There are widespread speculations that Apple is planning to enter the car manufacturing business. The move could see Apple joining the ranks of Google and Tesla Motors in the high-tech electric car industry. Apple is said to have already assembled a team to advance its interest in the car business. However, it is currently unclear whether the company would only seek to supply more software to the increasingly computerized auto market or would design its own branded vehicles.
Whether Apple chooses to design its own cars or supply software and automation solutions for the auto market, the company has the resources to do that. The company finished 2014 with $178 billion in cash stockpile, having earned a record $18 billion in the December quarter.
Apple’s automotive project reportedly won the approval of CEO, Tim Cook, about a year ago. The project was put under the care of the company’s VP and former Ford Motors engineer, Steve Zadesky.
Besides hiring people with experience in the auto industry from renowned companies such as Mercedes Benz, Apple’s automotive team has also met with a number of vehicle manufacturers abroad.
Some analysts have cited that if Apple chooses to make its own cars, the company would likely develop the design of the car and outsource the manufacturing job. That is what Apple does with iPhone and its other products.
Analysts have cited that profits margins in the auto industry are very attractive, yet technology companies such as Apple seek large margins of 20% and above. The fact that Apple may not be able to get the kind of profits it desires from making cars may mean that the company has a different agenda with its automotive project.
Lower barriers to entry
It has been cited that the barriers to entry in the electric vehicle business are lower today than they were in the past years. For example, there are a lot of vehicle components that people can buy off the shelf without the need to start from scratch. That explains why there could be more technology companies entering the market.