Everyone in the tech industry thinks Apple is working on a car project.
In the auto industry, there’s ample curiosity about what Apple is up to, but no executive I’ve spoken with seems to know what the master plan is.
The consensus from Detroit is that an Apple Car is a good thing. Fear that Apple will somehow put everyone out of business isn’t present.
And from one perspective, Apple couldn’t have picked a better time to get into the car game. In the US, the auto market has surged to new heights, setting the stage for a lot of new opportunities. If there is an electric vehicle boom a-comin’, it’s going to come soon.
But that’s a big if. Right now, the reality is that there’s an exceptionally low level of consumer interest in electric vehicles.
When you look at the electric-car market, you see a neat division: there’s Tesla, and there’s everything else.
Outside the Tesla market, there are numerous offerings from traditional automakers. But few customers wants to buy them.
A maturing technology
The electric-vehicle (EV) market in the US isn’t in its infancy anymore. A wave of fully-electric cars arrived over five years ago, along with plug-in versions of hybrids that were already in the market.
But by 2015 these cars accounted for less than 2% of overall market share. There isn’t a supply problem holding share growth in check, either. Nissan, Honda or Toyota could flip a switch on EV production in a matter of months, putting vastly more vehicles on dealer lots.
The problem is on the demand side.
Tesla doesn’t have this problem: the California-based car maker has struggled to produce enough cars to meet demand and on many occassions has made customers wait for delivery of their vehicle.
But once again, Tesla is unique.
With gas cheap and most EVs still relatively expensive (even after tax credits and incentives), Tesla is capturing motivated buyers who love the brand and have the resources to buy cars that sell for around $100,000. A big test of whether Tesla can develop beyond this paradigm will come this year, as it moves toward launching its Model 3 mass-market cars, expected to be priced at $35,000.
The Apple Car’s path to market would probably mirror Tesla’s — and Apple’s own pricey laptops and smartphones.
We’re gonna need a bigger boat
Unfortunately, for the Apple Car to matter as new product the massive tech company, it will need a much bigger EV market than what currently exists. Tesla may assist in creating one — but Tesla could also be about to prove that there current mass EV market is limited.
And I’m assuming that the business model Apple will pursue, if it starts selling a car, will be single-owner. If Apple instead intends to build cars for some kind of Uber-ized ride-hailing or car-sharing scheme, then it’s unclear whether the economics will fit with Apple identity as maker of things, rather than as a purveyor of services (in spite of the company’s move that way with its cloud, payment and music businesses).