Friday, October 7

Can Apple become a challenge to Tesla?

Apple vs Tesla: A Battle for Technological Dominance

The world needs to brace itself for a strategic battle between two tech giants as Apple has released its plans to manufacture electric vehicles (EVs) with advanced battery technology by 2024. Now that Apple has decided to beard the lion (read Tesla) in its den, the tech commentators anticipate a new era of technological competition. The attention-seeking news caused Apple’s stock to boom unprecedentedly amidst speculation of long-range ‘cars’. However, Apple’s decision to dive into the EV market may not be the threat to Tesla that some believe, Morgan Stanley analysts say. An account that Apple’s EV ambition dates back to 2014, but the little realization of targets yet. Despite this, there is some semblance of anxiousness in Tesla and other EV market players around the fact that a giant competitor like Apple is entering the race, and Wall Street observers have claimed that the company is a real threat to Elon Musk’s electric vehicle powerhouse. 

Apple’s EV ambition: Building a Car or Partnering

Is Apple going to build a car, partner on a car, or offer software and services for cars?

Apple after creating a highly demanded phone and Laptop market around the world which is known for its quality and software features iPhone for Sales now is a plan to build an electric car that is different from when that ambition sees the light of the day. While the rumors in the air that Apple is about to partner with Hyundai or Kia motors disappeared with the time as those motor companies denied it. However, the only possibility for Apple to succeed stands when it is vertically integrated. This means designing and manufacturing the components and every part of the product. Thus, partnership with another automaker is not a plausible trajectory for Apple. Without even Apple in the frame, Tesla is already encountering a brunt of new rivals in the industry. From established carmakers like Ford and VW to new EV entrants like Rivian, Nikola, and NIO, the EV industry is bustling.

Disentangling the conundrum of the Car Industry

The Car industry is awful for squeezing capital, often returning less than investments, and uneven profits, and is confined under federal laws and regulations. But at the top, what magnetizes tech giants, such as Apple, is the growth potential. The size of the market is a clue. The smartphone industry is worth a $500 billion annual market, while the transportation industry is a $10 trillion annual market. By analysis of statistics, if Apple manages to catch even a meager percentage of EV sales that would mean a huge revenue expansion. As far as margin concerns are considered, Morgan Stanley’s Katy Hubert maintains that “I would remind everybody that when Apple entered the PC, handset, and wearables market, the margins of competitors were razor-thin. And through vertical integration, as well as driving significant scale on a small number of Stock Keeping Units, Apple has been able to enter industries with low profitability and earn very strong margins. I don’t see why autos would be any different.” Briefly, it is analyzed that Apple can certainly face off in the EV market, despite the low margins, and can even challenge Tesla.

Apple’s likely strategy to challenge Tesla

Apple will surely look for a distinct competitive strategy, which may offer advanced capabilities and a reliable ecosystem, to challenge an established player like Tesla. Such a product strategy may include the following steps:

  • Introducing the real-time self-driving technology

The self-driving technology is termed as a real game changer for Apple EV cars. It offers Apple an opportunity to change the dynamics of the industry. For example, when Tesla started its production, it came up with only two advantages for high-end customers: green credentials and acceleration. Important features for self-driving cars are different. A self-driving car is expected to offer even fewer physical parts than a Tesla Model 3, making it feasible to manufacture. While manual control through the touch screen, if desired, do away with the need for a steering wheel or pedals anymore. 

  • Marketing strategy and revolutionized tech features

Apple’s EV cars may be too expensive. Despite this, the marketing strategy may help to acquire profits via numerous add-ons and subscriptions to self-driving cars. While revolutionized tech features may include gadgets, music, TV, new digital themes for the interior, and third-party applications. Apple’s EV strategy will dominate Tesla just like Tesla Model 3 dominated the automotive players.

  • Adopting new generations of Battery architectures 

Apple may big time look into sourcing investments in the advanced battery architectures to surpass Tesla. The battery technology industry is fast transforming and Apple is sure to have a pie from it, to successfully pitch itself in the automotive industry.

  • Adding the Apple ecosystem

The Apple ecosystem might prove the biggest leverage over Tesla in the battle for EV supremacy. As Apple is known for keeping its user in its ecosystem and would force you to buy an iPhone when you have a MacBook or will indirectly force users to buy an Ipad with your iPhone, however, Tesla has never been able to develop a smart platform with third-party applications and iphone repair services. Contrarily, Apple possesses one of its prime versions. 

Briefly, the competition is fierce. Concluding a final verdict is too early and might prove a leap in the dark. Thence, Apple has a long way to traverse, but evidence suggests that it is a challenger to Tesla’s reign.