Why The Apple Car Makes Sense, And Why It Doesn't

by Sohini Bagchi    Feb 20, 2015

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Apple is reportedly making an electric vehicle, which will hit the market as early as 2020. The Cupertino major has a secret lab working on the creation of an Apple-branded electric car and Bloomberg reported earlier that the iPhone maker has built a team of about 200 engineers to meet that goal.This is seemingly an aggressive target for a mobile devices maker with little experience in car manufacture, believe experts.

In recent times, Apple, Google and other Silicon Valley majors are being bullish on the car business. That’s because they would not want to miss out on the several billion dollar auto business. What needs to be mentioned is that most car majors also have a presence right there in Apple and Google’s own backyard, as they too do not want to miss out being at the heart of digital technology.

Today, car design and development is going digital, and so is auto manufacturing. However, according to analysts, car companies require stability, sufficient capital and must adhere to strict rules. According to them, traditional auto companies have very complex processes. It is here that Apple and even Google or any pure tech company will suffer if they are looking beyond the role of first-tier supplier.

Read more: How Self-Driving Cars Are Changing Our World

Tech analyst Jeremy Cato writes, a global patchwork of safety regulations, emissions and many other elements of the auto industry creates a complex, bureaucratic structure that mobile phone makers and search engine developers simply cannot comprehend. These require a bureaucracy within car companies that makes sense of the government/regulatory bureaucracy.

He explains,“To put it simply, if your cell phone just stops working, if it gives up the ghost in mid-call, no one dies. If your car or any key part of it fails, someone can die. And if it does not meet a long list of crash test standards, a new vehicle never even goes on sale. Silicon Valley companies do not need to worry about anyone dying while using their products.”

Former General Motors chief executive officer Dan Akerson also openly criticize Apple’s recent move. He says, “low-margin, heavy-manufacturing” aspect of the auto business as a key reason for Apple shareholders to be wary of such plans.

Akerson feels Apple would have a far better chance partnering with existing automakers with products like CarPlay, citing infotainment systems as one area the executive would have gladly turned over to Apple during his days at GM.

Read more: Why Is Everybody Racing For Connected Cars?

Apple’s track record with first-generation products has been flawed in the sense that the original MacBook Air, Apple TV, and iPhone had some design and manufacturing issues that required substantial changes. Analysts are sensing a similar potential for issues with the upcoming Apple Watch. So this is another apprehension.

Nonetheless, the $700 billion US giant thinks differently. In most cases, it is way ahead of its peers when it comes to design and built. Since Steve Jobs’ Era, it knew how to make complex things simple - a big advantage to give a stiff competition to other auto makers. Moreover, auto industry is now ripe for disruption, paving ways for innovative companies to enter the market. If Apple succeeds in the auto market, it has a real chance of changing the world. If not, Amen!