Implications of Apple Car
Apple obviously believes it can solve experience problems in the mobility area.
Although it is not officially confirmed, the rumors that Apple is building a car are intensifying. This has some interesting implications for the automotive industry, which is why I would like to summarize and classify a few things today.
I don't think it makes sense at the moment to talk about what the Apple car technology will look like, which is why I think speculation for example about a potential solid-state LFP battery is still too early. But, since the possible Apple Car will be a purely electric vehicle, Apple will also have to address issues related to batteries. Anyone who wants to read up on this: I've already discussed some of the key issues regarding Tesla Battery Day. The short version: it is and remains complicated and much will depend on Apple finding a chemistry mix that best suits the intended use of the car.
My first look was in the direction of Volkswagen, because their CEO, Herbert Diess, gave an interview a few hours after the Reuters exclusive, in which he referred to the potential Apple Car:
“We are looking forward to new competitors who will certainly accelerate the transformation of our industry and bring in new skills. The incredible evaluation and thus the virtually unlimited access to resources inspire us a great deal of respect. A real challenge - dimensions greater than those within our industry (e.B. Toyota Motor Corporation ) As I have already said, the most valuable company in the world will once again be a mobility company - it Tesla can, Apple or may be Volkswagen AG called. “, Diess said.
A few days ago I wrote my first impressions about that interview with another quote of Mr Diess on my LinkedIn page.
It is relatively clear that Herbert Diess, as CEO of Volkswagen, has a lot of respect for Apple and a possible Apple Car. Diess said, that "The unbelievable valuation and the practically unlimited access to resources (of Apple) instill a lot of respect” in Volkswagen.
However, I think it is not so much Apple's valuation that should be a concern, but the fact that after many years of research, Apple seems to have discovered elements in mobility that they want to solve with an Apple-specific approach.This doesn't necessarily mean disruption, but it does show that there are unmet customer needs in the automotive customer experience/ Jobs to be Done space.
Apple obviously believes it can solve these.
This should be worrisome.
Maybe it was the timing, or maybe it was just too strongly related to Volkswagen, but I think further classification of the Apple car news makes sense. Many articles in recent days (also in context of the high valuation) have also dealt with Tesla's new potential competitive situation. One could now go through each carmaker individually, but it would not change much dramatically. And yes, I know that many people are now expecting the big showdown between Tesla and Apple; I think you can certainly make a good story out of this but I won’t.
The questions Tesla needs to answer to beat Apple are likely to be pretty much the same ones that classic automakers like Volkswagen and BMW have. If there is going to be an Apple Car, it will be a typical Apple product. Apple stands for:
User Experience
Reliability
Delivery + Execution
Distribution
Design
I think, these characteristics are pretty obvious if you have some Apple products in mind: The user experience of the App Store, the reliability of iPhones (update policy,…), the guaranteed delivery of iPhones (even the pandemic could only jeopardize the launch of the annual iPhone update for a short time) and the distribution channels they are controlling (third-party cellular network carriers, wholesalers, retailers, resellers, own retail stores, eCommerce on apple.com,…). Design is a bit different: it does not mean the product design only, but the process of design. Apple separates the design process from the outsourced process of production , an iPhone designed by Apple in California means that the product is produced elsewhere by Foxconn.
This would be a completely different approach than large OEMs have: every big carmaker is also manufacturing cars. This is quite interesting because manufacturing cars is really hard. Elon Musk said, that for “cars it's maybe 100 times harder to design the manufacturing system than the car itself." So maybe it would be right to say that the fight of the incumbents against the Apple car “will be won on the factory floor", as Tim Culpan wrote last week.
The Apple approach of designing and manufacturing a car could be the antithesis of a whole industry that says you have to produce the car you have designed.
(I know that there are some exceptions, but as far as I know, only Magna Steyr is a supplier/manufacturer independent from OEMs with knowledge in the whole car.)
Compared to car manufacturers, Apple is really good in the combination of User Experience, Reliability, Delivery, Distribution and Design, even if you compare Apple with the best-in-class manufacturers. The problems OEMs have in these areas are somewhat different and specific:
Tesla may have more problems in the area of reliability (see Autopilot problems)
Volkswagen as an example of a traditional carmaker may have more problems in the area of user experience (this does not only mean software, but is a large part of it. See software problems of the Volkswagen ID series).
Other car manufacturers have their problem areas elsewhere.
Whether an Apple Car is a premium mid-size car or a small autonomous city vehicle, Apple will be strong in these areas, and products on the market that have problems in these areas mentioned will look very outdated compared to the Apple Car.
With an Apple car on the horizon, it's clear that any strategic mistake by an OEM can and probably will have catastrophic consequences. There have been a few experiments in recent years and few have worked.
This will have to change, starting right now.
Photo Credits: Andy Wang, unsplash.com