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Rumors continue to circulate about Apple’s long-awaited car project. On Wednesday, CNBC reported that Apple is close to concluding an agreement to manufacture an Apple Car at Kia’s assembly plant in West Point, Georgia, an hour southwest of Atlanta. Apple is a well-known mysterious company, and I have no information inside about Apple’s plans. But I’m skeptical that the product that Apple will eventually unveil matches CNBC’s description of it.
According to CNBC, the Apple Car, which will appear in 2024 or 2025, will be ‘fully autonomous’. One source told CNBC that Apple is aiming to make “autonomous, electric vehicles designed to operate without a driver and aimed at the last mile.” CNBC predicts the cars could be used for food delivery or as a robotic action service.
If true, it would be a dramatic departure for Apple. A key feature of Apple’s enterprise culture is that it sells hardware products directly to users. There are technology companies like IBM and Microsoft that focus on selling to business customers. There are technology companies – from Uber to Google – that focus on building services.
Although Apple does provide services and, of course, sell products to businesses, there has been no activity from Apple. Apple’s flagship products – the original Macintosh, the iPod, the iPhone, the iPad, the Apple Watch, etc. – have always been designed as consumer-oriented hardware products. It’s hard to believe that Apple, which is already making a bold leap into a new industry, will simultaneously set aside a core aspect of its business philosophy.
Robotaxi and delivery services do not fit well
To enter the robotic taxi or delivery market, Apple will need it. Apple will have to start its own delivery or taxi service, or sell cars to partners who actually own cars and drive services. None of these approaches can play the strengths of Apple.
If Apple launched its own service, it would have to develop expertise in a wide range of new activities, from cleaning and repairing vehicles to dealing with local government officials. Given the size of Apple, it would be very difficult to expand such a business fast enough to have a significant impact on Apple’s core.
Selling cars to partners would be an equally big departure. It is true that Apple has made some products, such as the Mac Pro, which are mainly bought by business customers. But these products have always been peripheral to Apple’s business, and Apple sells the Mac Pro to individuals as well as customers. In contrast, a delivery vehicle or robotic taxi will probably have to be designed specifically for it. Consumers probably would not even have the option to buy one.
Apple has long been proud to control the entire user experience. This has enabled Apple to maintain high quality, earn strong loyalty and charge a premium for its products. If Apple started manufacturing and selling Apple Cars to partners building taxis or delivery fleets, it would lose control of how the cars were used, and would be blamed for the bad decisions of its partners.
So it seems more likely that Apple will build a conventional car that it sells directly to customers. And if it works with a major carmaker like Kia, it suggests that the Apple Car will be a conventional, complete vehicle.
Apple has a lot to bring to the table here. Apple has deep expertise in battery technology that can apply it to the design of an electric vehicle. Apple can also apply its user interface design skills to build the best user experience in the automotive industry.
Apple can follow in Tesla’s footsteps
The big open question is what Apple will do on the self-government front. While CNBC says the Apple Car will be ‘fully autonomous’, it’s hard to believe Apple’s on the road to full autonomy by 2025 – if ‘full autonomy’ is even a meaningful concept.
In 2019, Apple traveled only about 7,500 miles to test its vehicles on California roads. By comparison, Waymo, widely regarded as the industry leader, tested its vehicles in 2019 for more than 6 million miles in California, Arizona and other states. And despite these efforts, Waymo’s self-driving taxi service is only available in a 50-square-mile corner of the Phoenix metropolitan area.
Of course, the Apple Car will not be available for another three to five years, and Apple could make significant progress during that time. But the company has a lot of catch to do.
It’s hard to believe that Apple is heading for full autonomy by 2025 – if ‘full autonomy’ is even a meaningful concept.
Apple’s best approach might be to follow in the footsteps of Tesla, which began shipping a home driver for driver assistance in 2016. Initially, Autopilot’s capabilities were quite limited, but Tesla CEO Elon Musk predicted that the system would improve quickly. Musk claims that the hardware is suitable for full autonomy (it was not) and that the necessary software for full self-management would be in a few years (it was not). In 2016, Tesla began charging thousands of dollars for a ‘complete self-management’ software package that at the time offered no functionality and still did not offer the full autonomy that Musk promised more than four years ago.
Of course, Apple should not follow Tesla’s lead in making wildly unrealistic promises. But the basic strategy of selling hardware now and later releasing software can serve Apple well. The high cost of lidar in 2016 meant that Tesla could not afford to include it in every vehicle. The lack of lidar made it harder for Tesla to improve Autopilot. By 2024, the earliest date for an Apple Car to hit the market, a high-performance lidar is likely to be available for less than $ 1,000. It’s cheap enough that Apple can make a standard feature of lidar sensors.
Apple can use these sensors to initially offer a solid driver assistance system, and then gradually upgrade the software over time to eventually enable the driverless operation.
Apple’s design and battery expertise means the company may not need leading-edge self-management software to deliver a compelling product. The strength of Apple’s brand and design sense, combined with the inherent performance benefits of electric vehicles, should be enough to attract many early car buyers. Customers may have to wait a few more years for more sophisticated self-driving features – especially if Tim Cook can avoid making unrealistic promises when the car is unveiled.