When we take a closer look, Apple’s foray into car manufacturing might not be the best idea. Critics often lament that Apple isn’t innovating enough. Yet, just a few years ago, they revolutionized consumer computing with Apple Silicon. For many, however, this isn't sufficient; they crave continuous, groundbreaking advancements. But innovation doesn't occur instantly, and those who can't accept this truth might benefit from experiencing the reality themselves.

The prevailing demand for an Apple Car—an actual vehicle, complete with wheels, seats, a hood, and an engine—has surfaced over the years. While Apple is indeed exploring concepts in the automotive sector, the specifics remain unclear. What is evident is that Apple has put significant focus on CarPlay, as highlighted during WWDC 2022. This brings us to why that announcement could be a game-changer for car enthusiasts and why creating a car may not align with Apple’s interests or those of consumers.

Learning from Tesla… I once admired Tesla, but my enthusiasm has waned recently, partly due to Elon Musk’s unpredictable behavior. A CEO with such temperament doesn’t inspire confidence. Additionally, established auto manufacturers are now entering the electric vehicle market, revealing Tesla's vulnerabilities.

Regardless, Tesla’s journey has provided valuable insights beyond simply validating electric cars as feasible. It serves as a case study for a relatively new carmaker, and I’ll highlight four key lessons.

• Prototyping is relatively simple. With some funding, many could create a prototype in a few months. Numerous new electric vehicle companies have produced prototypes quickly, only to falter when transitioning to mass production.
• Scaling manufacturing is crucial. Transforming a prototype into a production-ready unit is a complex process. The ability to scale production has been a cornerstone of industry advancements for centuries.
• Distribution presents challenges. Tesla has repeatedly demonstrated that the global distribution of vehicles is a monumental challenge. Manufacturing cars in one location and distributing them worldwide isn’t sufficient.
• Intense competition is a reality. While the smartphone market might seem saturated, the automotive sector has faced stiff competition for years, and the shift towards electric vehicles has intensified the race.

Go big or go home… To thrive in the automotive industry, Apple would need to establish a massive operation in a field where it currently lacks experience. Despite my admiration for Apple, I believe they have no background in car manufacturing. While some argue they could hire experts, that’s not a straightforward solution. Apple’s core strengths lie in computing and software. They would likely need to acquire an existing car manufacturer, which could lead to significant challenges during the transition.

Moreover, creating electric vehicles isn't solely about manufacturing cars. It would be unwise for Apple to develop a proprietary charging system, yet they would inevitably need to engage with global charging infrastructure expansion.

You can’t inundate the market with vehicles without considering charging networks.

Dealerships would also pose a challenge for Apple. Unlike Tesla or Ford, which have embraced online sales, Apple has a strong physical retail presence. It’s unlikely they would adopt a purely online sales model for the Apple Car.

Repair centers represent another critical consideration. While Apple manages repairs for its gadgets, automobiles require a different level of infrastructure. Handling numerous faulty cars is far more complex than managing defective phones or laptops.

And let’s not overlook the issue of lawsuits. Apple’s history with class-action lawsuits has mostly revolved around relatively minor grievances. However, lawsuits in the automotive sector can carry severe implications, including medical costs and liability claims. Apple lacks experience in navigating these waters, while Tesla, despite its experience, still grapples with such challenges. Given Apple’s prominence, they would likely face even greater scrutiny, as any issues would directly reflect on the brand.

Scandals in the auto industry can tarnish reputations. The VW emissions scandal is a prime example of how difficult it is to recover from such incidents. I doubt Apple possesses the resilience to weather similar storms, regardless of its valuation.

A car introduces far more risk compared to other tech products.

Finally, we must consider supply and demand dynamics. Tesla’s current supply challenges stem from the nascent electric vehicle market, yet Apple has also struggled to maintain stock of new products. Although one might argue that the volume of phones and computers sold surpasses that of cars, many consumers who invest in high-end tech likely have the means to purchase an expensive Apple Car. However, the demand could outpace supply significantly, leading to long wait times for potential buyers.

The future isn’t in cars… This brings us to a more contentious point: as environmental awareness grows, people are seeking fewer cars on the streets, regardless of their energy source. Cities are increasingly adopting on-demand transportation options, many of which aren’t even cars.

I fail to see how Apple could effectively position itself as “just another car manufacturer” unless it provided vehicles solely for ride-sharing services. However, Apple has never prioritized sharing models, making this scenario unlikely.

An Apple Car could ultimately jeopardize the company’s longstanding success.

Poor return on investment It’s common knowledge that Apple aims for substantial profit margins on its products. However, the automotive sector doesn’t yield high profits. The conventional belief is that car manufacturers enjoy a 30-40% profit margin, but that’s often misleading. For instance, Porsche, a personal favorite, averages about 21% profit on each vehicle.

No Apple Car could outperform the legendary Porsche 911.

In contrast, the iPhone 13 had a profit margin of around 37%, with the iPhone 13 Pro reaching approximately 50%. These figures are on the lower end, with some products boasting margins of up to 200%. Essentially, if car manufacturers attempted to achieve the profit margins that Apple does with its devices, we would likely see a significant shift toward walking or cycling.

The alternative reality Enter CarPlay, as unveiled at WWDC 2022. This model emphasizes software integration with third-party hardware. It may not seem very Apple-like, as it resembles strategies employed by Google and Android, but this approach makes sense.

Car manufacturers have quietly acknowledged that their in-house software often falls short. Developing software involves challenges that automotive companies may not be equipped to handle. In contrast, Apple excels in software and could license its technology to provide seamless integration without the headaches of manufacturing vehicles. This strategy offers a cleaner, more agile, and ultimately more profitable business model.

A successful business thrives by focusing on its strengths, and for Apple, that means computing.

Attila Vago — Software Engineer improving the world one line of code at a time. Cool nerd since forever, writer of codes and blogs. Web accessibility advocate, LEGO fan, vinyl record collector. Loves craft beer! Read my Hello story here! Subscribe and/or become a member for more stories about LEGO, tech, coding and accessibility!