Traditional premium automakers have the most to fear from a potential launch of a car by Apple, analysts at Bernstein believe, citing its ability to leverage its brand power to potentially sell 1.5. million units annually in that sector by 2030.
Apple has never officially revealed it is working on a car, but the company reportedly started the project in 2014 and has been refining it ever since.
More recently Apple has been looking for manufacturing partners. Hyundai and Nissan were candidates, according to reports, but no agreement has been reached.
Apple’s ability to equip cars with a software ecosystem used by millions of its iPhone owners is perhaps its greatest asset, said Bernstein’s Arndt Ellinghorst in a Q&A discussion hosted by the research company. “That’s why I think it’s one of the biggest scares for traditional automakers out there,” he said, citing premium brands specifically. “They would be much more scared by an Apple than by a Rivian or a Lucid or a Fisker or even by a Nio.”
An Apple car would be electric and likely offer autonomous capability, one area that the secretive company has spoken about. In 2017 CEO Tim Cook talked about the company’s research into autonomy, calling it “the mother of all AI [artificial intelligence] projects.”
Bernstein estimates that Apple wouldn’t launch its car before 2024-25 and potentially not until 2028. The analyst firm also warned that given the hurdles that remain it is “not convinced” Apple will go through with the car project despite working on it for nearly seven years.
“Apple has a very high bar for introducing new products, and has abandoned new offerings in the past very late in development,” Toni Sacconaghi, Bernstein’s IT hardware and U.S. electric vehicles analyst said.
He cited company’s plans to offer its own TV, a project that was shelved despite Apple having lined up a supply chain to make it. “I spoke with a senior engineer at Apple who said, ‘Eighty percent of what I work on never sees the light of day’,” Sacconaghi added.
Apple is working on autonomous software but doesn’t have a technology lead based on test reports submitted to U.S. transportation authorities seen by Bernstein.
The reports show that Apple is in the middle of the pack based on the number of autonomous miles driven and miles between disengagements (how far the vehicle goes before a human needed to take over).
Google parent Alphabet’s autonomous driving unit, Waymo, is in front on miles between disengagements, while self-driving technology company Cruise, which is majority-owned by General Motors, leads on autonomous miles driven.
Apple appears to have no breakthrough on battery cell technology either, according to research into patents filed. It would also likely be too late into the sector to form an exclusive partnership with a cell supplier on new chemistry.
“We think a hurdle for Apple is being able to offer a unique driving range,” Sacconaghi said.
With no specific lead on autonomy or battery technology, Apple will have to rely on the same marriage between design and proprietary software that make its phones so profitable.
“That will be the distinctive value proposition for the car. The question will ultimately be: Is that distinctive enough for Apple to launch the car?” Sacconaghi said.
The analysts didn’t foresee Apple having any trouble distributing its cars given it could leverage its 500-store global network, which is larger than Tesla’s at about 300 stores.
Manufacturing is considered a bigger problem by Bernstein. Apple is reportedly looking at a contract arrangement with an established automaker, but finding a partner has proved elusive.
“It would need to be someone with manufacturing capabilities in the U.S., China and Europe because cars are not easy to ship around [the world],” Ellinghorst said.
He also said there would need to be “no or very few conflicts of brand equity and segment positioning,” suggesting a mass-market automaker. A contract manufacturer such as Magna Steyr would likely be too small, he said.
An alternative was partnership, with Ellinghorst suggesting BMW. However, Apple’s desire to control its ecosystem could make that option “highly unlikely,” Sacconaghi said.
The Bernstein analysts warned Apple that vehicle making is hard. “The one thing that’s very often underestimated, especially in the tech world, there is no easy way to build a car,” Ellinghorst said.
That point was echoed recently by Toyota Motor President Akio Toyoda, who said that the automotive business goes beyond manufacturing and software.
“After making a vehicle, I would like them [Apple] to be prepared to deal with customers and various changes for some 40 years,” Toyoda said at a news conference held by the Japan Automobile Manufacturers Association.
British household products maker Dyson abruptly canceled its electric car in 2019 after realizing it would have to charge more than 150,000 pounds ($181,885) for the SUV, owner James Dyson revealed last year.
Apple could do the same, Sacconaghi said: “If it really believes it has something truly distinctive, it will bring it to market. And if it doesn’t, we won’t see it.”
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