The wait just got a little longer. In the works since 2017, Apple’s Project Titan – culminating in an electric, autonomous driving car – hasn’t quite hit its developmental timelines. The “Apple” car intended to mark the tech giant’s big, splashy entry into the automotive industry will now debut only in 2026, with initial plans to equip it with fully autonomous driving capabilities abandoned for a simpler self-driving system. The breakthrough concept of a steering wheel and pedal less car has also been parked for now in favor of a more conventional design complete with pedals and steering wheel.
To learn more about the latest developments in this space, please access our recent research report, Strategic Analysis of Nontraditional Players in Automotive or contact sathyanarayanak@frost.com for information on a private briefing.
Our Perspective
The ongoing transformation of the automotive industry powered by connectivity, autonomous, shared /services, and electrification (C.A.S.E) trends has brought into focus innovative business models and service-related opportunities. Simultaneously, it has opened the doors to several new entrants, many of whom are nontraditional players. These range from eCommerce leaders like Alibaba and Amazon, mobility providers like DiDi and Ola, technology behemoths like Google, Baidu and Apple, consumer electronics companies like Sony, Xiaomi, and Foxconn, and many more.
The entry of nontraditional players stems from the next generation of vehicles transforming from being hardware-driven to software-defined. Companies with technological capabilities, like Apple, are mounting a challenge to the traditional hegemony of automakers with their disruptive solutions. Simultaneously, there is an understanding among traditional automakers that they will have to reinvent themselves, whether organically or inorganically through consolidation and strategic partnerships to stay relevant in this rapidly evolving environment. The objective here is to vertically integrate crucial technologies and build scale to leverage emerging software-driven trends.
On the one hand, nontraditional players – again, like Apple – will enjoy a competitive advantage in terms of their established brand and digital customer base. This will position them within easy reach of their consumers through a direct-to-consumer (D2C) business model.
On the other hand, their lack of experience with automotive design and manufacturing will prove challenging. Invariably, this will translate into protracted and costly vehicle development, resulting in delayed launches. Throw in the added layer of complexity that comes with trying to produce vehicles that are electric and autonomous, and the difficulties become magnified. We have seen much of this play out with the Apple Car.
Recognizing this, Apple has dialed back on its initial agenda of developing a fully autonomous, SAE Level 5 car for urban settings that can compete with Tesla’s full self-driving (FSD) offering. Instead, it has set its sight on more achievable targets; the Apple car will now come equipped with autonomous capabilities for highway driving.
Technological and manufacturing challenges besides, nontraditional entrants like Apple will be squaring off against existing automakers who are investing heavily in electric vehicles (EVs), serial disruptors like Tesla, and startups like Lucid and Rivian. The lack of an established value chain is also likely to hurt, since customers, quite understandably, tend to be chary about buying cars that are not backed with a solid aftersales support system for servicing and parts replacement.
What Next?
Apple will push forward on the in-house development of its autonomous EVs. Like Tesla, it will seek to carve a niche for itself with the seamless integration of its proprietary hardware and software (primarily, the iPhone OS) products. It will move to integrate multiple services under Apple CarPlay through a subscription-based model.
Developing a strong value chain will be critical in this highly dynamic landscape and will call for synergistic collaborations between nontraditional participants with other stakeholders across the ecosystem. Over the years, Apple has sought to plug in the gaps by collaborating – not always successfully – with a host of partners, including LG Magna, Hyundai, and CATL. Apple will look to leverage its supply partners from its established smartphone value chain to supply automotive components for its EV plans.
Similar to the electronics segment, we can expect Apple to adopt a fabless manufacturing business model to develop EVs, where manufacturing and assembly will be outsourced to contract manufacturers, while Apple will retain control over software and design.
As Apple’s iCar on wheels gets rolling, it will be interesting to see whether it will be as disruptive to the automotive industry as the iPhone was to the consumer electronics space.
