Despite a frenzy of speculation over the possible release of an Apple electric car or truck (code named Titan), it is highly unlikely that Tim Cook and Co. have any real plans to design an automobile for mass production.
Apple car: rumors and gossip
Recent rumors suggest that Apple will offer Elon Musk $75 billion for Tesla within the next 18 months, but many believe that a deal is highly unlikely. More recently, it has been suggested that Apple has several hundred people working on an Apple branded car, which some say looks much like a mini-van. Apple CEO Tim Cook approved the project about a year ago and placed a former Ford executive, and now Vice President of product design, Steve Zadesky, in the leadership role for the project. We also know that Apple has been actively hiring engineers from Tesla motors, offering them massive signing bonuses and increasing their salaries by 60%. With facts and rumors like these, we can assume that Apple has plans to build a car of their own. But the question must be asked, “Why would they?”
Inspiration for an Apple car
It seems like only yesterday when Elon Musk built Tesla Motors out of thin air. The quick rise of the Tesla brand is an anomaly in the automotive industry. Just look at the sad departure of Fisker Motors and you will understand that building a successful automotive product is not easy. However, Tesla’s unique technology, impeccable engineering, and Elon Musk’s leadership has steered the motor company in the right direction. Still, many believe that Tesla Motors is overvalued and not as profitable as they would like.
Perhaps, Tesla’s triumphs have given Apple the faith that they too could build a successful car company. Apple has connections far and wide, a one of a kind design aesthetic, a drive for innovation and perfection in everything they do, and most importantly deep pockets. Apple could throw money at project Titan for a decade without every coming out with a finished product and it would barely affect their bottom line.
Apple is taking risks
With the pending release of Apple’s Watch, it would appear that Cook and Co. are moving into uncharted waters. So far, the Apple Watch does not have the same kind of wow factor and buzz as some of Apple’s more popular products. Some would argue that the Watch is not a game-changing device that everyone feels the need to own. However, if you recall the unveiling of the first iPad and the unenthusiastic reaction from the public and the media, we know how easily consumer’s minds can change.
The delay of Apple Watch’s launch has caused many consumers to forget about the new wearable and what little buzz it had has dwindled significantly while Apple dealt with supply chain issues in the months since. To combat the genuine lack of consumer enthusiasm and the shared belief that the Watch is not a life-changing product, Apple has teamed up with major players in the fashion industry to launch Apple Watch. Some argue that every Apple product is a fashion accessory. Anyone who has ever walked into a crowded Starbucks on a Saturday morning knows exactly what this means.
Apple Watch represents a new shift in Apple’s leadership. Tim Cook appears to be willing to make risky decisions. Many tech writers are saying that the Apple Watch, with it’s gold-plated Edition model rumored to cost a whopping $5000, is a prestige product. If Apple is willing to sell a simple watch at that kind of price, the idea of an Apple branded car becomes even more believable.
When you really think about it, all of Apple’s products are “prestige products”. At the very least, their marketing department wants you to feel that way. Everybody knows that Apple makes stylish and expensive tech. When you break down the cost for the components used for these products, you pay for the style more than the functionality. One could easily build their own Windows computer from the ground up with the same pieces used in an Apple computer, but at a third of the cost. Apple is making a big profit on every item they sell and it is all based on the consumer’s perception of high-end value and prestige.
The key to Apple’s financial success of late has been the iPhone, a rather expensive product if it were not for the subsidies contracted by the major cellular phone carriers like ATT, Verizon, T-Mobile, and Sprint. This subsidized business model is helping put an iPhone in the hands of millions of people who otherwise could never afford to spend $800 – $1000 on a cell phone. Of course, the adoption into Apple’s ecosystem inspires many to try out their other products like iPads and Mac computers, but not every purchase of an iPhone leads to the purchase of these other products.
Don’t expect an Apple car anytime soon
Apple’s bread and butter, the iPhone, is a product for the masses and an Apple car could never be that. The price for an Apple car, much like the price for a Tesla, would be out of reach for the average consumer. Apple may want to steer away from these lofty car plans. Tesla motors profits have yet to reach a billion dollars a year. With companies like Volkswagen making only an average profit of $850 per car sold and Porsche netting the company only 2 billion euros in profit annually, it is hard to believe that Apple would want to invest their money in this way. Apple made 8.5 billion dollars in profit in 2014. Why would they want to go into car manufacturing when they can continue printing money with their tech products?
With so many people using iPhones and sales of Mac computers on the rise, perhaps Apple wants to develop a singular product that would further their position as a fashion and prestige company. An expensive car would certainly do just that and if there ever was an Apple car, it would be absurdly expensive. On the other hand, Apple works on all kinds of projects that never see the light of day; patents get filed and approved, but they do not always end up in Apple’s consumer products. Knowing this, the fact that Apple is working with cars is really no surprise. However, it is quite possible that they are working on technology that they intend to patent and maybe someday license out to other car companies in the future, products and services like the new Apple CarPlay.
If Apple is working on a car, and all of the rumors point to that being true, then they are taking an even bigger step into the fashion and prestige market. Still, it remains to be seen what Cook and Co. plan to do. Rumors are abound, assumptions are being made, and hopes are high. One thing is for sure: if Apple does develop an electric car, it will not be for the average consumer, it will not look like a mini-van, and it will not be available anytime soon.