Apple’s car project is reportedly called Titan. That’s apt because it will require a colossal effort to break into the auto industry.
With rumors flying that Apple is planning to make an electric car -- possibly by 2020 -- it didn’t take a long for executives from traditional car companies to dismiss the rumored project as little more than wishful thinking.
Dan Akerson, the former CEO of General Motors, was one of the first to take a whack at Apple, quipping that it was “trying to cough up a hairball” in an interview with Bloomberg. And he called the prospects dim for a high profit-margin company like Apple getting into the “a low-margin, heavy-manufacturing” car business.
But Akerson may be on to something. Some of the biggest hurdles that Akerson and experts point to are those pesky regulatory and safety requirements, which present monumental challenges, even for seasoned giants like GM and Toyota. Both GM and Toyota have had to pay massive fines for violating safety regulations in the past few years.
The challenge for a consumer electronics company like Apple is that a car can kill you, an iPhone can’t.
“The car is probably the most regulated consumer product in the world,” John Voelcker, editor of GreenCarReports.com, told FoxNews.com.
“Its lengthy product cycle, enormous regulatory burden, and extreme durability requirements make even the most complicated electronic/software device look simple in comparison. Apple will have to learn all that,” he said.
But that’s just one of the obstacles, said Erik Gordon, professor at Ross School of Business, University of Michigan.
“You have to get dissimilar components like frames, transmissions, seating, brake and sensor systems to fit and work together,” he told FoxNews.com.
Others agree. “It’s one thing to design a car, even build a few prototypes. It’s a completely different matter to bring it to market with mass manufacturing,” said Dan Roth, host of the Autoblog podcast. “You need to know how to take your flights of fancy and make them reproducible by body presses, then weld, glue, and bolt them together, paint them, and then fill those shells with electrical systems and HVAC,” he said.
“At the very least, your best bet is to partner with a company that already knows how to do this, which is why the reports of talks with [contract manufacturer] Magna Steyr are fanning the flames even more,” he added.
And if Apple eventually aspires to target the mass consumer market, scaling up would be a huge challenge. “It’s not about necessarily building the car it’s about scaling the sales and manufacturing of the car,” according to Peter Adriaens, also a professor at University of Michigan’s Ross School of Business.
Then there’s the dealer network – which can be the proverbial brick wall. A network of dealerships with inventory and repair facilities is vastly different than a retail store network, according to Professor Gordon.
Tesla CEO Elon Musk knows these challenges all too well. Tesla has been battling to set up dealers state by state.
“The system of selling automobiles is very highly regulated and the rules are set at the state level with each of the 50 states having their own nuances,” writes Sam Abuelsamid, formerly a GreenFuelsForecast.com technical editor, who now writes a personal blog about cars.
But that doesn’t mean Apple wouldn’t succeed if it tried, notes Abuelsamid, citing the company’s huge cash hoard and influence. “If Apple chose to take on established car dealers to set up their own retail network, the tech company could potentially lobby and win over state legislators that have so far done the bidding of [car] dealers,” he wrote.
And Apple is also getting into the right market if it wants to stay on top of battery technology.
“There is a burgeoning market for electric propulsion...that’s not a bad place to be if you want to learn about how to make batteries last longer and deliver more power, which could be beneficial to the development of your phones, laptops, and tablets,” said Roth.
Apple also has some impressive car design expertise within its ranks. Last week, for example, Time reported that star designer Marc Newson, who joined Apple last year, has experience in this area. Newson designed the Ford 021C concept car that was shown at the Tokyo Motor Show in 1999.
In the end, all the roadblocks may be worth it for Apple. We should know if it's up to the challenge by 2020.