Report: Apple to Build Electric Cars
After months of rumors, the Wall Street Journal confirmed Monday that Apple Inc. is gearing up to build an electric car.
According to the Wall Street Journal report, it is officially a “committed project,” citing “people familiar with the matter.” Apple has set a “target ship date” for 2019, and the heads of the project — codenamed “Titan” — have been given authorization by Apple to triple the team to 1,800 people.
If Apple is indeed thinking about building an electric car, it’s a pretty interesting development. It pits the technology giant against another technology giant in Google, which has been testing self-driving vehicles on public roads since 2012 (Apple’s first wave of vehicles reportedly won’t be self-driving, but that could be part of the plans for future models).
It’s also hard to say if Apple will be successful in the automobile industry.
On one hand, the company has spent a lot of time researching the prospect of an Apple-branded car (more than a year, according to the Wall Street Journal), and it has already added some well known names in the technology industry to the team, including former Volkswagen engineer Megan McClain, a senior engineer from electric car maker Tesla Motors and Vinay Palakkode, a graduate researcher at Carnegie Mellon University, per a report from The Telegraph. Apple has also been known to sell products quickly out of the gate on its brand name alone, and the record-setting initial sales of the Apple Watch — primarily catering to the luxury market — is a step in the right direction.
Piper Jaffray analyst Gene Munster estimates that even “moderate success” in the electric car business could bring Apple $50 billion more per year, a 23 percent increase compared to what Apple is generating today, per Cult of Mac.
But even “moderate success” in the low-margin world of automobile making is an accomplishment these days.
It’s predictable that major automakers would publicly declare that Apple is doomed to fail with its electric car, but it’s not like they aren’t bringing up some valid points, either.
Behind General Motors Vice Chairman Bob Lutz’s grandiose statement to CNBC that the Apple car will be “a gigantic money pit” (in a bad way) are two valid points: a) Apple has no experience in the automobile industry, and b) if it’s hard to make it in the automobile industry, it’s even more difficult to make it in the electric automobile industry.
There’s also a very important distinction between the auto industry and Apple’s industry, Alex Davies wrote on Wired: Apple will be much more limited in how it can differentiate itself from its competitors.
The auto industry is heavily regulated by the federal government, primarily because of safety concerns.
As Davies writes, “Federal guidelines dictate everything from the size and color of the turn signal in the dashboard, to the icon for the fuel gauge, to the exact force each occupant’s seat must be able to withstand.”
That makes it very difficult for automobile makers to differentiate themselves from their competitors.
Just look at what Apple has done with the iPhone, and then imagine what the iPhone would look like if a bunch of rules and regulations were slapped onto it. Heck, based on look alone, the iPhone differentiates itself, and that’s not counting all the other innovations it’s been able to freely bring to the table.
One thing’s for sure: Google isn’t the only major technology company making headlines in the auto industry anymore. Get ready for a high-octane battle between two Silicon Valley superpowers.
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