Apple has the 'key ingredients' needed to disrupt the car market, analysts say
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
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.
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.
Comments
That's the only thing I'm not looking forward to.
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.)
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.
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.
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.
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.
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
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.