Apple’s “iCar” — The Next Eco-System Step
By: Tim Sibold
Tags: Autonomous Vehicles, Ecosystem, Emobility, Automotive, Apple

Photo by Michał Kubalczyk on Unsplash

According to Reuters Apple aims to expand their ecosystem even further and launch a self-driving car in 2024. Why?

Apple already accompanies you almost 24–7 with their iPhone, MacBook, Apple Watch, etc., except the time driving your car. According to a survey among 2k Americans the average driver spends about 71 min/day in their car — in digital economy a huge potential in terms of user awareness! Apple’s current CarPlay integration works fine for driving, but UX and adoption rate is limited due to regulations preventing driver distraction.

Therefore E-Mobility & Autonomous Driving are very promising trends, since they are game changers for the whole Automotive industry and offer Apple great chances to enter the huge Automotive OEM market (~10x bigger than smartphone market in terms of revenue) with an own electric and autonomous vehicle. Why?

E-Mobility reduces the entry barriers for Apple and others significantly due to reduced complexity of development, production and maintenance of an e-drive compared to a classic internal combustion-engine. Regarding the EV development Apple will probably also apply a similar strategy like Tesla. Meaning focusing on the development of differentiating and customer-relevant systems by leveraging their vertical competences in system on a chip design (with M1) and superior software and pairing that with the usage of existing and state-of-the-art vehicle systems from suppliers like Bosch. But in terms of production Apple will probably not follow the Tesla way, because they partnered successfully with electronic manufacturing services (EMS) companies like Foxconn for their other digital devices in the past. To prevent the quality issues of a Tesla, outsourcing that capital-intensive processes to an experienced and high-quantity producer like Magna or another OEM appears more realistic, because this would not only help in reducing unit costs, but also secures Apple’s high quality standards.

Autonomous driving will liberate the car user from the act of driving and thereby unlocks her/his precious attention and awareness. Compared with small smartphones the car with its large-screen infotainment infrastructure not only offers more convenient and comfortable UX, but also a valuable digital platform for future value-creating services including their valuable monetization. One crucial reason, why Automotive OEM like VW and Daimler work on their own OS and App Stores. If they succeed in offering a similar services variety and personalization this might represent a considerable threat for the precious user attention, currently mainly occupied by Apple and Google. On the other hand Apple has a proven track-record of creating not only outstanding digital products and services but a whole ecosystem around it.

The potential “iCar” — an electric and autonomous Apple vehicle — might therefore be the next logical step, because it would allow Apple to expand their currently very successful business model of “reversed” razor and blade to the automotive industry. Premium hardware (with high margins due to low manufacturing costs) combined with rather low-priced, but value-creating/extending services (from Apple or 3rd Party) on their powerful iOS platform.