What Tim Cook's China Visit Has To Do With Driverless Cars

After a disappointing run of earnings that showed a severely anemic performance in China last quarter, Apple's announcement last week that it was buying a billion dollar share in a Chinese ride-sharing app currently in a far east turf war in Asia seemed like something of a puzzling choice.

This is good news for Didi Chuxing certainly — and possible what has driven the Chinese startup to starting pushing an IPO in the near future (though Didi representatives officially deny IPO rumors) — and many wondered why this big push into a slowing market, especially one accompanied by what many sources are calling a "charm offensive" by Tim Cook in China this week.

But The Washington Post is reporting this moment that none of these are accidental — and that they all track toward the release of Apple's next big thing: "the car of the future."

China is moving with great speed toward the automated automobile future, with draft proposals on the table currently that would place driverless cars on China's highways by 2020. China, with its incredibly centralized federal system, has something of a leg-up in making this happen so quickly, whereas Apple's home market in the U.S. has roads and cars that are governed by a complex and occasionally confusing web of state, local and federal authorities.

The Chinese consumer is less likely on average to buy a car than their American counterpart, but China has both more consumers and a massive problem with traffic already. Driverless cars are thought to be crucial to ending traffic jams that can go for days (literally) and accidents with climbing fatality rates.

There are many reasons Apple would find a popular service like Didi appealing - it makes Apple more visible in China as a brand, might balance out some lost revenue from iPhones and could give Apple insight into how to build better and stickier services. It also, however, gives Apple insight into 11 million rides per day taken by the service, which has uses far beyond selling Apple's core phone product. It could also act as an excellent beta lab for Apple to design and road test the next generation of cars that will actually drive themselves.

"This valuable data is critical to all manufacturers interested in developing a fully autonomous future," said Tony Lim, an analyst at Kelley Blue Book. "The learnings from China can be applied here in the U.S. and other industrialized nations."

Apple, of course, is not the only firm that has noticed the potential of the Chinese market. Alibaba and Baidu — both hometown heroes of sorts — are both investing in self driving tech. Volvo is moving on the market as well.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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