iCar: Why Apple is more likely to make a flying car than take on BMW

February was the month when everyone went iCar crazy. There are always rumours about projects Apple is apparently working on, but as outlandish as the iCar rumours sound, when they come from The Wall Street Journal ( subscription needed) and the FT, there has to be some credibility to them.

[Read our iCar rumours here]

Those reports claimed that Apple had a team of 1000 engineers working on an automotive project. Apparently a quick look on LinkedIn shows 640 Apple employees with past experience in the automotive industry. Of that number, forty-six current Apple employees were formerly at electric car maker Tesla. It seems that Apple was pretty keen to get its hands on them too: Wired claims that Apple is offering up to $250,000 and a 60 percent raise to Tesla employees who agree to move to Apple.

Other recent recruits have included the head of Mercedes-Benz R&D unit, and the project is said to be being lead by Steve Zadesky, formerly of Ford.

There is certainly a lot of evidence pointing to the development of a car, or car related technology, at Apple.

Then there was the car, registered to Apple, which was seen driving the streets of America, with four strange looking cameras on its roof. Suddenly everyone was talking about Apple’s self-driving car plans (and ignoring the fact that the company has its own wannabe Google Maps and is clearly creating a database of Street View style images).

Ignoring this camera car for a moment, would Apple really be investing in this area? There is some evidence that it has. Apple has filed patents in the past that relate to automotive technologies, for example a 2009 patent for a “programmable tactile touch screen display and man-machine interfaces for improved vehicle instrumentation and telematics” but I’ve not seen a patent that suggests Apple is actually building an electric car. In fact, most of these patents are more about integrating the iPhone into cars – basically CarPlay. Read: The case for and against the Apple Car

One article I’ve seen speculates that CarPlay is the equivalent of the Rokr (the Motorola phone that Apple put iTunes on to test out the mobile phone industry). M G Siegler writing for Medium suggests that thanks to CarPlay Apple has its toe in the automobile water, ready to get involved when the time is right.

But would Apple employ 1000 engineers to work on CarPlay? It seems unlikely unless there is one day going to be a lot more to CarPlay than playing the tracks on your phone and asking Siri to read your emails.

Here we have two possibilities. Apple is either inventing a way of controlling a car that can be built into existing cars, as CarPlay is today, or it is building an electric car.

Former CEO of General Motors, Dan Akerson thinks Apple would be crazy to try and take on the automotive industry, which he describes as “low-margin, heavy-manufacturing”. Business Insider’s Henry Blodget thinks that the automotive industry isn’t enough of a money-spinner for Apple. Even if it made as much profit as BMW does in a year it would be a tiny percentage of what Apple makes from iPhone sales.

Forbes’ Eric Jackson thinks that Apple would make more profit than BMW because it has “operational supply chain guru” Tim Cook at the helm. He reckons Apple could make a car “in a manner that could produce 50% margins.”

That seems a little far-fetched to us, as it does to Blodget who notes: “There’s no super-cheap Foxconn for car manufacturing…. And wireless carriers won’t subsidize 2/3rds to 100% of the price of Apple cars.”

While it’s true that before Apple launched the iPhone nobody knew the potential of that money-spinner, it is hard to imagine a world where a car (and an expensive car to boot) would become the must-have item that smartphones have become.

But anything could happen in the next few years. Perhaps Apple is inventing a flying car and ten years from now we will all be living in exactly the way the team behind Back to the Future 2 imagined (all-be-it 10 years after predicted). Or not.

I don’t think Apple is working on a flying car, in fact I don’t think that Apple is working on any car. I think Apple is working on putting even more technology into car dashboards, technology that will make controlling the car simpler and safer, will help us drive our cars in a more environmentally friendly way, and will provide entertainment to our passengers and information to us. And that in a few years from now it will be using the relationships it already has with those car manufacturers that have integrated CarPlay in their vehicles, to fully computerize the cars we drive. Ten years from now your car could be running OS X or iOS and you could be using Siri to tell it what to do. But that car could still be a BMW or a Mercedes. 

Now that could transform the automobile industry.

Read about the other projects that Apple could be working on in 2015 here: Rumours and predictions for Apple in 2015

Plus: What to expect at WWDC 2015