What Apple Should Consider Before Trying to Make Electric Cars

 
 
By Don Reisinger  |  Posted 2015-02-18
 
 
 
 
 
 
 
 
 
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    What Apple Should Consider Before Trying to Make Electric Cars
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    What Apple Should Consider Before Trying to Make Electric Cars

    By Don Reisinger
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    Design Is Extremely Important
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    Design Is Extremely Important

    When looking at the Nissan Leaf or the Chevrolet Volt, two electric cars made by traditional automakers, one will discover something rather quickly: They look boring. Tesla, however, has made a name for itself by bringing a luxury design to electric vehicles, which has only improved its standing in the marketplace. If Apple has any hope of succeeding in the car space, it must go all-in on design.
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    Apple Has to Hit the Right Price Point
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    Apple Has to Hit the Right Price Point

    Apple has made billions of dollars on being a luxury hardware maker. So, one shouldn't be surprised if the company offers a car that stretches into six figures, like Tesla's early models. However, as Tesla CEO Elon Musk has said time and again, his company needs to bring prices down, and it actually has a car slated for launch in 2017 that will cost about $30,000. Apple must keep pricing in check to be successful.
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    Apple Should Try to Lure Back Former Employees at Tesla
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    Apple Should Try to Lure Back Former Employees at Tesla

    One of the more interesting revelations of late is that Tesla has recruited more than 150 employees from Apple. If the iPhone maker is to be successful, the company should try to bring some of those former employees back to Cupertino to use what they've learned building electric cars. A key to Apple's success is to recruit at Tesla and find the best of the best.
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    Building an Electric Car Manufacturing Infrastructure Is Costly
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    Building an Electric Car Manufacturing Infrastructure Is Costly

    The sheer cost of getting into the electric vehicle market is staggering. As Tesla's financial reports have shown, the automaker incurred billions of dollars in research and development and infrastructure costs just to get a car out of a factory. Apple has little to none of that infrastructure. The company will need to spend billions before it can even come close to matching Tesla in terms of scaling operations and getting cars on the road.
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    Make Sure Cars Are Made in the U.S.
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    Make Sure Cars Are Made in the U.S.

    One of the big selling points in the electric vehicle market is that many of the cars are made in the U.S. A key reason for that, of course, is that the U.S. government provides some heavy subsidies for those activities. Still, Apple has been touting its increasing investment in the U.S. across its product line. Adding cars to the mix will be another feather in the cap that will put it on par with Tesla and Chevrolet.
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    Is CarPlay Enough, After All?
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    Is CarPlay Enough, After All?

    Let's not forget that Apple is actually already competing in the car space with its CarPlay business. CarPlay is designed to integrate the full iOS experience into autos, complete with phone, Maps, iTunes and Messages. Apple has signed with several automakers for the service, including Chrysler, Ford and Nissan. Maybe that's enough for Apple. After all, the costs associated with CarPlay are low and the "halo effect" that will help it sell more iOS devices could be great.
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    Remember that Tesla Is Entrenched
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    Remember that Tesla Is Entrenched

    There's no debating that Tesla is now the iconic brand of electric car in the U.S. The company has made the electric car models from other automakers look old and staid by comparison. To take on Tesla now is no small feat and will be a daunting hurdle to surmount even for Apple.
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    Are Partnerships a Better Path?
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    Are Partnerships a Better Path?

    At the Consumer Electronics Show in January, several carmakers, including Mercedes-Benz and Toyota, showed off new electric car concepts. The auto industry in other words is moving swiftly toward electric vehicles. Perhaps then, it's time for Apple to consider partnering with other companies rather than going it alone. The costs associated with partnerships are lower and the risks aren't so great. It's something to consider.
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    Maintain the 'Cool' Factor
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    Maintain the 'Cool' Factor

    The "cool" factor is something that Apple must keep in mind. Tesla has established itself as the "cool" company in cars, offering great designs, cutting-edge technology, nice-looking interiors and a brand that resonates with people of all ages. Apple has done the same in the industries it's competing in, but to be successful, it will have to carry that over to cars. It mustn't forget that.
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    Would It Be Easier to Acquire Tesla?
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    Would It Be Easier to Acquire Tesla?

    In an interview last year, Tesla CEO Elon Musk said that he had held discussions with Apple, though he stopped short of saying what the companies talked about. Some have speculated that Apple was considering acquiring Tesla, but Musk has said that for now, the company isn't for sale. With billions in cash on hand, however, Apple has the resources to pull off a major Tesla buy and get into the car business without spending too much on infrastructure and research and development. Therefore, it might just be easier to acquire Tesla rather than try to compete with the company.
 

A multitude of news reports say Apple is considering jumping into an entirely new market building electric cars. These reports say Apple has assembled an engineering team with the task of building an electric vehicle that can take on the leading U.S. carmaker in that space, Tesla. Since building cars is such a major departure from Apple's main line of business, one would be forgiven for taking the rumors with a grain of salt or wondering if the company really knows what it's doing. But in recent weeks, videos have popped up on the Web showing what appears to be a self-driving car that was registered to Apple. The iPhone maker is also trying to woo carmakers with its CarPlay service. These factors, coupled with its billions of dollars in cash, at least make the rumors credible. This slide show suggests the kinds of things Apple needs to consider if it's serious about becoming an automaker. Taking on Tesla with its luxury electric cars won't be easy. But if anything has been proved over the years, it's that Apple hasn't shied away from the daunting challenge of getting into an entirely new business that's already dominated by entrenched competition.

 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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