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Exactly how viable are Apple's electric car dreams?digitaltrends

Steve Jobs' biography by Walter Isaacson provides a sneak preview on how Apple's plans and thinking process have evolved over the years. However, even the book failed to predict Apple's inclination towards entering the automotive business.

The Financial Times reported on Friday, citing several sources familiar with the iPhone maker, that Apple has started employing automotive and design experts to work in a top-secret research lab, most likely to build an electric car.

This cannot be just a rumour as a Wall Street Journal report also stated on Friday that Apple had around a few hundred employees working on a project, code-named Titan. The report further mentioned it could be a battery-powered minivan.

Recently, Apple made headlines for its staggering $700-billion valuation in the market. And it's only natural that, from here, the Cupertino-based company will look forward to a solid entry into a market that doesn't involve iPhones and iPads. And, if the reports are true, a new Apple car is on its way. But, is Tim Cook biting off more than he can chew?

An Apple fanatic will not really dig into the above claim too much with the company only expected to showcase its Midas touch in a grander way following the $700bn valuation. The company had been warned that making electric cars will be more difficult than making phones.

If the company is to go ahead with its Project Titan and build an electric car, it will also need to look at the set of challenges that come with being in the automobile business in current times.

Reports state that if Titan is to result in a real car, Apple must be ready to embrace challenges related to mounting safety rules and an ever-varying regulatory environment for zero-emission vehicles. Needless to say, electric cars anyway generate low margins, even ending up in losses at times, and that's something companies like Apple and its shareholders rarely experience.

"They weren't in the phone business and succeeded, but the car business will be more difficult by two orders of magnitude," said Erik Gordon, professor at University of Michigan's Ross School of Business. "You can easily contract with a company in China to do the simple assembly of a phone but you can't so easily do it with the complicated assembly of cars."

But Apple isn't backing out of the deal anytime soone. Whenever an Apple product is rumoured or leaked, it surely arrives sooner or later. 

In fact, some reports state how Apple could make its most massive acquisition yet, with regard to its new electric car. Apparently, internet entrepreneur and angel investor Jason Calacanis believes Apple will acquire electric car maker Tesla for a staggering $75 billion in the next 18 months.

Even though Calacanis admits he has no inside information on the matter, he still notes that considering Apple's new-found interest in building cars and Tim Cook's "obsession" with renewable energy, "the two companies seem like a perfect match."

He is also of the opinion that Apple could be further convinced by Tesla's reported resolution to start selling batteries for homes' energy needs, making Tesla a lot more than just a car company. Calacanis thinks Apple's reputation for producing quality products could also convince CEO Elon Musk to finally sell Tesla (or at least, consider) to Apple.

"No one else in the world could actually make a run at Tesla, because they either don't have the cash and, most importantly, they don't have the ability to give assurances to Elon that they won't f— it up," he writes. "Apple's design team, software, and global distribution would actually LEVEL Tesla up."

In reality, Apple might be seen as a design leader but that alone isn't enough to make an electric car a great bet. Declining gasoline prices have pushed down sales of fuel-efficient cars. In fact, Nissan slashed the price on its electric Leaf to boost sales, while GM lowered prices on its electric hybrid Chevrolet Volt for the same reason.

But others are of a different opinion with regard to Apple's interest in entering the automotive market. For example, senior research analyst at Navigant Consulting Inc. Sam Jaffe believes that Apple may be looking at the car business merely because it needs a way to spend money.

"So how do they spend all of that cash?" Jaffe said in a telephonic interview. "They are going to have to enter into new markets. It's inevitable that one of those markets will be automotive. The future of the car industry is how to replicate the design ethos of consumer electronics."

That a new Apple car will arrive before the end of the current year is highly improbable. In fact, we don't even know if Project Titan is real or not, and accordingly, not expecting its details at this year's WWDC event as well. But something definitely is cooking behind the closed doors of Apple.

Even if Apple's new car arrives sometime late, it will be interesting to see how Apple makes its debut in the automotive sector that's already flooded with a number of car makers.

Electric cars still form just a tiny portion of global sales. It took Nissan about three years to sell 100,000 of its Leaf EV. And, this is where Apple comes in to make something out of the market. We are sure Apple will know that only branding won't help sell cars; unless it, once again, starts "thinking out of the box."

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