Apple car or not, the way we drive is going to change radically

Is Apple working on an iCar?

It’s the big question on every tech journalist’s lips right now.

And investors should care too.

Not because it matters whether Apple makes a car or not – it really doesn’t.

But it points to just how massive a transformation the transport business is about to go through – and we’re still only very near the beginning. 

Is Apple building the car of the future? Maybe not – but someone is

Apple is being sued by A123 – an electric car battery maker – for allegedly poaching some of its staff.

Just to be clear, the big story here is not that one tech company is suing another. This kind of stuff happens all the time.

The big story is that it all adds to the buzz going around that Apple is working on something really exciting to do with cars.

Theories are flying about all over the place. Apple has apparently been hiring lots of people from carmakers recently. “The creation of a top secret research lab,” led by the lead developer of the iPod and iPhone also “points to efforts that could lead to an Apple car,” says the FT.

But maybe it’s not a car. Maybe it’s just software for a car – given that cars are all going to be connected to the internet in the future, Apple would have a big interest in that. And maybe it’s not even that. Maybe it’s battery technology. After all, Apple has a big interest in solar.

At the end of the day, it doesn’t matter. I like Apple products as much as the next person with a mild interest in useful and entertaining gadgets. (I defected to Android when I last switched phones but I’ll be changing back as soon as I can – I just don’t find it as intuitive – although please do argue the relative merits out among yourselves in the comments below.)

But the reason this should interest investors is because it shows just how much the car industry is being transformed by the tech industry right now. And this evolution is really only just beginning.

The dominant players in the car industry are going to change

I don’t know about you, but I still find it hard to get my head around the idea of our driving habits changing radically. But so much of the technology is already here.

Electric cars exist, obviously. They are niche and there remain big obstacles to wider adoption, but a Tesla is a status symbol. You’ve never been able to say that about an electric car before.

Self-driving cars exist. Again, there are big obstacles to their adoption. Driving around a sunny, barely-populated state in the US is a million miles away from slogging through London traffic, or navigating Glasgow in carwash-like levels of rain. But these things are real, and they work.

On top of that, you’ve got the likes of Uber. Again, fraught with regulatory issues (and the ethics of some of the companies leave a lot to be desired too). But these are getting people used to the idea of using smartphones and networks to summon lifts to wherever they want to go.

This sort of thing is all going to change the way we get around very radically. In the very long run, car ownership patterns will change. I’m not sure most people (particularly outside of urban areas, where there’s a much higher premium on the convenience of owning a car) are yet ready for a world where they don’t have a car always sitting in the drive, ready to go at a moment’s notice.

But once cars are entirely self-driving, the convenience of simply hailing a car from your smartphone every time you need to use one becomes much more attractive. You pay monthly rent to a provider – maybe similar to a mobile phone contract – or maybe pay as you go, per mile.

As ownership declines, cars themselves would likely become a lot more uniform. Well-designed, but largely interchangeable. Recreational driving would become a hobby – probably an increasingly expensive one, carved up between diehard petrolheads and people with a love of status symbols.

Or this vision could be completely wrong, of course. Maybe we’ll be too wedded to our motors. Or maybe we’ll all be travelling by drone before any of this stuff happens. (Please do give us your far-flung theories on how the future of driving will look in the comments section below.)

So enough of the futurism – it’s fun to indulge in, but doesn’t help a lot with the investment angle. The point is, technology is changing cars dramatically, and this shift is going to change the nature of the dominant players in the industry. Whatever the future looks like, I don’t think it’s too far-fetched to see this as the sort of disruption we’ve seen in the music and publishing industries.

My colleague Matthew Partridge looks at the best ways to profit from this potential future of robotic, electrically-powered cars in the latest issue of MoneyWeek magazine. If you’ve not already subscribed, you can access the piece (and get your first four issues free) by signing up here.

• This article is taken from our free daily investment email, Money Morning. Sign up to Money Morning here.

Leave a Reply

Your email address will not be published. Required fields are marked *