Apple may have some of the world’s best engineers and scientists, and it is sitting on more than $200 billion cash pile. But it would merely be a newcomer in the automobile market. For more than a year, there have been leaks, rumors and speculations about an Apple car that would arrive in 2019. However, one analyst says the Apple car will never see the light of the day.
Apple car would be ‘catastrophic’
Edison Investment Research analyst Richard Windsor said in a research note to investors that a car would never be as profitable as the iPhones and iPads. Entering the automobile market would be “catastrophic” to the Cupertino company’s valuations. Apple commands close to 40% gross margin on its gadgets. In contrast, the margins of most automakers are in single digits. Exorbitant margins on a car “look hopelessly unobtainable.”
The pricey components of the automobile also weigh on margins. The analyst said Apple was finding it “much harder than expected” to design and develop a car. The company’s talks with Daimler and BMW have fallen apart. The analyst believes that the Apple car would end up in the graveyard just like the much-rumored 65-inch Apple TV. The tech giant built a large screen TV. But it was never launched as it lacked any must-have features that would have set it apart from the crowd.
Apple’s focus is infotainment products
Windsor believes Apple is trying to build cars under the Project Titan. Rather than selling cars, the company is trying to learn about the rapidly evolving auto industry and how its “infotainment” products can be integrated into cars. The company might be able to generate high profit margins by commercializing the user data collected through its infotainment systems. However, automakers want to own that data and profits themselves.
In the last few years, Apple has hired hundreds of automobile engineers, battery technology and robotics experts to work on its secret car project. The company has also set up a secret facility in Berlin to develop innovative technologies and forge alliances with German automakers. Only time will tell whether the Apple car would see the light of the day or it will be shelved.