Apple has the 'key ingredients' needed to disrupt the car market, analysts say

Posted:
in General Discussion
Following recent "Apple Car" rumors, investment bank Morgan Stanley said it believes Apple has the "key ingredients" that are critical for a successful entry into the car market.

Credit: MotorTrend
Credit: MotorTrend


In a note to investors seen by AppleInsider, the bank's automotive and tech hardware analysis teams shared some key thoughts on the so-called "Apple Car." The note follows a report from Reuters that an Apple-made vehicle, equipped with new battery technology, could head into production in 2024.

Both of the Morgan Stanley teams say that it has long been an assumption that Apple would one day try to design and produce a car. However, the analysts said that Apple isn't attempting to enter the industry "as conceived by today's auto companies."

Instead, "Apple may have an interest in enhancing the driving experience with vertical integration of hardware, software and services." The goal, the note adds, would be to "dramatically improve the user experience, while helping to solve problems."

The analysts say that Apple already has the key ingredients to make that goal happen. Those include access to capital, the ability to attract and keep talent, a track record of proven hardware design, and a "rich ecosystem to leverage."

Looking from a Tesla perspective, Morgan Stanley's auto analysts say they've long felt that technology companies -- like Apple -- have long represented "more formidable competition" than established automakers.

Morgan Stanley's Apple team, which includes lead analyst Katy Huberty, see the "Apple Car" as a long-term project with the ultimate goal being to disrupt through vertical integration."

"Importantly, Apple has recently invested to bring five core technologies in-house, which can aid their car development - processors, battery, camera, sensors, and display," the note reads.

The analysts also note that tech companies want to enter the auto industry because of its total available market and the amount of time consumers are likely to spend in vehicles. However, they add that the electric vehicle "arms race" is still in the nascent stages and that battery technology development isn't currently mature.

"There are some very big bets being made across the capital markets on EVs and batteries," the note reads. "We believe [the] story on Apple and Project Titan are a reminder of the potential scope of competition for capital and brains (and eventually market share) as the ecosystem evolves."

Apple has been developing vehicular technology since 2014 under the moniker "Project Titan." Although believed to be focused on the underlying autonomous systems needed for a self-driving car, there have been persistent rumors that Apple may also be planning on designing and engineering its own production vehicle.
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Comments

  • Reply 1 of 33
    Why must we continue using this heinous rendering??
    williamlondonelijahglkruppflyingdpsdbryansuperklotonFred_the_Headmwhitechristopher126watto_cobra
  • Reply 2 of 33
    The user experience in cars is rubbish.  

    I drive a lot of different cars when travelling (in a normal year), and the user experience in them is all poor.  Some slightly better than others.  I've not driven a Tesla.

    But the automotive industry have consistently rejected Apple's approach - I find it particularly annoying that anything which supports carplay also supports android auto, like they are interchangable.  Apple want to differentiate their product, but the automotive companies want the opposite - they want to commoditize these sorts of "additions".

    So in the end, Apple need an automotive manufacturer who will really take a leap of faith, or find a "contract manufacturer", or build there own factory or buy a competitor.  Whether it's iPod or Mac or iPhone, Apple have always competed at scale.  Therefore it's my guess that they will buy (hostile takeover if necessary) a manufacturer when the time is right.  No reason why Apple can't buy GM or Ford if they want to (except maybe because of their historical liabilities).
    mark fearinglkrupplolliverBeatssuperklotonMplsPwatto_cobra
  • Reply 3 of 33
    tzeshantzeshan Posts: 2,351member
    Apple will use iPhone 12 5G in Apple Car. 
    williamlondon
  • Reply 4 of 33
    XedXed Posts: 1,029member
    plype11 said:
    Why must we continue using this heinous rendering??
    Overall I shouldn't care—and usually don't—but this render bothers me.
    edited December 2020 plype11flyingdpchristopher126watto_cobra
  • Reply 5 of 33
    I'm curious how Apple is going to price this crazy thing though. If it's gonna be $600,000, I suspect it won't be quite as popular.
  • Reply 6 of 33
    XedXed Posts: 1,029member
    I'm curious how Apple is going to price this crazy thing though. If it's gonna be $600,000, I suspect it won't be quite as popular.
    That's a reasonable assumption for an automobile price to you, why?
    Fred_the_Headwatto_cobra
  • Reply 7 of 33
    Same here 

