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The “Trojan Horse” of the automotive world, Apple has become the heart of the giants?

Beijing, July 23- Apple is using the iPhone’s high popularity to enter the automotive industry. Automakers are a bit overwhelmed by this. In June, Apple unveiled its next-generation in-car system, CarPlay, at the Worldwide Developers Conference (WWDC). It took over the user interface of all in-car screens, taking out the gas gauge and speedometer dashboard and replacing them with a digital version powered by the iPhone. Apple says CarPlay can help automakers sell cars.

Apple engineering manager Emily Schubert said at WWDC that CarPlay is installed in 98 percent of new cars in the U.S. She also gave a shocking statistic: 79 percent of U.S. car buyers will only buy cars that support CarPlay.

“It’s a must-have feature when you buy a new car,” Schubert said so at the time.

For the auto industry, they face an unattractive choice: either offer CarPlay and give up potential revenue and the opportunity to seize a major industry shift, or spend heavily on developing their own infotainment system, but potentially face a shrinking pool of car buyers who are the only ones who will buy a new car without CarPlay pre-installed.

Apple’s calculus

As cars connect to the Internet, gain self-driving capabilities, and shift from gasoline to electric and battery power, automakers regularly sell additional services and features to owners.

A report released by McKinsey & Company, a leading consulting firm, shows that the automotive software market will grow at an annual rate of 9 percent through 2030, outpacing the growth rate of the entire automotive industry. McKinsey analysts predict that by 2030, automotive software sales will reach $50 billion. Apple also wants a piece of the pie.

Apple releases next-generation CarPlay

General Motors is not on the list of support for Apple’s next-generation CarPlay system, and the auto giant already earns $2 billion a year from the in-car subscription service, which is expected to jump to $25 billion by 2030. Tesla, which also does not support CarPlay, recently began selling its “Fully Automated Driving System” (FSD), which supports self-parking and lane-keeping, for a $199 monthly subscription.

Chinese automakers are also starting to develop electric cars that are deeply integrated with their apps, enabling owners to access repair services, connect with other owners and even replace rented batteries.

In June, Goldman Sachs analyst Rod Hall wrote in a research note about next-generation CarPlay, “We believe this could eventually lead to Apple offering services that leverage the car’s sensor platform.”

For Apple, next-generation CarPlay will need strong support from automakers to get its software into the core system. Apple said the company has already partnered with several major automakers.

The list of partnerships shown by Schubert includes 14 automaker brands such as Ford, Mercedes-Benz and Audi. “Automakers around the world are excited to bring this new version of CarPlay to their customers.” She said before showing the list.

Industry watchers believe automakers need to embrace the software service or risk being left behind. But they also view Apple’s CarPlay with skepticism.

“The auto industry is really struggling right now. Car companies think they’re still making cars, but they’re really not. They’re developing software on wheels and they don’t know it themselves, and they’re cutting that business off.” said Conrad Layson, senior analyst at AutoForecast Solutions, an automotive industry data forecasting firm.

Potentially huge revenue engine

The new version of CarPlay could be a huge emerging revenue engine for Apple. For one thing, if users like the CarPlay interface on the iPhone, they’re less likely to switch to an Android phone. This is a strategic priority for Apple because the company derives most of its revenue from hardware sales; second, while Apple doesn’t yet charge automakers or suppliers, it could sell car services in the same way it distributes iPhone software.

In June, Apple revealed that it had explored the ability to integrate commerce into the cockpit of a car. A new feature released this summer will reportedly allow CarPlay users to navigate to gas stations and pay for gas through the car’s dashboard.

Apple already generates tens of billions of dollars in revenue through the App Store, and its revenue will grow even further if it decides to charge for automotive services. In 2021, for example, Apple’s App Store will generate between $70 billion and $85 billion in total sales. Depending on the app, Apple takes a commission of 15 to 30 percent from it. Apple does not currently take a percentage of physical goods or services purchased on the iPhone app.

Moreover, the new version of CarPlay allows Apple to collect advanced knowledge and data about how people use their cars. This will be invaluable information if the company eventually launches its own car. For years, Apple has been developing its own cars in a highly secretive manner.

For example, when people use Apple’s Maps app, the company can learn which routes are most popular and when traffic is highest. Apple can also see which apps for CarPlay are gaining traction and their download numbers.

Earlier this year, Morgan Stanley analysts speculated in a report that advances in self-driving technology could help free up trillions of hours a year for people in their cars. Apple could use that time to market its new services and products to car owners, a huge potential market.

“How much is an hour spent by a human in a car with nothing to do worth? It depends on who you ask …… but (and this is just our opinion) 1.2 trillion hours multiplied by anything is a very large number.” Morgan Stanley analysts wrote earlier this year.

Are car companies really that enthusiastic?

Apple claims that heavyweight automakers such as Honda, Nissan and Renault are “excited” to support the new CarPlay. The 14 brands listed by Apple delivered more than 17 million cars in 2021.

However, car companies may not be as excited as Apple says they are. Few companies have announced support for the new CarPlay models, and most have not explicitly stated their position.

Land Rover is on Apple’s support list, with a spokesperson saying it is “working with Apple” to see how CarPlay can become “part of” its infotainment system and that “it’s too early to comment on future products. It’s too early to comment on future products.

In Mercedes’ view, the company’s commitment to CarPlay is stuck in the “discussions” stage with Apple. A Mercedes spokesperson said, “In general, we evaluate all potentially relevant new technologies and features internally.”

Of course, the automaker’s lack of commitment may be a matter of time and product cycles. Apple has said that CarPlay-enabled models will be released starting “later next year. However, this lukewarm response could also be due to the fact that the new version of CarPlay represents a major shift in Apple’s relationship with automakers.

The battle for control

The new version of CarPlay will require the car’s real-time system to transmit this information back to the user’s iPhone, which will then be analyzed and integrated into Apple’s own system to be presented on the car’s screen. Apple’s interface will also include vehicle controls. According to Apple’s promotional video, users can tap an Apple-designed touchscreen button to turn on the air conditioning.

“Gaining control of these basic functions is notable because it effectively shifts the in-car experience from the automaker to Apple.” Gene Munster, the founder of venture capital firm Loup Funds, wrote in a research note.

For the auto industry, whether automakers relinquish control of the in-car experience could be of strategic importance. Electric carmakers such as Tesla and Rivian are well-versed in digital-first strategies, and their avoidance of Apple’s CarPlay despite user protests may well be for strategic reasons.

If in-vehicle computers and screens end up displaying primarily Apple interfaces, automakers’ ability to sell these services to customers will be diminished. They may lose the ability to use online services and apps to define customer relationships.

“For automakers, the goal of this game has to be: I have to have a place somewhere. That way, when these services come to market, I get a piece of the pie. In order to do that, they need to get users to leave their smartphones in their pockets when they get in the car. Once users turn on CarPlay, Android Auto or Android Automotive, or anything else, this automaker is in real trouble.” Richard Windsor, an analyst at independent research firm Radio Free Mobile, said.




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Threza Gabriel
Threza Gabriel
TechGoing is a global tech media to brings you the latest technology stories, including smartphones, electric vehicles, smart home devices, gaming, wearable gadgets, and all tech trending.

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