For the past few years, American tech giant Apple has danced around the topic of cars. Late last week however, Apple stunned industry observers by plonking down a cool billion dollars in investment capital for the Uber of China, Didi Chuxing.
For a company that had really, till that point, revealed very little about their automotive plans, the investment into China seemed like an odd move. Apple has never really invested in startups, preferring instead to acquire companies wholesale to merge their products into the Apple pipeline.
Didi is not a consumer tech company. They do not make products like Beats (Apple’s last big investment) nor do they make products for consumer electronics.
A closer look at investment into Didi actually shows a shrewd long-term game plan by the Cupertino-based company to get in on the next big tech arms race: autonomous vehicles.
Self-driving autonomous cars, once thought to be science-fiction, are slowly becoming a reality with one report stating that by 2020, we could see over 10 million on the road.
Car makers as well seem to be going all in on this with the likes of Nissan,Toyota and Mercedes to name a few, all making solid steps towards the creatin of autonomous cars.
This autonomous vehicle revolution has also greatly increased the integration between tech and automotive companies like never before. In fact, Apple is not the first tech giant to get into this new and emerging field.
Actually, in many ways, Apple is pretty late to the self-driving vehicle party.
Arch-rival Google’s parent company, Alphabet has been working on autonomous vehicle prototypes for over a year with varying degrees of success. Late last month, the company took another step forward by announcing a partnership with the world’s seventh largest car maker, Fiat Chrysler to create a new mass-market autonomous vehicle.
In China, tech-giant Baidu, the people behind China’s largest search engine have been working together with German auto maker BMW since 2013 to develop autonomous cars using the technology from Baidu’s deep-learning labs. This culminated in a successful test last year that saw a driverless BMW 3-Series navigate through Beijing.
Then there is Tesla.
A few years ago, who would have thought an upstart car company from Fremont, California that only made electric cars and owned by one of PayPal’s founders could become the sexiest name in the automotive world?
Against all odds Elon Musk and his team did it and today, Tesla stands at the forefront of automotive technology. The company actually already has self-driving cars on the road with any Tesla Model S or X built after September 2014 able to use the company’s autonomous vehicle functionality. With the Tesla’s Model 3′s tentative 2018 release date, Elon Musk has teased a whole plethora of new autonomous driving functionality.
However, the question remains, if Apple wants to get into autonomous cars, why invest in a Chinese ride-sharing company, why not just team up with a legacy car maker?
Firstly, one needs to understand that global transportation is undergoing a massive paradigm shift on two fronts. One is the shift from gasoline powered engines to electric ones. The other is the rise of ride-sharing services like Uber, Lyft, Grab and Didi which are changing the way people view car ownership.
Ideally, Apple would like its fingers in both pies and the first step to doing this for a company as famously careful as Apple is to get data.
According to Apple analyst Neil Cybart, who looked at Apple’s spending habits for the past few years, Apple will spend upwards of $10 billion on R&D in 2016, a 30 percent jump over 2015 and a massive jump from 2010 (the year the iPad was launched), where the company spent less than $2 billion.
Cybart’s figures also show a big year-on-year jump in 2014, just a year before Apple started stirring the pot with rumors about an upcoming automotive venture, Project Titan.
That is what is happening right now, R&D.
Didi is giving Apple the world’s biggest vehicular testbed to not only gain data about driving patterns, rider habits and traffic data but to also figure out the limitations of existing software because in the race to build the world’s true autonomous car, it is software, not hardware that will be king.
After all, if you stop and think about the incredibly complex minutiae you have to deal with while driving, it makes sense that you will need incredibly smart computers that are specifically trained to perform such complex tasks. Such training will need time, tons of data and a large enough variance to become worthwhile and China, the world’s fastest growing car market, is uniquely poised to help apple grow its automotive ambitions.
There is no denying that Apple’s investment into Didi had other factors which including appeasing ever an ever more anxious China, promoting Apple CarPlay and to some extent, making inroads for Apple Pay but years from now, this investment could be seen as a watershed moment for an autonomous future.