The strength of Apple’s position in the domestic vehicle market has given it the confidence to make a play for the whole digital vehicle, making Apple as threatening to the OEMs as Google. Apple’s expansion of CarPlay into the instrument cluster pushes OEMs further away from the Digital Life of the vehicle and brings them closer to being handsets on wheels.
Alongside its move into ‘buy now pay later’ loans, Apple’s biggest announcement at WWDC was the expansion of CarPlay to the other screens in the vehicle. Initially, this is aimed at the instrument cluster (which is increasingly just another screen) but clearly, it will not stop there. Apple demonstrated functionality that allowed the user to run CarPlay on the instrument cluster with themes and layouts for all of the information that is usually displayed there.
This is crucial because it means that for the first time, CarPlay will need access to the vehicle’s data in order to populate the instrument cluster.
This marks a shift from the iPhone being mirrored in the car to the car being mirrored on the iPhone.
CarPlay still runs on the iPhone, meaning that the digital cockpit will now be running on the smartphone as opposed to the vehicle. This extends to other functions, as CarPlay now intends to enable users to change the radio or the climate controls without leaving the CarPlay environment.
In contrast to Apple’s statement that OEMs are “excited to bring this new vision of CarPlay to customers”, any OEM in its right mind should view this announcement with horror.
This is because OEMs will need to monetize the digital vehicle in order to offset the loss of revenues and profits that is going to come from lower vehicle demand over the next 20 years. RFM research has found that electrification and autonomy could reduce vehicle transport spending by up to 65%, which no OEM is likely to survive in its current form.
Hence, it is crucial that OEMs have a seat at the table when it comes to delivering digital services in the vehicle in order to offset falling vehicle sales.
This latest iteration of CarPlay looks like the beginning of a migration from a smartphone remote projection system to a digital cockpit, leaving the OEMs out in the cold. If users spend all of their vehicle time engaged with CarPlay, then the opportunity for the car makers to monetise digital services is greatly diminished. In effect, they would become very little more than app developers for their own vehicles, and instead of collecting a percentage of every transaction, they would collect only 70% of their own transactions. This could be the difference between survival and going out of business or brutal consolidation.
Consequently, the most important objective for every OEM is to ensure that the user keeps his smartphone in his pocket, and instead engages with the digital experience created by the OEM. This is why Tesla does not support CarPlay, and it has been successful in this regard because its user experience is good enough that users are happy to engage with the Tesla platform.
Apple is in a commanding position, as 98% of all new vehicles in the US support CarPlay – and, critically, 79% of US car buyers will only consider CarPlay enabled vehicles. This implies that Apple has managed to generate such a high degree of user preference that it has the power to dictate terms to the OEMs, who will have little choice but to comply or face losing their customers.
I suspect that if Version 1 of CarPlay had included the instrument cluster functionality, the OEMs would have refused point-blank to enable it, and Apple would have never gotten to the position of user preference that it has today.
The OEMs have one card left to play – they have to allow Apple to take over the instrument cluster and access the vehicles’ data to make the proposition work properly.
The demonstration that Apple did on a BMW vehicle during the CarPlay developer breakout session looked like a crude hack with a navigation app superimposed over BMW’s digital instrument cluster. This tells me that OEMs have yet to sign up to extend CarPlay to the instrument cluster – if they are sensible, they will decline to participate.
Integration across multiple screens in the vehicle, and the fusion of vehicle and Digital Life data to create new services and experiences, is the one area where the OEMs have a chance to be relevant. If they let Apple take that over, they will allow Apple to reap the benefit of being the digital platform in the car and consign themselves to two decades of decline and despair.
The OEMs have so far kept Google out of the heart of their vehicles, they now need to treat Apple in the same way.