As of December 2020, the rumors and state of the industry are as follows:- Apple is rumored to deliver an electric car in 2024; Tesla has the highest evaluation of any car maker in the world at over 600 Billion US dollars, larger than the next top 5 car manufacturer by market cap combined; Elon Musk said that he offered Tesla at $60 billion evaluation; many car makers are jumping to the electric bandwagon since gas powered car will be banned in major markets by 2030.
Here’s a thing about building cars, it is very hard not because they are inherently more complex to design and build than computers and phones, they are heavily regulated for safety and environmental purpose and it is a very crowded market for any new player to come into.
First I’m going to focus on the US car market because this is the most likely place where Apple is going to launch a car. It makes the most sense because Apple is a California company, the USA is a big car market with high income consumers and it would be the most likely the test bed in where Apple will try a very expensive venture.
In US, one of the largest car market in the world has a turnover of around 17 to 18 million units. Apple as a brand will definitely go into the premium car market that will compete to the likes of Mercedes, BMW and Tesla. US premium car market is around 2 to 2.5 million units per year and Tesla which is not a market leader has around 10% market share in this segment.
Apple will not be a near term threat to Tesla because the nature of the car industry. Building a car company is all about building a car brand and building a car brand takes years. Tesla was founded in 2003 and only manage to turn a full year profit in 2020. This is despite cult-like following of Elon Musk and savvy marketing. This is after building 5 models (roadster, model S, model Y, model X and finally model 3). Apple is not going to hurt Tesla because it is going out with one model. There is no one size fits all in car model.
Further more, car building takes a lot of investment, not just in terms of development, design but also in marketing. It is very risky to spend billions of dollars in car development, not show the concept car to gauge market interest and release it in hope that the Apple faithful will just go out and buy it. Porsche is know for this approach: release a concept car to gauge interest and start building it when the interest hits a certain milestone. Porsche has something that Apple doesn’t in the car industry: experience and brand equity.
Conclusion
Apple is not going to be a threat to Tesla or any other establish car manufacturer because building cars take a lot of time and money, the market is very saturated, secretive development might backfire on Apple and Apple might not turn a profit from car manufacturing for over a decade.