Tech race propels carmakers
New York — Apple's reported entry into the autonomous vehicle race will accelerate automakers' efforts in self-driving technology and could dramatically reshape the industry, experts said this week.
Some analysts think the news that the computer giant is mobilizing hundreds to build an autonomous electric minivan by 2020 could upend the industry. Others are less concerned, but think the perceived threat will hasten automakers' efforts into self-driving technology and electric cars.
Apple Inc. wasn't at the New York International Auto Show this week; it hasn't acknowledged it is working on a car. Also absent were Google, which has logged more than 700,000 miles in autonomous cars, and Tesla Motors, with its stylish EVs and aggressive growth plans. But all three were much talked-about among automakers, analysts and the press.
Morgan Stanley auto analyst Adam Jonas says automakers have reason to be worried. He is confident Apple will be able to produce an autonomous car by 2020. He thinks such a car could first be used as taxis in urban areas, and ultimately spur widespread adoption. He believes some cities will even ban driving by humans by 2030.
"It accelerates everybody," Jonas said in an interview this week in New York. "If Google or Apple get a small fleet of driverless taxis on San Francisco roads, that could change forever transportation."
Features like lane-departure warnings, adaptive cruise-control that speeds up or slows down cars to maintain their pace in traffic — all steps on the way to autonomous driving — are available from most carmakers already.
Jonas thinks reported Apple's car project could help spur worldwide consolidation in the auto industry in the next quarter-century from 35 significant automakers to five or six. "It accelerates the move from software being worth 10 percent of the value of the car to 60 percent," he said. "The new rare resource is brains: What kind of people in your organization rather that what kind of steel are we bending."
General Motors Co. product chief Mark Reuss said this week in an interview in New York, "We always treat anybody who is going to be in the auto industry making cars and trucks as a competitive threat."
GM already has partnered with Apple to integrate Siri Eyes Free and is one of many automakers working with the company on its CarPlay system that allows apps to be projected onto in-vehicle touchscreens.
He said GM is open to working further with Apple. "They are great at user interfaces," Reuss said. "If they are going to go into the car business, I'm sure they'd like to have some of our expertise on some of the long-term capital things we do really well ... They don't stamp panels. It's a not a far reach to say those partnerships would be very healthy."
Asked if GM would build a car with Apple, Reuss said GM "has no proposals." But he added: "Those are the best of both worlds. Yeah, we're open to all that."
He said Apple has enough money that it could pose a major disruptive force in the auto industry.
Apple has a market capitalization of more than $175 billion in cash. The California-based company reportedly has met with major suppliers and hired prominent auto designers. It recently was sued by a major battery firm that accused Apple of poaching employees.
Much is not known about Apple's plans, since it has said nothing about the project. Apple has spent years researching other products before delaying or opting not to proceed. Apple spokesman Tom Neumayr said Thursday that the company's response is to "decline comment on rumor and speculation."
Ford CEO Mark Fields says the Dearborn automaker welcomes new entrants. "It's going to keep us all on our toes from an innovation standpoint," Fields said Sunday in the run-up to the New York show. "We are absolutely looking at this as an opportunity and not just as a threat."
Renault-Nissan CEO Carlos Ghosn — who says his company will produce autonomous cars by 2020 — says he doesn't see Apple as a disruptive threat to the auto industry. He thinks anyone bringing electric cars "is more an ally than a competitor" and will help send the message the EV is mainstream and "here to stay ... It brings more credibility and brings more momentum."
Mercedes-Benz USA president and CEO Stephen Cannon said, "Any company that sits on $170 billion in cash with a brand as powerful as Apple — if they make noise, we'd be silly not to listen." Cannon said Mercedes is prepared, and noting its new vehicles are getting growing autonomous capability in traffic jams and at other points. "We don't feel threatened by that at all."
Electronics ramp up
Automobiles — which already have more than 100 million lines of computer code — are becoming increasingly technology-packed with more connectivity between cars and roadways, electronic safety features and infotainment systems. More features are being added as companies anticipate competition with each other and with developments like a potential Apple car.
The push for electronics "will change the industry," Hyundai's U.S. chief Dave Zuchowski said in an interview this week. But he noted it isn't easy to build a car.
"Automobile manufacturing is a very complex and very difficult business," he said. "And a lot of these folks, be it Google or Apple: Be careful what you ask for sometimes." But he didn't discount Apple's potential: "They are very small, very well capitalized."
BMW North America President Ludwig Willisch says Apple certainly can build a car. But he said it's still not clear "if they can build a car that is meaningful to the general public."
Autonomous driving is coming he said, but he said BMW is about the fun of driving. "It's not just being brought from A to B. It's for people who want to actively enjoy driving," Willisch said, acknowledging there are times when autonomous driving — like in traffic jams — makes sense.
He pointed to sectors like cars-for-hire as the first place. "If I were somebody in the cab business, I'd be pretty frightened," Willisch said.
Toyota Motor North America CEO Jim Lentz said in a Detroit News interview last month that Apple "is a big challenge for all of us," but said it is by no means certain. "Money doesn't necessarily buy you credibility in the car space," Lentz said.
But Morgan Stanley's Jonas sees few obstacles: "It's just time — the technology is there."