What's Driving the Plans for an Apple Car?

Cars have become rolling computers. The value of the electronics as a percentage of  total costs is in the neighborhood of 40 percent - and expected to keep growing.

It would probably be sufficient to speculate that the benefit to Apple of creating its own car is based on the increasingly computerization of cars, both in terms of hardware and software. What luxury car brand - or mass market brand - wouldn't want to partner with the world's dominant tech brand?

But as the following article explains, Apple is thinking bigger and further out than that.

They are looking at trends in demographics, urbanization, household income and vehicle ownership, all of which suggest that there may be an opportunity not just in supplying components, but in taking the lead on a data-driven approach to transportation that plays to Apple's strengths in providing innovative solutions to compelling challenges that result in the world coming around to their vision. JL

Doug Newcomb reports in PC Magazine:

Car ownership is predicted to undergo changes due to urbanization, a drop people obtaining drivers licenses, and the growth of car- and ride-sharing services. For Apple, a lucrative business model in a shrinking personal vehicle market could be robo-taxi services that harvest data on a user's travel habits and shopping preferences, possibly in lieu of charging a fare.

By now you've probably heard plenty of speculation surrounding the reports that Apple plans to build an iCar, and perhaps some pretty funny parodies of the idea.
News broke last week that Apple has assembled a 1,000-person team and poached high-profile talent from car companies to work on a top-secret self-driving electric vehicle project carrying the code name "Titan." (Nissan has got to love that.) It's also been reported that Apple has met with automotive suppliers in Europe, mirroring Google's recent move to line up Detroit-area companies to help it build its self-driving cars.
As with anything Apple-related, there's been an outpouring of press reports, with most suggesting that Apple's automotive end-game is to build a self-driving car to compete with Google and Uber in the growing ride-hailing trade. Reactions have been split between yeas and nays on Apple's rumored first venture outside of consumer electronics, with the company's acolytes cheering the prospect of owning an iCar and critics warning that auto manufacturing could be a cash-burning dead-end for the company.
The idea of an iCar is nothing new. It's well documented that Apple co-founder, CEO, and tech icon Steve Jobs had dreams of the company building a car someday. And the C-suite at One Infinite Loop is stacked with automotive enthusiasts, including Eddy Cue, senior VP of Internet Software and Services and a member of Ferrari's board of directors, and Phil Schiller, SVP of Worldwide Marketing, whose Twitter bio lists "Apple, Sports, Cars, Science, and Rock And Roll" among his favorite things. A recent New Yorker profile of Jony Ive examined the long-time Apple design guru's automobile obsession, and mentioned his close friendship with celebrated industrial designer and fellow car buff Marc Newson, who joined Apple last year and previously created a concept car for Ford.

Perfect Timing for an Apple AutoBut while the iCar has been a rumor for several years, the timing is perfect for Apple to enter the auto market for several reasons and, more importantly, gain a foothold in future transportation technology. For one, new cars are quickly becoming more like computers, with processing power and connectivity as important as creature comforts and horsepower to many buyers.
Added to this is that traditional automakers have been struggling with in-car tech, and have recently moved to turn their infotainment interfaces over to Apple CarPlay and Google's Android Auto. And brand loyalty, which was once a staple of auto sales, has been dropping, particularly among the coveted Millennial car buyers.
Another factor at play is that the car ownership model is predicted to undergo dramatic changes due to a perfect storm of increasing urbanization, a drop in young people obtaining drivers licenses, and the growth of car- and ride-sharing services. Google and Uber are already making big bets on autonomous cars becoming robo-taxis to allow urban dwellers to get around without ever owning a car.
For Google and Apple, a lucrative business model in a shrinking personal vehicle market could be robo-taxi services that harvest data on a user's travel habits and shopping preferences, possibly in lieu of charging a fare. Talk about Apple extending its walled garden. And while Apple is still making record profits selling portable devices, critics have called for the company to diversify. And Apple can't simply sit on the sidelines as its chief rival Google makes investments in the future of transportation.
Sure, it's a stretch going from making portable devices to making cars— with all the complexity, resources, government regulation, and long product lead times involved—but Apple has shown that it has a knack for disrupting existing business models. Let's just hope that the Apple iCar isn't a minivan, as has been reported and photographed around Silicon Valley. That's surely not what Steve Jobs had in mind.