Apple are using the popularity of the iPhone to push themselves into the auto industry. The automakers are a bit unsure how they feel about this.
Apple announced the next generation of its CarPlay car software in June. It took over the user interface on all the screens inside, replacing the gas gauges and speedometers with a technical version. digitally supported by the driver’s iPhone. It suggests CarPlay helping automakers sell cars.
Apple’s chief technical officer Emily Schubert says 98% of new cars in the US have CarPlay installed. She came up with a shocking statistic: 79% of US buyers would only buy a car if it supported CarPlay.
“It’s a must-have feature when buying a new car,” Schubert said during the rollout of the new features.
The auto industry faces an unattractive choice: Offer CarPlay and forego the potential revenue and opportunity to make a major industry change, or spend big on software development. their own infotainment software and cater to a growing number of car buyers who refuse to buy a new car that doesn’t have CarPlay.
Apple wants a seat at the table
Automakers sell additional services and features to car owners on a regular basis, periodically as cars connect to the Internet, gain self-driving features, and switch from gasoline to diesel. with electricity and batteries.
According to a McKinsey report, the car software market will grow 9% annually through 2030, faster than the entire auto industry. McKinsey analysts predict car software could account for $50 billion in revenue by 2030.
Apple wants a piece of cake.
GMThe company, which isn’t listed on Apple’s slide, already makes $2 billion a year in car subscriptions, and expects it to grow to $25 billion a year by 2030. Teslawhich doesn’t support CarPlay, recently switched to selling “FSD” driver assistance features, including automatic parking and lane keeping, as a $199 per month subscription.
Automakers in China are starting to create electric vehicles Deep integration with their appsallows drivers to repair, connect with other owners, or even replace their rented batteries.
“We believe this could eventually lead to Apple offering a service that leverages a car sensor platform,” Goldman Sachs analyst Rod Hall wrote in June about next-generation CarPlay.
The next generation of CarPlay will need significant acquisitions from automakers to give Apple’s software access to core systems. Apple offered them to secure cooperation from several major automakers.
“Automakers around the world are excited to bring this new version of CarPlay to customers,” Schubert added, before showing off a slide with 14 automaker brands, including FordMercedes-Benz and Audi.
Industry observers believe that automakers need to embrace software offerings – and look at Apple products with skepticism – or risk being left behind.
“It’s a really tough time in the industry, where car companies think they’re still building cars. It’s not. They’re building software on wheels, and they don’t know it, and they’re trading it,” said Conrad Layson, senior analyst at AutoForecast Solutions.
CarPlay can generate new revenue
The new version of CarPlay could be a big revenue driver for Apple.
First, if users love the CarPlay interface of their iPhone, then they will be less likely to switch to an Android phone. It’s a strategic priority for Apple, which generates most of its revenue through hardware sales.
Second, while the company does not not yet charged to car manufacturers or suppliersit can sell services to vehicles the same way it distributes iPhone software.
In June, Apple revealed that it was exploring features for commercial integration into the cockpit of cars. A new feature announced this summer will let CarPlay users navigate to a gas pump and pay for gas from the vehicle’s dashboard, according to Reuters.
Apple has generated tens of billions of dollars from the App Store and will boost that number if it decides to charge for car service.
For example, in 2021, Apple raked in total revenue of between $70 billion and $85 billion from its App Store — 15 percent to 30 percent of that, depending on the app. Apple does not currently count the percentage of purchases made on the iPhone app for physical goods or services.
The new CarPlay also allows Apple to collect high-level knowledge and data about how people use their cars. It’s valuable information if it ends released his own carwas under high secret development for several years. (Apple’s car group and its CarPlay group are organized into separate departments.)
For example, when users use Apple’s Maps app, the company gets insights into which routes are most popular and when traffic is highest. It is also in a position to see what CarPlay apps are being solicited and downloaded.
In a note earlier this year, Morgan Stanley analysts surmised that advances in self-driving could free up trillions of hours a year that Apple could address with new products and services. – a huge potential market.
“One hour of people sitting in cars doing nothing? Depends on who you ask… but (and this is just our point of view) 1.2 trillion hours times anything is an animal. HUGE numbers,” Morgan Stanley analysts wrote earlier this year.
Car companies seem skeptical
Apple says heavyweights like Honda, Nissan and Renault are “excited” about the new CarPlay support. The 14 brands featured on Apple’s slide delivered more than 17 million vehicles in 2021.
But car companies may not be as excited as Apple suggests. A handful of them have announced models that will support the new CarPlay, and most are uncommitted.
Land Rover, which appeared on Apple’s slide, is “working with Apple” to see how it can become “a part” of its infotainment system, a spokesman said. A spokesperson for Land Rover and Jaguar added: “It is too early to comment on future products.
Mercedes-Benz describes its commitment to CarPlay as “discussions” with Apple.
A Mercedes Benz spokesperson said: “Overall, we evaluate all possible new technologies and functions that may be relevant internally.
Shortage Commitments from automakers can be a matter of time and product cycle: Apple says vehicles will begin to be announced “later next year.” But the great response could also be because the new CarPlay represents a major shift in Apple’s relationship with cars.
The new CarPlay will require the car’s real-time system to transfer that information back to the user’s iPhone, where it will be analyzed and integrated into Apple’s own software and displayed on the car’s display. Apple’s interface will also include vehicle controls. Users can tap a button on an Apple-designed touchscreen to turn on the air conditioner, according to Apple’s promotional video.
“Gaining control of these native functions is remarkable because it effectively shifts the in-car experience from the automaker’s hands to Apple,” Loup Funds founder Gene Munster wrote in a note. research notes.
Whether automakers give up control of the in-car experience could be strategically important to the auto industry. The first electric car manufacturers to be digitally savvy, such as Tesla and Rivian has moved away from Apple CarPlay, because of user outcry, most likely for strategic reasons (although Apple CEO Tim Cook reported take a trip in a van in Rivian earlier this month.)
If computers and displays in cars primarily display Apple’s interface, then automakers will be less likely to sell those services to their customers. And they may lose the ability to define their customer relationships with online services and applications.
Radio Free Mobile analyst Richard Windsor said: “The point of the game is for OEMs: ‘I have to get a seat at the table somewhere so that when these services come out, I have a finger in the cake. “In order to do that, the user’s smartphone has to be in his pocket when he gets in the car. As soon as he turns on CarPlay, or Android Auto, or Android Automotive, or whatever else, the umbrella manufacturer I’m in real trouble.”
