What Apple Should Consider Before Trying to Make Electric Cars

By Don Reisinger

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.