When a company is sitting on $178 billion of cash reserves, even the most ludicrous ideas seem plausible to execute. Such is the case with reports that Apple, the ultimate purveyor of cool, is working on a secret project, named Titan, to build an electric car. Apparently, the Silicon Valley giant is perusing designs, materials, metals and robotics — the components necessary to build a car, suggesting that this will not be a lark designed to keep investors excited. But, as more than one analyst has pointed out, it’s one thing for Apple to enter the cellphone market — before the iPhone, it wasn’t in the phone-manufacturing business — and assemble it in China. The same trick will be much more difficult to pull off with a car, given the safety requirements and shifting regulatory landscape.
If Apple does build an electric car, it will become a direct competitor of cross-town Tesla Motors, the current leader in electric vehicle technology, and automakers like General Motors, Ford and Toyota, which have electric and hybrid models in or coming to the market. It will also have to contend with low margins and probably losses — Tesla, for instance, has $1.3 billion in losses since 2008 and does not expect to break even until 2020. This is apart from the challenges that come with inadequate infrastructure, like a lack of charging stations, and consumer preferences for hybrid cars. In future, too, reduced costs and faster refuelling times might make hydrogen fuel-cell cars a preferred alternative to all-electric vehicles.
The automobile industry is not given to sudden disruptive innovation at a commercial level, as a result of stringent safety considerations. But a spate of developments seem to suggest that a massive change awaits in the next decade, in the form of zero-emissions vehicles that are either fully or partly autonomous. So the rumours of Apple’s interest, given its past record, should further galvanise an industry that is already considering its future.
