If Apple Wants To Be In The Auto Sector, It Needs This Car Supplier.
Apr 25, 2023
There has been much talk about Apple entering the vehicle market. Most attention is focused on Apple developing some electric cars. If the digital juggernaut is serious about vying for a piece of the $3 trillion car industry’s revenues, there is a better way to achieve it.
Investors have been obsessed with Apple Cars for over a decade. The Apple Car project even has its own Wikipedia page. But the only tangible product that Apple launched was CarPlay, a basic program the firm provides to automakers.
Now, CarPlay is no longer a favorite with automakers. A car supplier like General Motors has revealed that certain new cars introduced in 2024 would not support Apple’s CarPlay or Alphabet’s Android Auto.
Apps like Google Maps will remain accessible, but GM is following in the footsteps of a Car supplier like Tesla (TSLA), which puts apps onto Tesla’s iPad-like screen using its own native software without the need for phone projection. This method allows Tesla to guide users to EV charging stations when traveling lengthy distances — for around $10 monthly for a premium connection.
It appears that Apple should not be having this many problems in the automotive sector. It is the most valuable firm in the world, generating nearly $100 billion in free cash flow every year—more than all global automakers combined.
Still, Apple is on the outside looking in: it lacks the necessary hardware. The iPhone is at the center of the Apple ecosystem. Apple owns the hardware and chip design, and it is the gatekeeper for programs that run on the iPhone. Their clients, who use phones, demand and pay for continuous development. The automobile is effectively the iPhone in the automotive environment.
There is potential in infotainment systems, which are becoming smarter and combining services such as radio, navigation, and driving information into a single display with more data handled by fewer microchips.
For example, Visteon, situated in Van Buren Township, Michigan, is a small-capitalization car supplier that manufactures instrument clusters, telematics, and displays, among other things. Revenues are small compared to Apple’s estimated $300 billion in product-related revenues in 2023. Controlling Visteon’s software and technology would be a good and feasible path into the automobile industry for Apple.
According to Barron’s, Apple may enter the automotive market by purchasing Visteon. Apple should start with a modest purchase of an automotive supplier that does all the things the iPhone maker already understands. It should be Visteon. It could be an easy buy. Apple had $165 billion in cash as of Dec. 31, while Visteon has a market value of $4.2 billion.
Visteon did not respond to requests for comment. Apple did not react to a request for comment on Barron’s suggestion.
So, if the iPhone manufacturer does not, someone else may.