By Amit Kumar,
In the year 2008, Tesla started a mobility revolution by launching its first electric car, the Roadster. After more than a decade, there is another revolution brewing in the automobile sector. Mobile handsets giant Apple is looking to make an entry in electric and self-driving mobility. Tesla and Google’s Waymo are also in the race. The reasons are becoming more obvious than ever before: More than a century old Automobiles market is expected to be almost 9 times larger than the global smartphone market by 2030, the Automobile market is dominated by traditional players who have a lot to lose by disrupting themselves. As a result, by the year 2030, market disruption in the form of self-driving cars is expected to be approximately $2 trillion, which was only $54.21 billion in 2019.
Coming back to Apple, the seeds of its entry into mobility market were sown in 2014 when Apple announced its entry into the automobile sector through a project internally codenamed ‘Titan’. Last 7 years have been of prolonged silence. But inside Apple ‘the Titan’ has been moving with its trademark secrecy and disruptive pace. As per latest reports project ‘Titan’ close to fruition. Apple is all set to produce its electric – self – driving passenger vehicles by 2024. Apple Edging Over Its Technology Apple has its battery tech as the focal point this time for its automotive debut and as per reports Apple is also evaluating a combination of batteries known as Lithium Iron Phosphate or LFP which reduces overheating and is safer than lithium-ion batteries. As per the report filed by Apple to the California Department of Motor Vehicles, in 2019, Apple’s car drove around 7,544 miles, which increased to 18,805 miles in 2020. As the self-driving technology is still in the initial phases, this technology is likely to have disengagements or human interferences while the car is being driven on the road. Possible options to enter the Automotive market for Apple Apple is new to the Automobile sector, but it has its USD 200 billion cash reserves, battery technology, software and design prowess to make a mark. This reminds us of what apple did in 2007 in the mobile handsets market. To move forward, Apple has a couple of options in front of itself:
The first option is to manufacture Apple branded cars itself, which is capital intensive and might have a long gestation period. Relatively new entrant, Tesla has faced challenges in meeting its car production targets. The second option is to partner with existing car manufactures and license its design, software and technology. Apple is already in talks with Kia Motors Corp and seems to be favouring the second option.
How is the Auto Market Reacting?
Apple’s entry would surely challenge a lot of automakers who are now taking the electric and self-driven car market seriously. Year 2024 has the potential to be the ‘Nokia moment’ of the Automobile industry. Reactions from Automobile industry leaders have been mixed. Some have shown scepticism questioning Apple’s decision and its ability to deliver shareholder value through cars, while others are affirmative about Apple cars, stating that it would be a revolutionary Internet of Things (IoT) upheaval for the industry. Would Apple be a Black Swan for Its Competitors? In the last two decades, Apple has built a formidable brand, which eases its entry into any new industry. People are more likely to buy a car from Apple than to buy a smartphone from a leading Automobile manufacturer. This is the power of brand Apple. Apple has a strong foothold in the software ecosystem. Apple has a strong lead in AI and Machine Learning powered architectures. While counting Apple’s strengths we must not forget that cars are machines and have moving parts while phones are largely static devices. Apple’s core market is smartphones and entering into a gigantic segment like the car would require Apple to add many new capabilities. Apple is indeed aflush with cash, top talent and strong intent, to write the future of mobility. A Battle Royale for the next king of human mobility is on cards, between Apple, Tesla, Google and every automobile manufacturer in the world.
(The author is CEO, OLX Autos. The views expressed are his own.)