    Xed
    said:
    plype11 said:
    Why must we continue using this heinous rendering??
    Overall I shouldn't care—and usually don't—but this render bothers me.

    edited December 2020
  • Reply 8 of 33
    BeatsBeats Posts: 2,531member
    Saw a Black Mirror episode yesterday where all the cars on the road were iCruisers or knockoffs so they all looked the same.

    That's the only thing I'm not looking forward to.
    watto_cobra
  • Reply 9 of 33
    macguimacgui Posts: 2,047member
    If Apple sells a car, I hope it's better looking than the Teslas. I like just about everything about Teslas, except their incomplete styling. It's as though designers took a break while in the middle of the clay modeling stage and somebody else assumed it was the finished product. Tesla's aren't bad looking, just unfinished. 
    superklotonwatto_cobra
  • Reply 10 of 33
    I'm curious how Apple is going to price this crazy thing though. If it's gonna be $600,000, I suspect it won't be quite as popular.
    That's honestly my number one interest in this whole thing; because of how it will show Apple's intent going forward…

    Looking at how Apple has priced things over the past 10+ years we've seen a more and more aggressive trend in Apple banking on people being willing to pay an ever increasing premium.

    Taking that, and combining it with all car rumours essentially placing the Apple Car in the regular car category (as compared with smaller city-vehicles, or even some type of no-license-required e-bike/car hybrid)… and it looks like an Apple Car would end up being even more of a luxury item than a Tesla.

    Can Apple really pull that off without it finally making users feel disconnected from the Apple brand?

    Will people really push themselves into adding yet another couple of hundred on top of what they paid for their last iPhone if they feel that Apple is moving this far out of their reach? And will they then still be into the sound equipment, and the tablets, and the computers, once they've started getting out of the Apple ecosystem?

    I just feel that if Apple screw up too badly, by getting lost in their own sense of how luxurious/important they are, they could sort of disenfranchise their customer base by releasing a luxury (in price) car.

    (If Apple on the other hand has feared that, and they have been looking more towards bike-friendly European cities than bigger-is-better US cars while developing next generation transportation… That could be fun.)
  • Reply 11 of 33
    wizard69wizard69 Posts: 13,377member
    plype11 said:
    Why must we continue using this heinous rendering??
    Too remind us that even Apple can screw up!
  • Reply 12 of 33
    plype11 said:
    Why must we continue using this heinous rendering??
    It was "wow" a decade a ago. Now it's 🤮.
  • Reply 13 of 33
    The image of the “Apple Car” looks like a suppository with wheels. Still, it’s not half as ugly as Tesla’s Cybertruck.
    christopher126
  • Reply 14 of 33
    MplsPMplsP Posts: 3,268member
    arthurba said:
    The user experience in cars is rubbish.  

    I drive a lot of different cars when travelling (in a normal year), and the user experience in them is all poor.  Some slightly better than others.  I've not driven a Tesla.

    But the automotive industry have consistently rejected Apple's approach - I find it particularly annoying that anything which supports carplay also supports android auto, like they are interchangable.  Apple want to differentiate their product, but the automotive companies want the opposite - they want to commoditize these sorts of "additions".

    So in the end, Apple need an automotive manufacturer who will really take a leap of faith, or find a "contract manufacturer", or build there own factory or buy a competitor.  Whether it's iPod or Mac or iPhone, Apple have always competed at scale.  Therefore it's my guess that they will buy (hostile takeover if necessary) a manufacturer when the time is right.  No reason why Apple can't buy GM or Ford if they want to (except maybe because of their historical liabilities).
    that's my thought, too , and that's the reason CarPlay (and Android Auto) have taken off and taken over the way they have. In the old cars the user interface was relatively simple - a few simple mechanical controls. Not always the best design, but still generally usable. As cars became more computerized with more and more options and controls the interface became increasingly more important, but none of the automakers seemed to care. Witness the ford Sync or Toyota's pathetic attempts.

