These days, the media insists on describing every future plug-in vehicle as a “Tesla competitor.” The latest putative challenger is not an automaker at all, but Apple, a company that has a lot in common with our favorite EV maker (including about 150 former employees). Reports that Apple has been bulking up on battery expertise have fueled rumors that it is planning to get into the auto business.
Savvier industry observers tend to pooh-pooh this scenario – auto OEMs have razor-thin profit margins, and vertically integrate as much as possible to squeeze out every penny of waste, which is not Apple’s style at all. Retired GM chief Dan Akerson put it eloquently. “I think somebody is trying to cough up a hairball here. If I were an Apple shareholder…I would be highly suspect of the long-term prospect of getting into a low-margin, heavy-manufacturing business,” he told Bloomberg.
But what if Apple’s plan is not to build cars, but to sell user interface software for cars? The company has already taken a step in this direction with Apple CarPlay, an infotainment system that’s supposed to be “available on select new cars in 2014.”
The computerization of cars is old news, a trend that started many years ago. However, current cars are far from state-of-the-art mobile computers. As Tesla founder Ian Wright explained to Charged in a 2014 article, the software in most cars is a clunky patchwork of incompatible systems, whereas the Model S is run by one integrated system that offers features the others only dream of. There’s a huge opportunity for a company that could bring automobile IT into the 21st century, and that company seems more likely to hail from Silicon Valley than from Detroit.
What if Apple offered to license a comprehensive automobile UI to OEMs – one that features the familiar Apple interface and has all the capabilities of Tesla’s system, including remote updates? This would be right up Apple’s alley, and could be a huge step towards the hyper-connected, self-driving EV of the future. However, as at least one stock analyst has pointed out, there are serious objections to such an arrangement – would OEMs really be willing to cede so much control of their products to a third party?
It’s far too early to say just what Apple is up to, and how the Dinosaurs of Detroit will respond, but the California company certainly seems to be setting its sights on the automotive world, and it may not be the only one – Google has also stuck its foot into the street, and other IT firms may follow.
Whatever is or isn’t going on, the stock market is fascinated. AAPL set a new yearly high last week, and TSLA also posted a solid gain.