Tesla Motors Inc (NASDAQ:TSLA) is one of the masters of the car manufacturing business, designing and manufacturing premium electric vehicles, but ‘cars’ is totally a new chapter for the tech giants Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL). A CNBC article discussed how aspects of the car business would be tougher for Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) compared to Tesla Motors Inc (NASDAQ:TSLA), which already has lots of resources for such a business.
“Electric-car darling Tesla Motors assembles its own cars, makes its own batteries and, like Apple, runs its own stores where it can but Tesla has run afoul of state franchising laws that protect incumbent car dealers. Putting a mechanic at an Apple-store “genius bar” could be as hard to do legally as it is, well, to find mechanics who are geniuses and a base of outside auto manufacturers would have to be built,” said Theodore O’Neill, Ascendiant Capital Partners Analyst.
Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL)’s dream of car manufacturing seems likely to remain a fantasy as they have no comparable base for car manufacturing like Tesla Motors Inc (NASDAQ:TSLA). “AppleCar” is an electrically powered and self-driving car. According to a Barclays report, only 400,000 of 88 million+ cars sold globally last year were electric and none of those were self-driving. On December 22, 2014, Google Inc (NASDAQ:GOOGL) unveiled a fully functioning prototype of their driverless car and planned to test it on San Francisco Bay Area roads beginning in 2015.
At $1.6 trillion a year, the car manufacturing market is four times bigger than the smart-phone business. According to Morgan Stanley analysts, Apple Inc. (NASDAQ:AAPL), which is currently the world’s richest, most valuable technology company, will meet one of its most challenging businesses. Back in 2012, Google founder Sergey Brin stated that Google’s self-driving car will be available for the general public in 2017, while Apple Inc. (NASDAQ:AAPL) is planning to bring its electric car in 2020, whereas Tesla Motors Inc (NASDAQ:TSLA) is already in the market with its Model S, which was declared the best car overall in its class recently by Consumer Reports magazine.
“It doesn’t seem to us that Google is necessarily interested in entering the automotive manufacturing business, but it seems interested in dominating the OS so it can augment its search experiences. Apple may need to pursue an iCar so that Android won’t be the mobile platform of choice while traveling,” a Barclays Analysts stated.
People usually spend 10% of their free time in cars, so those who sell content and ads want to reach them there. That’s the reason Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) are already partnering with car makers for their CarPlay and Android Auto, to have passengers link their smart-phones with cars’ electronics. As Morgan Stanley predicts, Tesla Motors Inc (NASDAQ:TSLA) should achieve 15% operating margins by the middle of the next decade. If Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) want to join Tesla Motors Inc (NASDAQ:TSLA)’s car manufacturing race and win it, they will have to look into its planning and strategies or come up in front with more intelligent ones of their own.
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