A couple of glorious hikes up the Four Beasts this weekend inspired some thoughts about the rising flood of rumors about Apple developing a car.
While I have no way of knowing whether these rumors are true, they certainly do not come as much of a surprise. Forget analyst noise about low margins and other challenges of entering the automotive market. From a strategic perspective, Apple has no choice but to join the fray in order to establish leadership in the development and integration of emerging AI, Lidar, cloud, wireless, and related autonomous driving technologies. If it does not, the company risks falling behind others that are already taking the leap.
In some ways, the auto industry is in a similar position now to the one the feature phone industry was in before the launch of the iPhone and Android devices. Just as Nokia, Ericsson, and other companies were trying to figure out how to design an internet phone then, so too are traditional auto industry players attempting to define what a smart connected car is now. Because they were unable to see beyond the constraints of their tightly integrated (and at the time extraordinarily successful) product development and business models, the feature phone incumbents left a huge amount of room for industry outsiders like Apple to come up with truly revolutionary devices that harnessed the promise of mobile internet in ways that they could never have conceived of.
One big difference with the auto industry now is that Tesla has already defined the self-driving EV car experience in much the same as Apple did for the internet phone. This will make it very difficult for competitors to truly differentiate themselves in the marketplace no matter how great their new vehicles.
A second key difference is that the supply-side ecosystem is already so mature that it is possible for virtually any company with sufficient capital to enter the market. This is nowhere more evident than in China, where EV manufacturers are popping up left, right, and center, and major players like Li Auto, Nio, and Xpeng have already completed successful listings on the NYSE.
Given the already hyper-competitive nature of the auto market, rolling out a branded car promises be a far tougher challenge for Apple than the original iPhone launch. Still, with their great brand and technology chops, it would be unwise to count them out at such an early stage of the market’s development.
Just don’t expect them to reach the same levels of dominance that they’ve achieved with the iPhone and iPad. The geopolitical environment that pertains in the auto industry is far too complex for that to ever happen.