    Part of the problem was every auto maker took a different approach, so even if one company's interface had some potential, there was no consistency between cars. One of the nicest parts about CarPlay is it's the same in every car so you don't have to re-learn anything or remember which car you're in.

    I have a Tesla Model Y. in general the interface isn't bad. It could definitely use some improvements in some areas, though. My biggest complaint is it doesn't have CarPlay. For podcasts it has a TuneIn app that absolutely sucks. I have to wonder how much TuneIn paid Tesla to put their crap software in the cars.
    watto_cobra
  • Reply 15 of 33
    XedXed Posts: 1,029member
    The image of the “Apple Car” looks like a suppository with wheels. Still, it’s not half as ugly as Tesla’s Cybertruck.
    I put a downpayment on 3 of them. I think the thick, cold rolled steal is perfect for my business. My logo on the streets will be more noticeable while their utility serves to make them better than the current vehicles in the fleet. The only issue I foresee is having to carve out time for employees and customers to chat about the damn truck.
    watto_cobra
  • Reply 16 of 33
    I really don't think Apple is going to actually build their own hardware (as in - cars). This is a low-margin stuff, even in mid-luxury segment afaik, and they would have to build factories and stuff, because I have no idea what makers would actually allow Apple to build on their own factories in a bring-in-your-own-design scenario.

    AND, I really don't think any automaker will allow, or even be allowed for Apple to access core automotive features - such as accessing car by OBD2 or whatever other direct control channels (speedometer, proper compass, electronic tolls collection integration, proper G-sensor, car security for locking/unlocking, and I can continue). There's just way too many regulations an automaker has to clear - even if you make a tiny software tweak, unless you completely own the platform (Tesla), AND your system has access to a car's core systems - good luck getting that approved.

     And without this sort of "full" access, I have really really hard time figuring out how Apple is going to disrupt anything - since they won't be able to inject anything into cars that makes sense and works seamlessly.

    Current state of CarPlay is a joke - it won't understand if I passed electronic toll gates and how much it cost me (and won't keep history), it won't understand if I'm driving on a highway or under highway on a normal road, it won't update itself inside long tunnels, it won't know the direction my car is facing until I actually start moving, which in many cases is an issue. The UI and UX are pretty nice (though I'd say there's A LOT for Apple to cover before it gets up to par - functionally - with the navigation in my Lexus, which, in itself, is considered a rather not very good in terms of navigation stuff), but that really is about it :( 

    Apple could potentially provide some algorithms, recognition systems and license them to automakers, I guess? But considering all car models get designer over period of YEARS, and looking at time it took CarPlay to become generally available by default… I'm not looking forward to seeing anything Apple in my car any time soon (5-6 years horizon at the very least). They could get these system, potentially, on cheap cars from some Korean brands, but Toyota, BMW, Mercedes?… I just don't see it happening soon, if at all.
  • Reply 17 of 33
    YP101YP101 Posts: 132member
    Well, Apple does not need to enter mass car market at the beginning. Start with reference car made like Sony did.
    I am not sure why people think Apple will compete with Tesla at this point.
    Apple just takes 100-500 orders only for high end customer like supercar maker. Cost will be start at $175,000+ with options will be sky is the limit.
    Which Sony failed to do so. Sony should talk Nissan to make 500 pre order only. 
    Apple has upper hand due to they have M1 or A14 chip.

    Apple can buy Lucid motor(if they failed) or other small electric auto company to hand made.
    Apple should control QC so tight, they do not have any issue like Tesla QC problem at the beginning(Not sure they still have issue or not.) will be big selling point.
    Total integration with Apple hardware and software.
    Main console should be 12.9' iPad Pro and 11' iPad pro for the passengers.

