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When Tesla’s super factory rises up in the Texas desert, traditional car giants are betting on electrification transformation, and technology giants such as Huawei and Xiaomi enter the intelligent car race with high profile, a confusing phenomenon continues to spark discussion: as the world’s most valuable technology giant, why did Apple decisively dissolve its car making team and abandon its car making plan? Cook seems to have discovered something.
In the past decade, rumors about Apple cars have never stopped, but apart from the continuous iteration of the CarPlay in car system, consumers have never been able to wait for that smart car with the glowing Apple logo. This decade long car making puzzle reflects the deep game between the technology industry and the automotive industry in the era of deep integration.
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strategic focus
Apple’s business empire has always adhered to the product philosophy of “extreme simplicity”. Unlike other tech giants who like to tinker around, Apple during the Tim Cook era maintained astonishing strategic determination: launching only a few core products each year, yet accounting for over 85% of the global consumer electronics industry’s profits. This strategic focus on car manufacturing is reflected in rigorous cost-benefit calculations.
The marginal effect of product matrix: iPhone, as a cash cow, contributed over $200 billion in revenue last year, while the ecosystem formed by Mac, iPad, AirPods, and others has built a deep enough moat. As a heavy asset, long-term, and low gross profit industry, the cost-effectiveness of automobiles poses a challenge to Apple’s existing business model.
Cannot accept imperfect products
Apple’s car making ambition has never stopped at producing an ordinary electric vehicle. Its initial goal is to build a fully autonomous vehicle “without steering wheel and brake pedal”, and even envisage “zero intervention driving” through Siri voice control. However, this vision is impossible to achieve in the short term. In addition, the perfectionist Apple company cannot accept imperfect products being launched into the market.
In the game between tech giants and traditional car companies, time dimension becomes a key variable. The mature “vertical integration+global OEM” model in the consumer electronics field has completely failed in the automotive industry. The automotive supply chain involves over 20000 components, with a certification period of 3-5 years. While Apple is still struggling with whether to invest billions of dollars in building a factory, the automotive industry is evolving at an unimaginable speed.
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Apple’s retreat is essentially a precise business calculation: when investing over $10 billion in ten years but still seeing no hope of mass production, timely stop loss is more important than idealism. Currently, Apple is focusing on AI and AR, transforming its advantages in consumer electronics into an enabler of the automotive industry, and still holds a significant number of automotive related patents. Since the launch of CarPlay, Apple has been trying to expand the iOS ecosystem into the automotive industry. By holding patents for in car interaction and AR navigation, Apple can further enhance the functionality of CarPlay and even potentially develop the next generation of in car operating systems.
External comments: In the century long transformation of smart cars, Apple’s caution and patience are in stark contrast to its radical innovation in the field of consumer electronics. Behind this strategic choice is not only a clear understanding of the particularity of the automotive industry, but also a precise grasp of its own advantages. While the industry is still debating when Apple cars will be born, this tech giant may be reshaping the future of the automotive industry in another way. Some Silicon Valley analysts say that Apple never really wanted to make cars, they were just looking for the next iPhone.
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