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Illustration: Eniola Odetunde/Axios

Apple's moves toward breaking into the market for self-driving cars have come in fits and starts, but it has big ambitions for the space and is moving forward both with its own efforts and with potential partnerships with automakers.

Why it matters: Apple has great businesses in phones and computers, but its long-term growth potential will depend on conquering an entirely new market. Improving health care and playing a role in autonomous vehicles appear to be its two biggest bets on that front.

What's happening:

  • Hyundai made a rare (and probably unwise) public confirmation two weeks ago that it is in talks to work with Apple in some form. Reports were that the Korean automaker would help with both manufacturing and battery technology, with production possible as early as 2024.
  • Apple has sought and received permission from California regulators to test self-driving vehicle technology on city streets. It has a few dozen vehicles outfitted with lidar, radar and other sensors, some of which have been spotted on the streets of Silicon Valley.
  • Apple has continued to hire and invest in the business, though it has also cut staff at times, changed leadership and revamped its strategy. The size of the team has varied over time, but has been on the order of 1,000 workers, according to sources.

Of note: Tesla CEO Elon Musk said that when his company was at a low point with the Model 3, he reached out to Apple about selling the company but that Tim Cook declined to meet with him. Apple has not commented on that.

Between the lines: Apple is very interested in the space and wants a chance to play a significant role, but that doesn't necessarily mean proprietary iCars will be rolling down the streets.

  • The company has considered several possibilities in addition to making its own cars, ranging from building software that others could use to focusing less on cars and more on the broader area of "autonomy."
  • "The only thing we do actually know with certainty is that they have been developing and testing automated driving systems," says Sam Abuelsamid, principal analyst at Guidehouse Insights.

Yes, but: Apple might well not want to make the whole car, but run an autonomous car service, for several reasons, Abuelsamid said.

  • Selling cars doesn't produce the 35%+ profit margins Apple typically likes, while a service might.
  • Apple could pick and choose where to offer the service, focusing on big cities that are well-suited to self-driving cars and have a large base of affluent customers. Think L.A., New York, San Francisco, Chicago, Miami and so on.
  • Apple has been making a big push on services.

Be smart: Apple usually likes to put a better interface on technology that's emerging but not brand new, rather than being the absolute first to market.

  • The iPod wasn't the first digital music player, the iPhone wasn't the first smartphone and the Apple Watch wasn't the first smartwatch. They typically enter a market when they see an opportunity to do something better.

Apple in the past has confirmed its general interest in the category but declined to comment for this story.

The bottom line: Whatever Apple is doing will take time. Given how much work still needs to be done on automated driving, Abuelsamid said that probably puts an Apple car, or even a service, "likely in the second half of the 2020s."

Go deeper

Ina Fried, author of Login
Updated Jan 27, 2021 - Technology

Apple's quarterly sales top $100 billion for first time

Credit: Apple

Spurred by strong sales of the latest iPhones, Apple reported it took in a record $111 billion in revenue for the three months ended Dec. 31, as the company crushed expectations.

Why it matters: The move showed even a pandemic didn't dull demand for Apple's latest smartphones.

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.

Mike Allen, author of AM
2 hours ago - Politics & Policy

Third Way: "Big Lie" could become "Big Coup"

Graphic: Third Way

Third Way, the center-left think tank, is urging fellow Democrats to respond to the Capitol riot with "the size, scope, and seriousness of a presidential campaign," co-founder Matt Bennett tells me.

Driving the news: "For the first time in U.S. history, a party must mount two parallel presidential campaigns: one to win the election, and the other to prevent its theft," Bennett said, calling this "a Paul Revere moment."