Apple is reportedly stepping up its efforts to create an electric car with a ship date of 2019. With the move Apple could risk its primary advantage in the technology sector: Focus.
The Wall Street Journal reported that Apple is about to triple its 600-person team to build a car. This car would reportedly be code-named Titan.
Apple apparently isn't going for a fully autonomous car, but the fascination with automobiles is notable. On the surface, Apple's master plan simply reveals the reality that cars have become high-tech, the user interface in the cabin may actually sell vehicles and there's no better example of hardware-software integration in any product.
See: CNET Car Tech
Add those moving parts up and it's almost a no-brainer to create an Apple-branded car. Apple Car here we come. Apple's move isn't any more absurd than Google (oh excuse me Alphabet) cooking up robot cars just because the company has neat mapping technology.
Apple's effort to build an electric car screams of Tesla envy.
Among the questions to watch:
- What does Apple know about cars? Not much. Can Apple close the gap with automakers as well as Tesla? Maybe.
- Can Apple sell cars and rely on its CarPlay software and smartphone integration as a differentiator? Sure.
- Is Apple underestimating what it takes to build a line of premium cars? Certainly.
- Will Apple lose focus building a car? Most likely.
In the end, that last question is the item that will matter most to the ecosystem and the company's prospects. Apple can expand its horizons into new categories as it has done historically. Just based on revenue growth automobiles must look interesting to Apple. Apple is projected to deliver $233 billion in sales for fiscal 2015 with net income pushing $53 billion. Ford's 2015 revenue will be about $133.5 billion with net income of $6.82 billion. In other words, Apple can find new revenue growth via automobiles at the expense of profit margins.
I'd argue that building a car is much different than entering watches, music players and smartphones. Let's face it: The technology interface in vehicles needs a lot of work. I seriously doubt Android and Google are going to save the day. Apple could.
But just because you can build a nice interface and integrate mobile software doesn't mean you can build a line of automobiles. Apple basically makes two flavors of smartphones. Apple now has three flavors of tablets. The Apple Watch is basically one nice trick with all the variables revolving around accessories.
To make a bet on electric vehicles, Apple will need sedans, SUVs and crossovers. And these devices better have some the gravitas that a BMW, Audi or Tesla has. All of that reality screams distraction. Time will tell if the Apple Car is a jump the shark moment. At the very least, chasing the Apple Car dream is a debatable diversion.
If Apple really wants to get into the car business it should simply buy Tesla.