Valentine’s week seems to have been just as exciting for tech-enthusiasts as couples-in-love thanks to the Wall Street Journal’s latest speculation. The eve of this hallmark holiday saw a game changing conjecture by journalists Daisuke Wakabayashi and Mike Ramsey who claimed that Apple (AAPL, Financial) had hundreds of employees stowed away on a secret location working on what was soon to be an apple-branded electric vehicle. The resulting sensation, as expected, nearly broke the internet.
But while iLovers were amid a flurry of excitement, we think they forgot to review some facts. And as much as we love the idea of an iCar, we are here to explain why it’s nothing more than a pipedream.
Hurdles obstructing the iCar idea
First of all, although both have "electricity" in common, a technology platform and an electric vehicle are two very different things. Just because Apple remains supreme in the mobile world, doesn’t mean it will create a sizable dent in the automobile industry. And Apple knows this. Frankly, we don’t see them throwing away millions of dollars without at least a certain amount of guarantee of success.
Which leads us to the money question.
Over the years, many entrepreneurs and companies have tried to enter the vehicular industry. Barring Tesla (TSLA, Financial), nearly all have failed. The reason? Money, of course.
It takes a huge sum to design, engineer and produce vehicles for mass-market. Depending on the effort put into the car (and if Apple were to do this, we can only expect the best from them), we could be looking at expenditures worth two to three billion dollars.
In the case of Tesla, they had help from Toyota (TM, Financial) who all but gave them the required factory. The company has been slowly marking up its production costs and cutting corners where they can. Even then, the company’s long term chances are dubious according to many. Apple’s reputation for quality deems this marketing strategy impossible.
Moreover, even if the report is true, (which subsequent reporting from FT and Reuters says it is not) “hundreds” of employees is hardly enough to start-up a new division of vehicle production. Tesla employs 10,000. Volkswagen has over half a billion people. Apple wouldn’t even be in the competition, something I’m sure neither the company nor fans would want.
What Apple may really be doing
Leaving aside all rumors, Apple is definitely working on the CarPlay, announced last March. The CarPlay, advertised as the “iPhone on four wheels,” is a touch- and voice-based car system that allows users to interact with their cars like they would with their phones. However, out of the 31 companies set to feature the CarPlay, only Ferrari seems to have offered it to buyers.
Could it be that the "super secret" project is trying to innovate the idea to make it seem more appealing? It’s a definite possibility.
Some analysts even believe the tech giant is going over and beyond the CarPlay idea with the iDash. The iDash would revamp car dashboards to provide better interface and help with car safety issues.
Why the CarPlay is a more reasonable assumption
Apart from the obvious problems, a pretty basic obstacle in building cars is the technology side of things. A chip- and computer-based company is changeable by nature. The world of technology is constantly evolving. In contrast people expect cars to last a long time. The turnover rate is pretty low. The bridge between the two is virtually impassable.
For this exact reason, a technology-based company diving headlong into the automobile business is going to be problematic. If the software is the key selling point, on what basis is a car, which is expected to remain the same for years, going to attract customers?
In contrast, a device like the CarPlay would considerably bridge the gap. If the main software platform is in the user’s smartphone, then upgrading frequently is the same as upgrading phones. Meanwhile, the basic engineering of the car remains the same.
In conclusion
At this point, we have more rumours than actual facts. So it would probably be a good idea to wait before jumping onto the iCar bandwagon. While most articles seem to refer to important sources who claim the car is a reality, not one source has been named making fact-checking an impossibility.
Optimists may point to Tesla or the Google (GOOG, Financial) self-driving car, but as we have already pointed out, the former was one in many while the latter had been working on the project for years. In a nutshell, even if Apple is working on something like a vehicle, it will be years before it will even be unveiled, much less hit the streets. Wait and watch is our advice.
