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Jun
2021
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Apple’s Car Obsession Is All About Taking Eyes Off the Road

(Bloomberg) — At first glance, the forays Apple Inc., Google and other technology giants are making into the world of cars don’t appear to be particularly lucrative.

Building automobiles requires factories, equipment and an army of people to design and assemble large hunks of steel, plastic and glass. That all but guarantees slimmer profits. The world’s top 10 carmakers had an operating margin of just 5.2% in 2020, a fraction of the 34% enjoyed by the tech industry’s leaders, data compiled by Bloomberg show.

But for Apple and other behemoths that are diving into self-driving tech or have grand plans for their own cars, that push isn’t just about breaking into a new market — it’s about defending valuable turf.

“Why are tech companies pushing into autonomous driving? Because they can, and because they have to,” said Chris Gerdes, co-director of the Center for Automotive Research at Stanford University. “There are business models that people aren’t aware of.”

A market projected to top $2 trillion by 2030 is hard to ignore. By then, more than 58 million vehicles globally are expected to be driving themselves. And Big Tech has the means — from artificial intelligence and massive data, to chipmaking and engineering — to disrupt this century-old industry.

What’s at stake, essentially, is something even more valuable than profitability: the last unclaimed corner of consumers’ attention during their waking hours.

The amount of time people spend in cars, especially in the U.S., is significant. Americans were behind the wheel for 307.8 hours in 2016, or around six hours a week, according to the latest available data by the American Automobile Association.

Read More: Apple Tilts to iPhone Playbook for Car as Automaker Talks Stall

That’s a fair chunk of someone’s life not spent using apps on an iPhone, searching on Google or scrolling mindlessly through Instagram. Any company that’s able to free up that time in a meaningful way will also have a good chance of capturing it.

The world’s inexorable shift toward intelligent cars that are better for the environment is impossible to miss. If governments haven’t already declared plans to be carbon neutral by, in some cases, the end of this decade, there’s plenty of research that shows combustion-engine cars are going the way of the dinosaurs.

BloombergNEF’s annual Electric Vehicle Outlook, published earlier this month, sees global oil demand from all road transport peaking in just six years, assuming no new policy measures are introduced. By 2025, EVs hit 16% of global passenger vehicle sales, rising to 33% in 2030 and 68% in 2040. Eventually, autonomous vehicles will reshape automotive and freight markets entirely.

Against that backdrop, it’s unsurprising that after years of chipping away at self-driving cars, tech companies have been stepping up their activities and investments in earnest.

Autonomous cars are only as good as the human drivers they learn from — so the people who teach these systems need to be excellent drivers themselves.

Over the past several months, Apple has prioritized