[글로벌Biz] Contrasting gazes on entering the Apple business… “God’s Hand vs. Worst Mistake”

Input 2020.12.23 14:22

After reporting on Apple’s entry into the electric vehicle business, the positive and negative arguments were dismissed.
“Apple has already prepared the electric vehicle business as a new growth engine for a long time”
Using mobile and IoT to make a breakthrough in the mobility field
Negatives “entering the old business, profits are too small compared to enormous investments”

Amid reports that Apple’s long-awaited entry into the automobile business is becoming visible, Wall Street, analysts, and investors are giving very contradictory opinions.

While some people have affirmations that Apple, which has strengths in the mobile and software fields, can exert a great influence while the mobility industry is rapidly converting to autonomous driving and electric vehicles, there is also a prospect that it will become a’handshake’.

According to the Wall Street Journal (WSJ) on the 23rd, opinions on Apple’s entry into the automotive industry are mixed. Apple hasn’t officially said anything about this yet, but traditionally, it’s extremely rare to say anything about a project Apple is developing. However, it is true that Apple has been involved in the smart car business for a long time.

Since the mid-2010s, Apple has been secretly working on a driverless car project under the name’Titan Project’. Most of the plans are veiled, but some of the reality was revealed when documents about Project Titan were leaked through some media in 2015. It is known that Apple has a roadmap of releasing electric vehicles first and then developing them into autonomous vehicles in the mid- to long-term. Apple has been researching electric vehicles by creating the Titan Project since 2014, and in 2018 it also recruited Doug Field, who was in charge of development at Tesla.

First, on Wall Street, there has been a controversy over the recent report on Apple’s entry into the automobile industry. As for the prospect that Apple will enter the auto industry, so-called “positives” understand that Apple’s growth is stagnating, as a natural procedure. In fact, sales of $233.8 billion in 2015 only increased to $274.5 billion last year. WSJ pointed out that “the biggest innovation Apple has done in the last 10 years since the iPhone came out is the only headphone field.”

Their view is that the combination of smartphones and electric vehicles has the potential to reap enormous profits in the transforming mobility market. The automobile market is a huge market worth 2 trillion dollars. In addition, if various services such as music contents, followed by electric vehicles and smartphones are provided through Internet of Things (IoT) technology, the current stagnation in the growth potential of the automobile industry will find a breakthrough at once. It is analysis.

In addition, the production capacity of existing automakers is overflowing enough to reach oversupply. It can be easily made by acquiring a factory at a low price and changing it, or by partnering with a company that is having difficulty in developing electric vehicles. Although it is difficult to enter the electric car market, Tesla has also done it, and there are also places like Nikola, a startup. Chinese Internet companies are also considering outsourcing electric vehicles in this way.

On the other hand, there are some negatives that Apple’s entry into the electric vehicle business will be the worst mistake. WSJ is a capital-intensive and low-margin industry. The gross margin of the world’s top 10 automakers is 15%, far lower than Apple’s 38%. This is not a market for high-margin companies like Apple to jump into. In particular, the capital input is enormous, but the profits that can be earned compared to the current auto industry are not at the level that Apple is aiming for.

Jim Serva, a Citigroup analyst, said, “Apple is doing research and development (R&D) in many fields, so it’s not surprising that the automotive project’Titan’ is also very low. “I am very skeptical about making cars.”

Some believe that even if they enter the automotive industry, they will only watch the situation in the autonomous driving software field. Jean Munster of Loop Ventures said, “Apple doesn’t seem to have a clear decision whether to make Apple-branded cars using self-driving technology that has been developed over a long period of time, or whether automakers are going to make sales by providing software.”