Apple Inc. (NASDAQ: AAPL) not only has plans to launch a car–the car will come soon, and the competition it brings to the global industry should be considered real, according to Volkswagen AG Chief Executive Officer Herbert Diess.
The comments fall on the heels of a Financial Times article about a potential tie-up between Apple and Nissan. These negotiations may have floundered on the issues of branding. If so, Apple has had talks with at least three car companies. That list also includes Kia and Hyundai, at least.’
Diess says that concern about an Apple car represents a lack of understanding of the industry. Apple faces the hurdles any manufacturer that wants a presence in the industry has. The creation of EVs and AVs comes with complex technology challenges. The market for these vehicles remains uncertain. The huge majority of the world’s cars and trucks run on gas and diesel engines. Industry experts have to guess how fast that could change.
Diess told Bloomberg that a car represents “a very logical step” due to Apple’s core competence in the design, battery, and software segments. He added, “Despite that, we’re not scared.” Why should he be? VW sits atop the car market as either the largest or second-largest company, jockeying each year with Japanese manufacturer Toyota for first place.
Apple’s strength in any consumer market has to be driven by its brand, often measured as the most valuable in the world. Interbrand recently rated Apple at the top of its list, with a valuation of $323 billion, up 38% from last year. That well outdistanced Amazon in second place with a valuation of $201 billion, up 60%.
Apple’s installed base of hardware strengthens its chance in the car business industry. The number of iPhones, iPads, Macs, and Watches in consumer’s hands could be as high as 1.5 billion, based on recent research. That base gives Apple leverage with any new product it may launch. Its iOS operating system runs all of the devices and some versions could run a car as well.
The Nissan rumor may demonstrate Apple’s largest hurdle. Will an Apple car carry the Apple logo, the logo of a partner, or some hybrid of the two? Apple’s may argue that the power of its brand carries leverage no other brand does. However, what car company would abandon its brand altogether?