U.S. Markets closed

Apple May Leave The Driving To Others

Marcy Kreiter

If you had your heart set on an Apple iCar to go with your iPhone and Apple Watch, take a deep breath and prepare to be disappointed. Forbes reported Wednesday the company apparently is more interested in developing apps for self-driving cars than the cars themselves.

The California Department of Motor Vehicles granted permits for Apple to test three 2015 Lexus RX 450h hybrid SUVs. Industry analysts say the fact that only three vehicles are involved suggests Apple is focusing on its CarPlay connectivity and infotainment platform, Forbes said. CarPlay already has a significant portion of the vehicle market.

Read: California Lawmaker Comes Up With Penalties For Permitless Testing Of New Technology

“Three cars and six drivers is so small you couldn’t even really be pursuing sensor tests,” Eric Noble, president of the CarLab, an industry consultant in Orange, California, told Forbes.

The National Highway Traffic Safety Administration released its autonomous vehicle guidelines last year, suggesting it should be up to the federal government to certify safety and leaving the states responsible for licensing and registration.

Portland, Oregon, became the latest city this week to express interest in allowing companies to operate robotic vehicles within its borders.

Read: Boston Next City To Test Autonomous Vehicles; Pittsburgh Testing Driverless Ubers

"We can't simply dismiss the idea that autonomous vehicles are going to be a big part of our transportation system. Instead of waiting for this new technology to come here and have us confront it, the responsible thing to do is to prepare for this future," Mayor Ted Wheeler said.

Thirty companies already are testing autonomous vehicles in California, with Google sibling Waymo testing 79 of its 100 vehicles in California alone and GM’s Cruise unit testing 27. Tesla has 24 vehicles registered in California.

Waymo_self-driving_car_side_view

Apple reportedly sees more profit in apps for self-driving cars than in the vehicles themselves. Above, Waymo autonomous vehicle in Mountain View, California, Feb 24, 2017. Photo: Grendelkhan/Creative Commons

Waymo, which is planning to add 100 Chrysler minivans to its fleet, also is in talks to supply Honda with a system. Cruise is eyeing a ride-hailing service using perhaps thousands of robotic cars beginning next year.

Part of the reason Apple may leave the vehicles themselves to others is the relatively paltry profit margin on new vehicles, about 7 percent compared to the 23 percent for Apple’s iPhones, iPads and Macs.

CarPlay was released in 2014 and integrates with iPhone functions. It is available on most brands of new cars.

“We do expect Apple to focus on developing the technology hardware/software rather than manufacturing its own autonomous car. However, at this point Apple remains behind Google in this arena,” Angelo Zino, an equity analyst for CFRA Research, told Forbes. “While the margins of producing a car are much lower, we believe that developing the content within the vehicle will have significantly better margins.”

Related Articles