Of Course Apple Is Building An Autonomous Electric Car. The Question Is: Should It?

February 16, 2015

Over the weekend, news broke that Apple is seriously investigating the possibility of creating an all-electric, autonomous car. People the world over seemed shocked and awed, but among those who've been paying attention, the revelation isn't too surprising.

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BACKSTORY

Apple has been working with automakers for years, since at least the time of the iPhone's 2007 debut. That summer, Apple and Volkswagen entered talks to create something allegedly code-named the "iCar". (Which is, admittedly, a lot better than the "iMo" concept dreamed up a year later or the "iMove" concept of 2011.) Alas, soon afterward, the bottom dropped out of the world's financial markets, and the Apple/VW mashup wasn't seriously mentioned again until 2013, when VW debuted a special edition "iBeetle".

In the intervening six years, Apple re-thought its automotive strategy. By all appearances, it decided to forego the challenges of hardware -- in this case, sheetmetal and engines -- and focus instead on what it knows best: software. And so, in 2014, we saw the launch of Apple's "CarPlay", putting Apple's iPhone and its rich app environment at the center of the driving experience. 

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NEW DEVELOPMENTS

Things could have easily ended there. Apple could've left the car-making to companies like Ford and Toyota, turning its attention to the domination of dashboards.

In that scenario, Apple would've received revenue from selling CarPlay packages, along with a host of subscription offerings, upgrades, and in-app purchases. Like GM's OnStar, Apple's CarPlay could've also earned cash from companies eager to distribute location-based ads to motorists passing by their shops.

All that will still happen, no doubt. But over the past few years, two things have also reinvigorated Apple's dream of building automobiles:

Apple's enormous success: Apple is easily one of the most profitable companies on Planet Earth, and it's sitting on a boatload of cash -- nearly $180 billion at last count. Apple could play things conservatively and keep that money squirreled away. It could also use some of that payola to develop smarter software and other things that only wonkish, backend types would understand. But investors want Apple to keep wowing consumers with new products -- things that people can buy and hold, like iPhones, iPads, and the highly anticipated Apple Watch. A car is an audacious option, but it certainly fits the bill.

Google's success: Nothing inspires competition quite like jealousy. (Ever notice how CVS outlets always seem to break ground directly across the street from Walgreens stores? Bingo.) Google has generated loads of headlines with its all-electric autonomous car. Surely, no one is surprised that its closest rival, Apple, wants a piece of the same pie. 

Right on cue, now come reports that Apple has created a super-secret automotive research lab dubbed "Titan", employing several hundred workers just down the road from Apple headquarters in Cupertino, California. The company is also allegedly in talks with suppliers -- notably, not automakers -- about the ins and outs of building cars. And if rumors are to be believed, the company is trying to lure robotics experts away from automakers onto its own payroll, much as it poached watchmaking talent when it built the Apple Watch. 

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