Why Apple Inc. (NASDAQ:AAPL)’s Chances in Autonomous Car Business Are Slim

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Although Apple Inc. (NASDAQ:AAPL) doesn’t comment on rumors as a policy, it is increasingly becoming difficult for the company to distance itself from claims that it is developing a car. It is highly likely that the Apple Car or iCar, if those turns out to be the names, would be an automated vehicle with an electric engine. However, does Apple stand a chance of success in car business?

Despite the fact that Apple Inc. (NASDAQ:AAPL) has transformed its business model multiple times (or at least diversified its revenue sources) over the years, the company lacks automotive experience. That is a problem. Manufacturing cars is nothing like manufacturing iPhones and iPads.

Apple has cash hoard of about $200 billion. With that, the company has the resources to absorb shocks in virtually any business that it decides to go into, but facts are stubborn.

Car manufacturing is hard

The iPhones and iPads that Apple makes are mostly treated carefully when in use or sit in the comfort of the pockets or a cashing. But cars have to withstand extreme conditions –rough roads with potholes, freezing temperatures and severe deserve heat. Apple doesn’t have an experience in manufacturing products capable of working flawlessly in extreme environments.

Of course, the company can decide to learn the ropes to become a reliable carmaker. However, the complex engineering works required in car design means that it will take years before Apple can make any meaningful progress in designing a reliable car to sell or even show off.

Production complexities

Despite its vast resources, Apple Inc. (NASDAQ:AAPL) cannot get a car factory up and running in a month or two. On the minimum, it requires a year to put in place a vehicle manufacturing plant worth its salt. If you combine that with a lengthy design process, it looks like the earliest Apple can have a reliable vehicle on the road is after 2025.

Car production is full of pressures
Apple Inc. (NASDAQ:AAPL) will counter far stricter regulations in the car manufacturing than it has seen in smartphone business.Additionally, for the most part, Apple sells an experience and reputation – mostly reputation. However, there is no guarantee that Apple will maintain its good reputation forever, and without it, selling a car could prove more difficult than selling handsets.

Sources: Forbes

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Ruchi Gupta
Ruchi has more than 6 years of rich experience ranging from Financial Services to Media. She has worked with companies like Zacks, ABN AMRO Bank (now RBS) and Genpact India. Gupta completed her Post-Graduate Diploma in Business Administration with a specialization in Finance from International School of Business and Media (ISB&M). Ruchi can be contacted at: [email protected]

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3 COMMENTS

  1. Yes Tim is not Steve. Steve is dead. Tim runs a company with 200 Billon in cash. Tim has marginalized Samsung, LG, HTC, and every other cell phone maker on the planet that make NO PROFIT from those devices. There’s a difference between worship and enthusiasm. I have only one question for you. Do you own any apple devices? There’s an old marketing saying you should consider, “Ask the man that owns one” Here’s another old saying. “Put your money where your mouth is!”. Heck, I’d even be impressed if you are just shorting Apple stock. I have no idea what you’re complaining about. I own an macbook air, mac pro, iPhone 6S, apple TV 4 and am thrilled with all of them. I have a record label that has over 8,000 tracks on iTunes and has been making a serious amount of money for us for the last 10 years while the rest of the record business has been falling off the edge of the earth. In addition I own a great deal of Apple stock. I know where I’m coming from. How about you?

  2. Lawrence, you sound like an Apple worshiper. I don’t see an issue with the article besides it’s source is Forbes by the way as it says at the bottom.

    Tim is not Steve that’s one, secondly, try to let it sink in your head that Apple is not the ultimate tech company, they have issues and they certainly did “steal” technology from others so spare us the hollow Apple glorifying please.

  3. In a free society, anyone can have and express their opinion. BUT…..seeing this article in my Google Finance feed for Apple Stock tends to reinforce MY opinion that having a robot pick out articles of note for investors is like having an ouija board make stock pics.

    Do you really think that Tim Cook called up Bernie in New Product Development at Apple and said….”Hey Bernie, I want you to put in place a plan for Apple to start building cars by 2019. I’m giving you a check for 50 billion bucks and when you run out of that, there’s another 150 billion for you to draw upon.” Why do research, EVERYONE WANTS A CAR so who needs to go any further?

    Well, everyone was saying that Apple was going to build a TV. People were SURE they were going to build a tv, and what did they come out with, APPLE TV 4, basically an EXTREMELY sophisticated set top box that fit PERFECTLY into the Apple ecosystem.

    Trust me, if Apple is going to build a car, they’ll take some time to study the plusses and minuses of such a venture.

    Take my advice next time you write an article about what plans Apple has in the future. Here it is. If you think you know more about what Tim Cook and his crew know about a subject………think again.

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