Will The Muted Apple Car Hurt Tesla?

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Rumors continue to build that Apple is to diversify into the electric car market

Evidence is growing that Apple is currently working on its own electric car, possibly to be released around 2020. This has been a persistent rumor in recent weeks, and it appears that the car in question would be similar to existing Tesla vehicles, being electrically powered and running on a rechargeable battery.

In many ways, this is an ideal niche for Apple to move into. It would certainly suit the profile of the company, and its green credentials are well documented. Additionally, the electric car market is the sort of hipsterish, cool technology niche which Apple would naturally want to be involved with.

Apple strongly linked with the electric car market

And additionally, Apple has been strongly linked with the electric car market in the past. It is only a few months back that the consumer electronics giant was linked with a buyout of Tesla itself. This rumor now seems to have died down, but perhaps there was more substance in the notion of Apple entering the Apple car market that was presumed by some.

Aside from the technical challenge of producing an electric car, Apple is perhaps well-placed to take a gamble on a major new product at some point in the foreseeable future. The company has recently become the first $700 billion corporation in market capitalization terms, and many predict that this figure will reach $1 trillion in the near future. And that isn’t the only economic plus point for Apple at present.

The corporation recently achieved the largest single-quarter profit in business history. This is obviously a massive achievement for Apple, and given the hundreds of billions of dollars it has stashed away in tax-free accounts, the corporation is certainly in a strong position to take on a major project should it choose to do so.

Apple can also call upon a vast supply chain and production network, which has been involved in the manufacturing of its previously released products. The resources that Apple can call upon make the concept of producing a vehicle far more feasible than it would be for the overwhelming majority of companies on the planet.

But at the same time, producing a major vehicle is a massive undertaking, and one that would require a significant amount of restructuring within Apple. Manufacturing consumer electronics is extremely different to producing a production-quality road vehicle, and even though Apple has an existing supply chain to call upon, it would certainly need to purchase new premises in order to achieve this.

Apple has also been able to call upon the cachet which it carries in the consumer electronics industry every time it releases a new product. But this will count for nothing in the motor trade, and Apple cannot count on the strength of its badge alone to sell electric vehicles. The motoring press is also notoriously scathing and caustic, and if Apple failed to produce a vehicle anything less than top-class, it could easily become a white elephant very quickly.

The company has also built its reputation and status by working within its core area of competence. This certainly isn’t producing motor vehicles. Expanding the Apple business and brand beyond consumer electronics would certainly be a risky venture, even if it is already to some degree of associated with fashionable technologies such as those involved in the manufacturers of electric cars.

But there is strong evidence that Apple is going to go ahead with this anyway. The Guardian newspaper has reported that Apple is recruiting strongly for its purported electric car division, with early research and development already underway on a vehicle which may hit the high street before the end of the decade.

What does Apple Car mean for Tesla?

So what does this mean for Tesla? The existing electric car manufacturer has established itself as a significant player in the US market, and is almost ready to release its long awaited Model X vehicle. Tesla has unquestionably boosted electric car innovation in the United States in particular, and already has in place an extremely impressive network of charging stations which enable people to make long haul journeys via electric cars.

Effectively, Tesla has already established itself as a credible player in the electric car market, and is unquestionably the market-leader. It is also fully prepared for competition in the short-to-medium-term, as numerous vehicle manufacturers which have generally concentrated on gasoline-driven engines are currently either moving into, or at the very least looking into, the electric car market.

The biggest challenge for Apple in usurping Tesla will be one of credibility. At this point in time, Apple has absolutely no credibility in the car marketplace, whereas Tesla has already acquired a good portion of this vital ingredient. And by the end of the decade, Tesla is planning to be an even more significant part of the auto marketplace; thus Apple will have a lot of catching up to do.

But Apple has the history of disrupting established industries, from the music industry to smartphones, and the fact that the corporation literally has more money than anyone else will obviously account strongly in its favour. There is no question that should Apple decide to opt for this product niche and make a serious commitment that it has the resources in order to be a serious success.

Another feasible prospect is that Apple could consider buying out Tesla once more, or could even partner with the company. By 2020, the electric car market could have matured considerably, and indeed Tesla is pretty much counting on this. The potential for some form of merger or cooperation between the two corporations is quite high, and Apple would obviously benefit from gaining access to the existing Tesla manufacturing facilities.

Some market analysts and observers believe that Apple will not actually move into the manufacture of electric vehicles, and will instead concentrate on producing components. This would hint much more strongly at a partnership with Tesla. But if the recent reports are correct, and Apple instead decided to manufacture an electric car, what is clear is that the company has the clout to make it a success.

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