Why is Apple betting on the Automotive market...

Will Apple build a car eventually??

1.Apple has the resources. Car-making is the second most expensive business in the world after the oil industry. The sector invested a staggering $133 billion on capex and R&D last year. The costs keep rising due to increasing safety and emissions standards, as well as technological innovations. GM spent $14.4 billion on new products, plants and technologies in 2014, and it has increased its spending by $2 billion this year. Apple can easily afford that kind of money, as it has the world’s biggest cash reserve at over $200 billion. It could match GM’s spending without much trouble.

2. Dealerships won’t be a problem. Apple could sell its cars through its existing retail network and bypass the old franchise rules that have blocked other potential competitors. Tesla deserves praise for tackling this issue. Apple has the lobbying power if it wants to join the fight. Imagine the outcome: Imagine you go to an Apple store and take a test drive from the mall parking lot, then sign the papers back at the Apple store, next to the guy with an iPad. Maybe you’d wear some Apple AR headset to experience the car inside the store, then fill out the paperwork on an iPad and arrange for it to be delivered right to your doorstep.

3. Apple wouldn’t have to build the car at all. Just as it delegates production of iPhones and computers to companies like Foxconn and Samsung, it would likely hire a contract manufacturer to build the vehicles. Apple would handle the design, engineering and marketing. Supply chain management should be simple, too as Tim Cook is known for that. Automotive suppliers that have been squeezed by major carmakers would be more than happy to work with a rich new entrant.

4. Apple has no legacy issues.?It doesn’t have old factories that need retooling. Nor does it have expensive unions, tired brands or stubborn management fiefdoms to support.

5. Tesla has shown the way.?Musk has created the first automotive brand in decades that has captured the public imagination. Just imagine what Tim could do with Apple’s capabilities.

6. With the name Apple comes credibility.?Branding and marketing is extremely costly and important in the car business. But Apple’s brand – by far the world’s most valuable brand. This gives them extraordinary leverage over established automotive brands. GM and Ford Motor are spending huge amounts of money to prove they’re cool. Apple already is cool. That’s why carmakers are rushing to include Apple’s CarPlay user experience in their future models.

7. People would stretch to buy a car from Apple.?They already pay premium prices for Apple computers, iPhones and iPads. If they could replicate the Apple user experience in their car, they’d probably find a way to justify spending more on a vehicle, too.

8. Apple is known for winning the Talent War.?They can pick off whomever they want at will. The company has already been scooping up auto industry veterans and is even reportedly offering $250,000 signing bonuses to woo Tesla employees.

9. Apple only needs one great car.?It doesn’t have to care about catering to every market segment. That focus would give them a huge edge.

10. Apple can take risks others can’t. If Apple tries to make a car, and spends, say, $20 billion on the project, it would be the biggest budget ever to develop a new vehicle. (For comparison, Cadillac spend $12 billion to develop eight new models in 2020 and two more in the next decade.) Yet the experiment would be only about 10% of Apple’s total cash. So Apple can aim for a moonshot – a self-driving electric car, perhaps, that smartly handles all of life’s details – because failure is an option.

Apples annual revenue was $394 Billion in the year FY22. It makes this revenue by selling iphones, iPads, Macbooks, Apple TV, AirPods, Watches & Subscription Services. Multiple products, multiple challenges, EU regulations, competition across categories etc etc...

The automotive industry is globally close to $3 Trillion. It needs only a market share of less than 10% to achieve the total revenues it does with a suite of current products by entering with only 1 product. As phones & laptops start reaching global saturation and possibilities of mobile phones being replaced by some other edvice going forward, the automotive segment is the PERFECT bet to bank on!