    Apple car comes with free usage of Apple TV+, Music while in the car.(license bound to car account. Not normal Apple account.)
    Car key will be your iPhone's face id and main console panel also has face id that when driver side seat will recognize who seat on it and display presetting.
    For the internet, Apple can use Space X internet service as included for 2-3 years free. After that consumer pay if they keep the car longer then that.
    Yes.. Apple will do recycle program for own Apple car too.. For the environment.

    If Apple can  pull this off seamlessly then it will be big hit.
    Oh..  one more thing, by 2024 full auto drive should be normal feature.
    Who knows. Maybe Apple start own auto insurance for own car at the beginning.


    edited December 2020
  • Reply 18 of 33
    MplsPMplsP Posts: 3,268member
    Apple obviously has a huge amount of experience with user interface and software design. What they don't have experience with is manufacturing things like cars. When you look at Tesla, that's been the big area they've struggle - getting an efficient manufacturing process down and Elon Musk has made this point himself. Part of the design process is designing something that not only works well, but is reliable and can be assembled consistently and inexpensively. Apple has manufacturing experience with iPhones, but cars are not phones, so that experience won't necessarily translate.

    The other issue is price. The car market is competitive and costly. Tesla did not post a profit until this year, and even their cheapest model (the base model 3) would be considered moderately priced at best. As others have mentioned, Apple's business model is to design a 'premium' product and price it accordingly. People are willing to pay a few hundred more for a quality computer that they know will work well and last. Convincing them to pay $10-20k more for a car when the competition is already priced at $50-100k is completely different proposition. 
    muthuk_vanalingam
  • Reply 19 of 33
    arthurba said:
    The user experience in cars is rubbish.  

    I drive a lot of different cars when travelling (in a normal year), and the user experience in them is all poor.  Some slightly better than others.  I've not driven a Tesla.

    But the automotive industry have consistently rejected Apple's approach - I find it particularly annoying that anything which supports carplay also supports android auto, like they are interchangable.  Apple want to differentiate their product, but the automotive companies want the opposite - they want to commoditize these sorts of "additions".

    So in the end, Apple need an automotive manufacturer who will really take a leap of faith, or find a "contract manufacturer", or build there own factory or buy a competitor.  Whether it's iPod or Mac or iPhone, Apple have always competed at scale.  Therefore it's my guess that they will buy (hostile takeover if necessary) a manufacturer when the time is right.  No reason why Apple can't buy GM or Ford if they want to (except maybe because of their historical liabilities).
    Looking at the cost of a car, it's easy to see why car makers want to give options. It's a long term and heavy investement, and car makers have they own loyal customers to take care of.

    Imagine a die hard android fan who also happen to be a die hard BMW fan, but then BMW tell to that guy : "sorry, but from now on if you want to enjoy the multimedia capabilities of our cars you'll need an Iphone". Meanwhile people who are loyal to Apple might not like BMW cars. 

    Apple having an exclusivity contract is certainly good for them, but I doubt that the car maker is going to see this as an opportunity unless Apple can assure them that it's not going to be a loss of benefits. 

    I like my Iphone, but I don't want my phone to rescrict me in the choices that I have when it comes to cars. Cars are part of those "necessary, but still fashionable" items. Just like clothing, the type of car that you drive says a lot about you, we are getting dangerously close to a hive mind if being part of the apple ecosystem also require you to own a specific brand of car  
  • Reply 20 of 33
    Anyone who follows the auto business knows that if Apple wants to build a car a couple of years out they need to be signing contracts now or already have them done.

    The people who manufacture systems and components supply many makers and need lead time to be ready. Then there is the question of who would build it since Apple does not have a car plant. Apple does not make any of the hardware it sells and that would likely be the case in this arena.

    2-3 years from now the EV market will be profoundly different, the days of Tesla and wannabes is fading fast. The Mustang Mach E looks to be very well done and shows Ford is in a good place for EVs. GM is not far from electrics through Cadillac and Hummer. VW has EVs through Porsche, Audi and VW up and running with many more to come. I am sure Toyota is not far behind.

    Athen there are charging networks, Tesla has one and VWAG has one- already built out. Apple will need one as well.
    tmay
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