apple-carplay-300x158

Apple's automotive aspirations could soon move beyond the CarPlay interface (Photo: Apple)

By Arjen Bongard

Is Apple going to become the first IT company to buy into the auto industry?

According to the Financial Times last week, Apple has approached McLaren to either buy the British race car maker outright or make a strategic investment. McLaren has denied that it is in talks with Apple, but that's par for the course in these kinds of transactions.

But regardless of whether an Apple-McLaren tie-up will happen, the reported Apple interest underlines that high-tech companies are aware that they need help if they want to enter the car industry.

That help clearly is best obtained from an established player in the global automotive industry. McLaren, with its big Formula One operation, obviously has the kind of core expertise needed to build cars.

In early May, Google and FiatChrysler announced they would cooperate on self-driving car technology. Google and other carmakers are also working together.

And even Tesla, the most successful outsider to carve out a niche in the global auto business, implicitly admits it needs help from the "old" car industry. The electric-car company has been hiring automotive manufacturing executives to improve its car building.

Why is the technology sector so interested in the automotive space? There are various reasons for this:

  1. Just about all new cars can now connect to the outside world, which provides a whole range of new business opportunities for providers of digital and online services that, until now, have had no place in the car.
  2. Drivers are, to some extent, a captive audience, which makes them an attractive target group for non-automotive companies. If cars in future drive themselves, drivers will have even more time on their hands to listen to music, operate apps, buy services.
  3. Cars, which continue to be status symbols for many, can provide a valuable brand extension for a company such as Apple, which today depends for most of its revenue and profit on its smartphone, the iPhone.
  4. Finally, some technology companies feel that they can build a more attractive car than traditional auto manufacturers. And make more money doing so. Outsiders can change an industry. Just look at Apple, which wasn't a mobile phone company before it launched the iPhone. Similarly, Tesla was conceived by Elon Musk, who studied physics and economics and took an early interest in computers, but didn't have any automotive background.
Apple, with its track record in design and marketing, its high brand value and more than 200 billion dlrs in cash and securities, could well be a successful automaker for two reasons.

First, digital technologies are becoming so important in personal mobility that they will soon be the main reason people prefer one car over another. A consumer electronics specialist such as Apple may be better able to cater to a new generation of car buyers than a traditional automotive company.

And second, if you don't have it in-house, you can buy the automotive expertise. You can hire automotive engineers, which Apple and Google have already done; you can forge alliances with automakers or contract manufacturers; or you can buy McLaren.

In January of 2011, I argued that Apple should build a car. The story is at: http://www.automotiveit.com/point-of-view-why-apple-should-build-a-car/news/id-001435

Five-and-a-half years later, many of the arguments are still valid. It may not be Apple, but before too long, a big IT player will actually become a carmaker.

-E-mail Arjen Bongard at: abongard@automotiveIT.com