Is Apple Really Building a Car?

The automotive industry is preparing for war.  They have got wind of a huge new threat on the horizon, and they are buttressing their reserves for the fight to come.  And as well they should, for the opponent is indeed a Titan.

Most people would never guess where this new competitor in the automotive industry is coming from.  The source originates in companies which until now were deemed neutral in the war of auto market share…in other words unrelated.

That new threat is tech.  More specifically, it’s Apple.

But is the threat real?  Sorry, Dodge, Toyota and Ford: most believe it’s very real. One analyst puts it at a 50% – 60% chance that we will see Apple cars on the road within a short time (1).

Furthermore, the public seems to be ready for a shakeup, too.  65% of 18-34 year olds would be willing to buy a car from a tech company.  81% of consumers in India are ready to drive an Apple car, according to data from Statista:

This chart shows the willingness of consumers to switch from their current car brand to a tech company (e.g. Google, Apple).
This chart shows the willingness of consumers to switch from their current car brand to a tech company (e.g. Google, Apple).

You will find more statistics at Statista

So yes, it’s a real possibility and here are the compelling reasons why that is so.

Introducing Apple’s very serious Titan Project

Some analysts say the automotive industry it overdue for a shakeup, and this could just be it.   Apple plans on rolling out the iCar in 2019 to a select 200,000 buyers.  That’s far away and it’s only a few cars, but it definitely could be the wedge that eventually leads to that final chop for the automotive industry as we know it today.

Apple is, after all, known for turning entire industries on end.  Look what the iPod did for music.  The iPhone for cell phones.  And let’s not forget the Mac.

Titan, as the new iCar project is aptly named, is labeled within the Apple company as a “committed project”, which means that yes, it’s going to happen and yes, automotive companies are right to brace for new competition.

Just this week, Titan was given permission to triple its workforce, according to the Wall Street Journal (2).

Apple and Tesla

The rumor mill is working overtime lately on this subject, but recently an Apple employee sent an email to Business Insider hinting that Apple was going to “give Tesla a run for its money” (3).

Not only that, but it seems that many Tesla engineers have switched teams and left Tesla for Apple.  It is even rumored that Tesla is a viable target for an Apple takeover.  That’s one way to enter the automotive industry: buy your way in!

The iPhone Can’t Carry Apple Forever

Currently, the iPhone is carrying the profit load for Apple.  Roughly three quarters of the operating profit of the company comes from iPhones alone (4).  That percentage grows with each passing year, putting Apple in a more and more vulnerable position.

The Apple Watch was supposed to alleviate the burden on the iPhone but so far it’s received lukewarm interest from just a tiny subset of enthusiasts.

The iPad didn’t really turn out to have long-term market strength, as interest continues to wane.

The Apple Car represents for Apple a welcome diversification, so they are completely serious about making this car happen.  They are even reaching out for help…

Apple probably can’t do this alone so look for partnerships

The highly active Apple rumor mill has it that the tech giant has been meeting with BMW (5) for assistance on Titan.  BMW’s current line of electric cars, the i3, isn’t the huge success they hoped it would be, and a partnership with Apple may be just what they need to compete with the likes of Nissan Leaf and Chevy Volt.

BMW’s i3 has a carbon fiber shell, which may indicate the direction Apple will be taking with the iCar.

Apple will also need an experienced hand to help them with the regulatory issues that come with manufacturing and selling cars.  Chances are, they won’t go that alone, either.

Finally, they will even need help with manufacturing: isn’t it unlikely that they will build their own plant?

It’s about getting a car on the road, not about invention

Google may be brewing up some magic with its driverless cars but for now Apple is all about being practical and getting some cars on the road.  While Google’s crazy invention division is about the future, Apple’s Titan Project is about market share and profits.  Apple has some driverless car experts on the payroll but for now the car coming out in 2019 is not expected to be driverless.

One last thing

Finally, the mystery and speculation arise from Apple’s never having officially announced it is working on an electric car.  So all we can do for now is gather clues and engage in speculation.  It does, after all, fit right in with the way Apple loves to shroud its milestones in mystery and drama.

What we will be hoping for – in the meantime – is an exciting shakeup of the automotive industry, one that fits the new ways we think about cars, transportation, and car ownership.

References

All references retrieved September, 2015