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Cars are already undergoing 'massive change,' with no help from Apple

Rick Newman
Senior Columnist

Revolution is coming to the auto industry! And here’s how we know: The CEO of Apple (AAPL) said so.

Apple doesn’t build cars (yet), but it has been staffing up an automotive division, fueling speculation that it may soon start to disrupt the wheezing, clay-footed automakers that have been around for a century or more. Apple chief Tim Cook gave a hint of the company’s plans recently, saying the software revolution will bring “massive change” to the car business. He didn’t spell out what the tech titan’s role in that transformation might be, but Apple fans seem to think flying carpets or teleportation will soon be coming from Cupertino.

In reality, the car business is already undergoing massive change, without any help from Apple. Some fancy new technologies are already here, while others will take decades to get right. Here are the big developments, along with some estimates of when they’ll start showing up in ordinary vehicles.

Self-driving cars. This technology is rolling out incrementally, with some autonomous systems, such as lane-departure warning, adaptive cruise control and automated braking already available in dozens of models. These technologies basically scan the road and the surrounding traffic, signaling to the driver when to steer away from danger, and in some cases changing the car’s speed or applying the brakes with no driver input. Once available only on luxury models, these “driver assistance” systems are now offered as options on inexpensive vehicles such as the Volkswagen Golf, Mazda CX-3, Honda Civic and other economy cars.

Automakers will soon be rolling out more advanced systems that let the driver take hands off the wheel and feet off the pedals—but only for short periods of time on roads with a predictable flow of traffic. What the sensors and other electronic bits still can’t do quite right is anticipate everything that might happen on busy streets where kids and pets might run into the road, bad weather could deliver unanticipated obstacles and lousy drivers could do stupid things even a computer can’t comprehend. “Everybody can make a self-driving car,” says Mark Reuss, global product chief for General Motors (GM). “The problem is, there are a million cars out there that aren’t [self-driving]. The software must be able to learn from its environment on a very rapid basis.”

The Department of Transportation has established four levels for the development of self-driving cars, from a few autonomous functions, such as cruise control (introduced by Chrysler in 1948) to a fully autonomous car that requires no driver involvement. We’re now at Level 2, which is limited automation. Getting to Level 4 will require better technology that costs a lot less than it does now, regulatory approval, driver acceptance, resolution of liability and other legal issues, the revamping of some roads to embed needed sensors, and probably many unforeseen adjustments along the way. Some researchers think it might take until 2050 for the majority of new cars to be fully autonomous. So there’s still time for Apple and other technology companies to become big players—if they can leapfrog the automakers and suppliers that have been steeped in the technology for decades.

Internetted cars. Most cars on the road today are already connected to the Internet -- via the smartphones most drivers and passengers now carry -- and it’s inevitable this technology will soon be embedded in the car itself. GM now offers a built-in wireless connection standard on most 2016 models (although the owner has to pay for a cellular connection). Most competitors will soon offer the same.

In-car connectivity will allow more entertainment and information options in the passenger cabin. More importantly, it will allow over-the-air software updates to the car’s millions of lines of code, along with real-time diagnostics able to spot problems—something Tesla (TSLA) can already do with its Model S sedan. Some recall remedies will be handled over-the-air, saving the owner the hassle of driving to the dealership and waiting for a fix. And autonomous cars will rely on real-time connectivity that allows automobiles to communicate their location, speed, heading and other information to each other.

This is natural area for Apple, which already offers the CarPlay interface that mimics an iPhone screen on the car’s dashboard. The same goes for Google, whose Android Auto works in a similar way. The catch is Apple and Google will have to operate as suppliers to automakers that have final say over the look and feel of the car, branding, and data captured on the driving habits of customers. This could be a big moneymaker for tech companies, because people spend so much money on cars as it is. But Apple may decide it wants more control over the final product, which would be the rationale for actually manufacturing cars. Google (GOOGL), for its part, suggested recently it would rather partner with automakers than build complete cars of its own, tamping down years of speculation about a Googlemobile.

Electrification. Cars powered by electricity alone represent just 0.2% of the new car market, according to Kelley Blue Book. And the jury is still out on whether costs will fall and driving range will rise enough to make electrics practical for families. Apple knows something about batteries used for smartphones, tablets and laptops, but Tesla, Toyota (TM), Honda, Ford (F), GM and other automakers know far more about vehicle batteries and electrical systems than Apple does. So this technology will probably develop with little input from Apple.

Car sharing. Uber, Lyft and Zipcar probably worry automakers more than Apple does right now, since they’re giving a lot of people good reason to forego buying a car altogether. Combining this trend with autonomous and connected cars suggests a future in which a rented car can deliver itself to your doorstep for as long as you need, and many people, starting with those who live in cities, may never need to own a car—or even learn how to drive. This would be massive change indeed, especially for automakers that would have to learn how to make money from services, upgrades and aftermarket products to offset money lost on sales. Hmmm. Come to think of it, those are things Apple is already pretty good at.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.

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