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Rumors continue to emerge about Apple’s long-awaited car project. On Wednesday, CNBC reported that Apple is close to finalizing an agreement for an Apple car to be manufactured at Kia’s assembly plant in West Point, Georgia, an hour southwest of Atlanta. Apple is a company famous for secrets and I have no inside information about Apple’s plans. But I am skeptical that any product that Apple will reveal will match CNBC’s description of it.
According to CNBC, the Apple Car, scheduled to launch in 2024 or 2025, will be “fully autonomous”. A source told CNBC that Apple intends to make “autonomous electric vehicles designed to operate without a driver and focusing on the last mile”. CNBC predicts that the cars could be used for food delivery or in a robot taxi service.
If true, it would represent a dramatic change for Apple. A central feature of Apple’s corporate 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.
But while Apple manages some services and, of course, sells products to companies, none of the activities have been Apple’s focus. Apple’s core products – the original Macintosh, iPod, iPhone, iPad, Apple Watch and so on – have always been designed as consumer-facing hardware products. It is hard to believe that Apple, already taking a risky leap into a new industry, would simultaneously leave out a central aspect of its business philosophy.
Robotaxi and delivery services would be an inappropriate choice
Entering the robotaxi or the delivery market would require Apple to do just that. Apple would have to launch its own delivery service or taxi, or it would have to sell cars to partners who actually owned cars and managed services. None of these approaches would play on Apple’s strengths.
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 Apple’s scale, it would be very difficult to expand such a business quickly enough to have a significant impact on Apple’s financial results.
Selling cars to partners would be an equally important starting point. It is true that Apple made some products, such as the Mac Pro, which are purchased mainly 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 corporate customers. In contrast, a delivery vehicle or robot taxi would probably need to be designed specifically for this purpose. Consumers probably would not have the option to buy one right away.
Apple has long prided itself on controlling the entire user experience. This allowed Apple to maintain a high level of quality, gain strong customer loyalty and charge a premium for its products. If Apple started manufacturing and selling Apple Cars to partners who build taxis or delivery fleets, it would lose control over how cars are used and risk being blamed for the wrong decisions of its partners.
Therefore, it seems more likely that Apple will build a conventional car that it sells directly to customers. And if it’s a partnership with a major automaker like Kia, it suggests that the Apple Car will be a full-size conventional vehicle.
Apple has a lot to offer here. Apple has a deep knowledge of battery technology that can be applied 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 could follow in Tesla’s footsteps
The big open question is what Apple will do on the autonomous front. Although CNBC says Apple’s car will be “fully autonomous”, it is hard to believe that Apple is on the road to full autonomy in 2025 – if “full autonomy” is a significant concept.
In 2019, Apple recorded only about 7,500 miles testing its vehicles on California’s roads. For comparison, Waymo, widely considered the industry leader, tested its vehicles for more than 6 million miles in California, Arizona and other states in 2019. And despite these efforts, Waymo’s autonomous taxi service is available only in 50 units. corner of a square mile in the Phoenix metropolitan area.
Of course, the Apple Car will not come out for three to five years, and Apple can make significant progress during that time. But the company has yet to catch up.
It is hard to believe that Apple is on the road to full autonomy in 2025 – if “full autonomy” is a significant concept.
Apple’s best approach may be to follow in the footsteps of Tesla, which began shipping a local driver assistance system in 2016. Initially, autopilot capabilities were quite limited, but Tesla CEO Elon Musk predicted that the system would improve quickly. Musk claimed that the hardware was suitable for full autonomy (it was not) and that the software needed for complete autonomous driving would be released in a few years (it was not). In 2016, Tesla started charging thousands of dollars for a “fully autonomous” software package that didn’t provide any functionality at that time and still doesn’t provide the full autonomy that Musk promised more than four years ago.
Apple obviously shouldn’t follow Tesla’s lead in making totally unrealistic promises. But the basic strategy of selling hardware now and releasing software later may serve Apple well. The high cost of dealing in 2016 meant that Tesla could not afford to include it in all vehicles. The lack of handling made it more difficult for Tesla to improve autopilot. In 2024, the closest date an Apple car can hit the market, the high-performance deal is likely to be available for less than $ 1,000. This is cheap enough that Apple could make the sensors handle a standard feature.
Apple could use these sensors to initially offer a solid driver assistance system and then gradually update the software over time to allow for completely driverless operation.
Apple’s design and battery experience means that the company may not need industry-leading standalone software to ship an attractive product. The strength of Apple’s brand and design sense, combined with the performance advantages inherent in electric vehicles, should be enough to attract many early car buyers. Customers can be happy to wait a few more years for more sophisticated autonomous driving features – especially if Tim Cook can avoid making unrealistic promises when the car is launched.