Tesla Motors gets credit – deservedly so – for lighting a fire under the global auto industry, inspiring carmakers to speed up their product development times and to get serious about introducing long-range electric cars and new technologies like over-the-air vehicle updates.
But another Silicon Valley company, Apple, appears to be spending billions on R&D for mobility, far more than Tesla. And unlike Elon Musk’s enterprising company, Apple has the financial firepower to sustain the pace, with $153 billion cash burning a hole in its pocket, more than the world’s 14 top automakers put together.
While the creator of the iPhone and iPad has never confirmed it is working on a car, there is plenty of evidence to suggest it sees the auto business as its next big opportunity.
The latest came from Morgan Stanley technology analyst Katy Huberty, who studied Apple’s R&D spending patterns over the past 15 years and concluded that it’s pouring more money into shared mobility than it did when it launched its most successful product, the iPhone.
From there, she makes some pretty huge leaps of logic to conclude that Apple will own 16% of the $2.6 trillion shared mobility market by 2030, resulting in $400 million in new revenue (almost three times what Apple is believed to take in on iPhone sales).
Some of her analysis is flawed – for example, she claims Apple is outspending automakers on R&D by 20x. In fact, she is comparing Apple’s incremental R&D spending over the last three years with the auto industry’s incremental spending over the same period: $4.7 billion for Apple vs. just a net $192 million for the top 14 automakers. Tesla alone increased its R&D spending by $444 million during 2013-2015, she notes.
What this comparison fails to acknowledge is that automakers already invest billions of dollars on future vehicles and technology each and every year – this is their core business, after all – while Apple and Tesla are industry newcomers trying to get in the game. General Motors spent $7.5 billion, or 4.9% of its revenue, on R&D in 2015 while Ford Motor spent $6.7 billion, or about 4.5%.
Photo Credit: Forbes/Apple CarPlay in Volvo XC90
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Forbes / Autos
