Apple’s Exit from EV Market Boosts Tesla, Eases Pressure on Competitors

With Apple’s voluntary withdrawal from the electric vehicle market, there’s a sense of relief among existing electric vehicle manufacturers like Tesla. In the recent cooling down of the electric vehicle market, the departure of a big tech company that holds $61 billion in cash means a lot to these existing companies.

On the 27th (local time), Bloomberg reported that “Apple’s sudden suspension of its electric car plans may be a gloomy signal for the auto market, but it’s good news from the perspective of existing auto manufacturers.” Quoting an explanation from Mike Ramsey, an analyst at market research firm Gartner, it said, “They (auto manufacturers) are probably relieved.”

The reason why existing companies are evaluating this situation positively is because the growth of the electric vehicle market is slowing down. Bloomberg Intelligence, a research institution under Bloomberg, predicts that this year’s increase in electric vehicle sales will be around 9% compared to last year. This is why there are talks that the growth rate is slowing down compared to the average annual growth of 65% over the past three years.

Tesla, the largest electric vehicle company in the US, has signaled a decrease in demand by lowering vehicle prices. Existing automakers like General Motors (GM) and Ford are also delaying investments and withdrawing production plans, indicating that the market atmosphere is not as expected. Electric vehicle startups like Rivian and Lucid struggle with poor sales and financial difficulties. Apple’s departure from the competition is somewhat of a relief for existing companies that had to bear heavy competitive pressures.

Along with this, there’s an interpretation that big tech companies have been too optimistic about innovating in the auto industry. Jeff Schuster, the vice president in charge of auto research at consulting firm GlobalData, said, “This is another example of how the tech industry underestimates how difficult it is to innovate in the auto sector,” adding, “Nine times out of ten, most people find it a bit more difficult and more dynamic and complex than they expected.”

There’s also speculation that this could be an opportunity for traditional automakers to recruit good talent. Brad Holden, founder of Holden Richardson, said, “Auto companies will strive to secure talent,” adding, “There will be a lot of excellent talent in the market so that recruitment will go well.”

Some see Tesla as the biggest beneficiary of this situation. Analyst Ramsey explained, “Tesla has the advantage of being perceived as a cutting-edge vehicle, and Apple’s electric car could have had the same perception.” Tesla CEO Elon Musk posted an emoticon saluting with a cigarette on his social media X (former Twitter).