Is Apple building an iCAR?

The news from the tech and automotive industries last week was a maelstrom of speculation, excitement and confusion – all the signs are pointing to Apple’s imminent foray into the automotive manufacturing industry. The rumour is that Apple has assembled a large team to work on a top-secret project, codenamed ‘Titan’ (Nissan might be miffed about that), and it is purportedly a self-driving car…or the iCar, if you like.

The iCar as imagined by car designer, Liviu Tudoran.

The head of this project might or might-not-be Steve Zadesky, depending on whether there is such a project in the first place. Zadesky played an important role in the development of the iPod and iPhone, and more importantly, in this instance, he was an engineer for Ford in the nineties. 

A few others from the 'who’s who' of the automotive industry have cleared out their offices in Detroit, Stuttgart and the like, and moved to Silicon Valley. For instance, Johann Jungwirth, who led R&D for Mercedes-Benz North America for six years, joined Apple last September to head MAC systems engineering division. According to his resume, he specializes in Internet-connected cars and autonomous driving.

Last month, engineers from A123 Systems have jumped ship to Apple; in fact, so many had abandoned ship that A123, a battery manufacturer which li-on batteries are found in the BMW ActiveHybrids series and Chevy Spark, claims that Apple is destroying its business. A123 is suing the tech company and five of its former employees for violating terms of their employee agreement. The lawsuit states: “Apple is currently developing a large-scale battery division to compete in the very same field as A123. 

“It appears that Apple, with the assistance of defendant Ijaz, is systematically hiring away A123’s high-tech PhD and engineering employees, thereby effectively shutting down various projects/programs at A123."

A123 is not the only one who has lost a number of employees to Apple. Reuters reported that after scouring LinkedIn profiles, it found more than 60 Apple employees who were previously employed by Tesla Motors; they include hardware, software and manufacturing engineers, and supply chain, retail, sales, legal and product management expertise. We have not forgotten that Tesla's CEO, Elon Musk, met with Apple’s acquisitions head last year, although he didn’t comment on what for. 

Besides the great migration of talents, there have been sightings of unmarked vans with identical characteristics - decked with cameras and sensors - out and about in Brooklyn and Concord (a San Francisco suburb), the latter of which is registered with the California’s DMW as leased to Apple. Although there were people behind the wheels of those vans, the equipment looked like they were for more than just street mapping. Hmm, interesting.

So, what if Apple is indeed venturing into autonomous car production. Reactions in the tech and automotive industries have been split, and some are perplexed. The automotive industry has very narrow profit margins – 5% to 6% when times are good, and hemorrhages profusely when bad - whereas Apple is used to profits in the neighbourhood of 40%; so why would Apple want to gamble its bankroll with a full-on entry? And will it be able to sell a product that costs, say, US$70,000 rather than US$700?

The skeptics are of course weighing in with these questions; but on the other hand, the tech industry is such - innovate or die. Perhaps Apple considers vehicles as the next frontier for mobile technology. Car utilisation is expected to change dramatically: urbanisation continues, fewer millennials are getting drivers licenses much less buying a car, and ride-sharing services are growing. Alongside this revolution, in-car technology has been climbing higher on the list of purchasing criteria for car buyers, urging traditional automakers - which have struggled with developing their own in-car tech - to adopt Apple CarPlay and Google Android Auto. Someday, maybe, the software of a car will take precedence and the ‘hardware’ becomes secondary; and maybe that’s what Apple is banking on. 

An Apple board member revealed that the late Steve Jobs had once dreamt of building a car. Well, Steve, hope that you approve, wherever you are.