–Analysis–
BERLIN — For 10 years, a phantom haunted the global car industry: the Apple Car.
The technology giant from California had gathered employees from across the industry to join its secret “Project Titan” — highly qualified, experienced people from other car manufacturers, lured by fantastic salaries.
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Again and again, speculations about the product these people were supposedly developing leaked out. Each time they caused shockwaves in the industry — and doubts as to whether the established automakers would be able to make the leap into the technology world of the future.
At least in the public narrative and all the rumblings surrounding it, the Apple Car was supposed to bring about a revolution in cars and mobility. The company has been testing autonomous driving on the streets of California for years.
Car revolutions are not possible
The Apple Car was of course supposed to be a software-defined product, like an iPhone, and to possibly enable completely new forms of mobility. Apple has now canceled this revolution. According to reports in the U.S. media, the project has been stopped. After 10 years of research and development and billions in investment, it is clear that Apple will not be launching a car on the market.
This is good news for established car manufacturers such as BMW, Mercedes-Benz and Volkswagen. It is bad news for Tesla. Because Apple’s withdrawal shows that revolutions in the car industry are not possible — not even with endless financial resources and know-how. The technology in the industry is developing in an evolutionary way, with vehicles getting better and better in product cycles that last for years.
It’s now a bit quicker because engineers in China work longer hours. But it still takes many months to design a new car. And nobody can do it all alone. Suppliers are always involved, sometimes even contract manufacturers — the iPhone manufacturer Foxconn has been trying to become a car producer for years. No car is created independently of this industry “ecosystem”.
No big change in the foreseeable future
More important, however, is the entrepreneurial insight gained from Apple’s withdrawal: the business model of car companies will not change in the foreseeable future. The technology giant was certainly aiming for this as much as for a technological leap. The minimum requirements for an Apple product can be seen from the iPhone: it must be easier and more intuitive to use from the user’s point of view than the competition’s products, it must look better. And customers must be prepared to pay far more for it.
Apple’s gross margin currently stands at 45%. Not even the luxury sports car manufacturer Ferrari earns that much money. The Mercedes-Benz brand or the mass manufacturer Stellantis (Fiat, Peugeot, Opel) achieved slightly more than 12% last year — and are therefore doing very well in an industry comparison.
It has become even less likely that Tesla will overturn industry rules and unhinge global car markets.
For an Apple car to achieve an Apple profit margin, it would either have had to be sold at a much higher price or produced at extremely low cost. Or the company would have had to invent a different sales model, such as a subscription. But that already exists — and it doesn’t generate dream profits.
Conclusion: There will be no economic redefinition of the car market. Not even when cars become intelligent and autonomous, which is obviously much further in the future than previously thought.
The slow art of manufacturing cars
These are bad prospects for Tesla.
After the Apple exit, it has become even less likely that Elon Musk will overturn industry rules and unhinge global car markets. The Tesla boss likes to present himself as a revolutionary. In reality, however, his car company sets itself apart above all in the details.
Just like Apple, Tesla has been working on autonomous driving for many years — and others are doing the same. Even though Musk is slightly faster than the competition — because he is taking greater risks — the technological lead will never be so great that Tesla can take over the entire market.
The art of manufacturing cars lies in integrating new and familiar technologies into vehicles. Many small parts become a more or less coherent product. This is the same logic that Apple uses — combined with the promise that this product is better than others from the customer’s point of view. In the car market, it seems that Apple is not in a position to beat the existing companies in this discipline.
