’s numbers would take a big hit, regardless of how successful an Apple Car would ultimately be. This is bad news for investors, and Apple wants to keep its investors happy.
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