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An iPhone on wheels: the existential challenge for carmakers (FT)

17 July 2022


Financial Times title: An iPhone on wheels: the existential challenge for carmakers
FT subtitle: The spread of Apple’s CarPlay system is a threat to the auto industry
By: Peter Campbell
Date: 13 July 2022

“To sound smart, some car manufacturing executives have defaulted to calling their product “an iPhone on wheels”.

The phrase helps investors conjure up images of smooth, glitzy, consumer-beloved technology, while helpfully banishing visions of heavy machinery or labour unions.

It is true that connecting cars to the internet unlocks an array of features, from ordering coffee while driving to on-board streaming for the children in the back. These features, carmakers believe, will provide them with lucrative new revenue streams in the future, helping them expand from low-margin metal bashing to the more investor-friendly arena of “services”.

Stellantis, the owner of Fiat, Jeep and Peugeot, believes it can make €20bn of revenue from services by 2030. Additionally, selling directly to drivers brings the all-important “customer relationship” — largely farmed out to the dealerships — to the manufacturers themselves, along with a treasure trove of data.

All of this helps an industry with meagre valuation multiples that mask the fact that its companies are world leaders in a host of areas from research, engineering and marketing to manufacturing.

Unless, of course, Apple gets there first. That the technology giant is working on some sort of automotive proposition is widely known.

Yet for all the whispered talk of a secretive “Apple car”, its real foray into the industry is already hard-wired into millions of vehicles. At its developers’ conference last month, Apple unveiled its latest CarPlay system, a significantly metamorphosed beast from the maps-and-music service of today.

“Deep integration with the car’s hardware lets you tune the car’s radio or change the temperature without ever leaving the CarPlay experience,” boasted company executive Emily Schubert.

The new system takes over all the screens in a vehicle, with customisable dials and display. A slide flashed up with a dozen car brands, from Ford and Honda to Porsche and Mercedes-Benz, that are “excited to bring this new vision of CarPlay to customers”, Apple announced.

This was news to some of the carmakers listed, which did not expect to have their names stamped on the product. Yet as long as customers want Apple features, the brands have little choice but to buy it.

However, the “iPhone-isation” of the car industry brings its own lessons from the smartphone world, where producers that were unable to provide consumer software ended up as unglamorous device makers. The great fear in boardrooms from Detroit to Tokyo is that consumers who buy a car for the Apple interface won’t really mind what logo adorns the steering wheel.

After seeing the announcement, the chief executive of one large carmaker put it like this: “Do we want Apple or Google to come in and take over, to enter our car and get the direct customer relationship, to get our customer to talk to Siri as opposed to our own system?” 

Software in cars, though, is a far cry from smartphones. “How often do you restart software in a phone?” asks one auto executive. “Even if it’s once in a while, that cannot happen in a car.”

But already, the best in-car technology offered by carmakers feels clunky compared with Apple’s current technology. Just as many of the industry’s enthusiastic new entrants have discovered that making cars is hard, so established manufacturers have found software a tough nut to crack.

Volvo Cars’ new boss Jim Rowan, who joined earlier this year, reversed a company position to focus on cars and let other companies build its software.

VW’s bid to bring its software efforts under one project called “Cariad” have been underwhelming, while software faults in the electric Jaguar I-Pace significantly delayed its rollout. Barely a week goes by without carmakers somewhere in the world issuing a software-related product recall.

Yet even if the industry produces crisp, intuitive systems, there is a larger hurdle: getting consumers, who are used to interacting with Apple or Android systems in their life, to put up with something different when driving.

“You take Apple from your kitchen to your car, but you never take VW from your car to your living room,” notes Philippe Houchois, an auto analyst at Jefferies. Fresh from the latest slightly-tweaked phone, Apple’s slick design team has drawn the latest battle lines with the carmakers. The industry has yet to figure out how, or even whether, to face it down.”



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1 Comment

  1. ana

    a challenge that scares me


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