Apple CarPlay could be a Trojan horse in the automotive industry

Apple is using the popularity of the iPhone to advance in the automotive industry. Automakers are a little unsure how they feel about this.

Apple announced the next generation of its CarPlay in-car software in June. It takes over the user interface on all interior screens, replacing gas gauges and speed dials with a digital version powered by the driver’s iPhone. He suggested that CarPlay helps automakers sell cars.

Apple tech manager Emily Schubert said 98% of new cars in the US come with CarPlay installed. She presented a shocking statistic: 79% of US buyers would only buy a car if it supported CarPlay.

“This is a must-have feature when buying a new car,” Schubert said during the presentation of the new features.

The automotive industry faces an unattractive choice: offer CarPlay and forgo potential revenue and the chance to be part of a major industry shift, or spend heavily developing its own infotainment software and cater to a growing audience of car buyers who won’t buy new ones. car without CarPlay.

Apple wants to take a seat at the table

Automakers regularly sell value-added services and features to car owners as cars connect to the Internet, acquire autonomous driving capabilities, and move from gasoline to electricity and batteries.

According to a McKinsey report, the automotive software market will grow at 9% per year through 2030, faster than the automotive industry as a whole. McKinsey analysts predict that by 2030, automotive software sales could reach $50 billion.

Apple wants a piece of the pie.

grandmasterwhich was not listed on Apple’s slide, already generates $2 billion a year from car subscriptions and expects to grow to $25 billion a year by 2030. Teslawhich doesn’t support CarPlay, recently moved to sell its “FSD” driver-assistance features, including automatic parking and lane keeping, as a subscription that costs up to $199 a month.

China’s automakers are starting to build electric vehicles, integrate deeply with your applicationsallowing drivers to repair, communicate with other owners, or even replace rented batteries.

“We believe this could eventually lead to Apple providing services using automotive sensor platforms,” Goldman Sachs analyst Rod Hall wrote in June about next-generation CarPlay.

The next generation of CarPlay will require significant support from automakers to give Apple software access to key systems. Apple has offered to secure cooperation with several major automakers.

“Automakers around the world are excited to bring the new version of CarPlay to customers,” Schubert added before showing a slide of 14 automaker brands, including FordMercedes-Benz and Audi.

Industry watchers say automakers need to use software services — and look at Apple’s offering with skepticism — or risk being left behind.

“This is a really difficult time in the industry when car companies think they are still making cars. This is not true. They make software on wheels and they don’t know it and they sell it. ,” said Conrad Layson, Senior Analyst at AutoForecast Solutions.

CarPlay could bring new revenue

The new version of CarPlay could be a huge source of income for Apple.

First, if a user likes the iPhone’s CarPlay interface, they’re less likely to switch to an Android phone. It’s a strategic priority for Apple, which makes most of its revenue from hardware sales.

Secondly, until the company but charge car manufacturers or suppliersit could sell services for cars the same way it distributes software for the iPhone.

In June, Apple said it was exploring features that integrate commerce into the car’s cockpit. One new feature announced this summer will allow CarPlay users to go to a gas station and pay for gas from the car’s dashboard. according to Reuters.

Apple is already making tens of billions in the App Store and intends to increase that amount if it ever decides to charge for services in cars.

In 2021, for example, Apple’s total App Store sales were between $70 billion and $85 billion, of which it accounts for between 15% and 30%, depending on the app. Apple does not currently charge a percentage of purchases made in iPhone apps for physical goods or services.

The new CarPlay also allows Apple to collect high-level information and data about how people use their cars. This is valuable information if it ever turns out to be production of own carwho was under very secret development for years. (The Apple Automotive Group and its CarPlay team are organized into separate divisions.)

For example, when users use the Apple Maps app, the company gets an idea of ​​which routes are most popular and when traffic is highest. It can also see which CarPlay apps are revving up and downloading.

In a note earlier this year, Morgan Stanley analysts suggested that advances in self-driving could free up trillions of hours a year that Apple could use with new services and products — a potentially huge market.

“How much is an hour of human time spent in a car idle? It depends who you ask…but (and this is just our opinion) 1.2 trillion hours multiplied by anything is a VERY BIG NUMBER,” Morgan Stanley analysts wrote earlier. year.

Car companies are skeptical

Apple says big players like Honda, Nissan and Renault are “excited” to support the new CarPlay. The 14 brands featured on the Apple slide delivered over 17 million vehicles in 2021.

But car companies may not be as excited as Apple thought. Few have announced models that will support the new CarPlay, and most of them don’t commit.

Land Rover, which appeared on Apple’s slide, is “working with Apple” to see how they can become “part” of its infotainment system, a spokesperson said. “It’s too early to comment on future product offerings,” a spokesman for Land Rover and Jaguar added.

Mercedes-Benz described its commitment to CarPlay as “discussions” with Apple.

“In general, we are evaluating all potentially important new technologies and features within the company,” said a spokesman for Mercedes Benz.

Absence automakers’ commitment could be a timing and production cycle issue: Apple says cars will begin announcing “at the end of next year.” But the cold reaction could also come from the fact that the new CarPlay represents a major shift in Apple’s relationship with cars.

The new CarPlay will require real-time in-car systems to relay this information back to the user’s iPhone, where it will be parsed and integrated into Apple’s own software and displayed on the car’s screens. Apple’s interface will also include vehicle controls. According to an Apple commercial, users can press an Apple-designed touch screen button to turn on the air conditioner.

“Getting control of these root functions is remarkable in that it effectively transfers control of the car from the hands of the automaker Apple,” Loup Funds founder Gene Munster wrote in a research note.

Whether automakers relinquish this control over the automotive experience could be of strategic importance to the auto industry. Resourceful digital-focused EV manufacturers such as Tesla as well as Rivian abandoned Apple CarPlay due to outcry from their users, most likely for strategic reasons (although Apple CEO Tim Cook is reportedly swept in a Rivian truck earlier this month.)

If car computers and screens end up displaying mostly the Apple interface, automakers will have less ability to sell these services to their customers. And they may lose the ability to define their relationship with customers through online services and applications.

“The goal of the game should be for OEMs: ‘I have to get a seat at the table somewhere so that when these services come out, I’m in business,'” said Richard Windsor, an analyst with Radio Free Mobile. “To do this, the user’s smartphone must remain in his pocket when he gets into the car. The minute it turns on CarPlay, Android Auto, Android Automotive or whatever, the automaker is in real trouble.”