Activation of battery, sensor, software, and service business
Tesla Chief Executive Officer Elon Musk (CEO) tweeted, “I contacted Tim Cook to discuss the possibility of Apple’s acquisition of Tesla, but (Tim Cook) declined to meet.” On the 21st (local time), it came after reports that Apple will release self-driving cars with self-designed electric vehicle (EV) batteries by 2024. Major foreign media, including the War Street Journal, requested Apple for Musk’s Twitter post, but there was no response.
Reports have come out intermittently that Apple will be involved in the finished car business over the past few years. It was mainly through Apple retired companies or partners. Each time, Apple declined an official response. It’s no different this time, but the weight is different in that the electric car industry giant Elon Musk directly requested Apple to take over the business. In fact, it was confirmed that Apple entered the finished car business.
When Apple enters the finished car business, major changes in the front and rear industries are inevitable. Apple has solid platforms like Google, Microsoft, and Facebook. However, more than 70% of sales come from device sales. The proportion of services such as App Store fees and iTunes is not high. It is analyzed that the finished car business will not be much different. This is a method of outsourced production of autonomous vehicles designed by Apple by companies such as Foxconn. Foxconn has recently set an electric vehicle as the future growth engine and announced its own design plan.
Unlike traditional internal combustion locomotives, electric vehicles are powered by batteries and motors. The barrier to entry to the power engine is relatively low. The problem is that there is a limit to cost reduction of core parts, and it is difficult to secure enough as much as desired. Electric vehicles are included in each country’s policies to foster eco-friendly industries, and as the demand for batteries increases, supply is insufficient compared to demand.
The foreign press reported that Apple will adopt a lithium iron phosphate (LFP) battery and apply the’Mono Cell’ technology, an all-in-one battery that eliminates battery cells and modules. Lithium iron phosphate batteries are mainly made by Chinese companies. CATL and BYD are the dominant players in this market. Looking at the Tesla case, it is expected that the semiconductors required for autonomous driving will be designed by themselves and entrusted to foundries such as TSMC and Samsung Electronics. Given that Apple has a strong relationship with TSMC, it is expected that Chinese and Taiwanese companies will focus on producing core parts and autonomous vehicles.
In the industry, it is analyzed that it will not be difficult for Apple to launch an autonomous vehicle. This is because the cooperation with existing automakers has achieved sufficient success in the existing industry, and platform and service competitiveness have become very important as they enter the era of electric and self-driving cars. However, it is pointed out that there is a limit for Apple to directly lead the business due to the margin persecution of the finished car business. According to Citigroup, the world’s top 10 automakers have an average of 15%. Apple accounts for a much higher 38%.
An industry insider said, “With the Apple brand, you can supply an autonomous driving system to automakers or indirectly enter the business through a license.” “There is a case where even though the product was continuously released like Apple TV, it did not have a great influence on the market. After securing differentiated competitiveness, the business will start in earnest.” It is an analysis that autonomous driving technology can be the key. Tesla sells the autonomous driving function as an option when selling electric vehicles. The option price alone reaches $10,000 (about KRW 11.3 million).
Apple, which is making achievements in healthcare (fitness+) and fintech (Apple Pay), can create new revenue streams with autonomous vehicles. In particular, the synergy effect is sufficient as it holds the leadership in the smartphone, tablet, and wearable device market. For example, a method such as implementing an autonomous driving function with an iPhone may come out.
An industry expert said, “If you set the price of self-driving cars inexpensively and devise a strategy focused on services, it is a business that can be fully tried.” “I have.”
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