Apple Overturns Auto Industry
Thursday, January 12, 2012 at 04:08PM Apple Overturns Auto Industry
Rob Graves
Earlier this month Apple CEO Tim Cook surprised everyone with his unveiling of Apple’s latest innovation, the iCar. With an unexpected entry into the auto industry, the battery-powered wheel-less vehicle purportedly hovers several dozen feet above any terrain and travels at speeds up to 300 MPH. But even with that, the truly shocking news comes in the form of its price tag - just $599. “We feel it’s important for everyone to have access to the iCar,” said Cook, “so we worked very hard to make it affordable to just about anyone.”
While the response from consumers is overwhelmingly positive, many remain skeptical. Dept. of Transportation director Richard Bagley points out, “While this is an interesting development, let’s remember it’s just one facet of personal transportation. Owners of the iCar will still need to use the existing road system and follow the same rules as everyone else.” When asked about the effect the iCar would have on the auto and oil industries, Bagley says “We’re confident a large number of consumers will continue to purchase conventional automobiles, and view the iCar as just another passing fad. Folks will not want to give up the time-honored tradition of the leisurely Sunday drive, or the much higher quality of a fully-priced car.”
Others aren’t so sure this is the case. Gerald Freebaugh, CEO of the new start-up MapSter says, “With the iCar I can drive from Boston to New York in about forty-five minutes. Why would I take the highway?” MapSter, one of several new companies that have sprung up seemingly overnight with the advent of the iCar, will calculate a safe, nearly straight-shot route between any two locations, avoiding any major obstructions. Federal lawmakers have attempted to shut down the site, but Freebaugh says “They can’t shut us down, because we’re not forcing anyone to do anything. We’re simply here, providing information.”
Lawmakers aren’t the only opponent MapSter is facing. Yesterday the city of Danbury, Connecticut filed a civil suit against the company, citing Freebaugh’s Boston to New York example above. Rita Colon, head of the city’s Chamber of Commerce, states “MapSter is providing a simple and easy way for travelers to bypass our city completely. We depend on the tourism that US 84 brings through Danbury. These iCar users driving illegally might never even know our city exists now. We’ve always had the highway to bring them through.” When asked to comment on the suit, Freebaugh replied “Maybe now cities will have to offer tourists something worthwhile to bring them in. Would you really want to go through Danbury if you didn’t have to?” This morning the city amended their civil suit, adding the names of over fifty iCar drivers believed to have bypassed Danbury in recent drives. The suit demands that they are fined an undisclosed amount, recouping “gas, souvenirs and food-goods” the iCar drivers might have otherwise paid to the city’s businesses.
The news of the iCar could however be most devastating to the auto and oil industries. Jerry Stapleton, president of the United Auto Union laments “Apple has asked us to make a Faustian deal and abandon the American tradition of building cars the way we always have in this country, something we adamantly refuse to do. Furthermore, we will continue pushing lawmakers to crack down on those operating their iCars illegally by not using the established highway system. We are advocating a special division of law enforcement to police these individuals. Right now there is no way for traditional methods to track them.” When asked to justify the use of taxpayer dollars for such a force, Stapleton answered “There are countless jobs at stake, not just in the auto industry, but in several other industries as well. The construction industry will be decimated without roads to build and maintain. The auto industry will collapse, unable to compete with the $599 price tag of the iCar. And that doesn’t even bring the oil industry into the equation.” Freebaugh, who has seemingly become an unofficial spokesperson for the iCar revolution, answers “At one time horse and buggy advocates had a hard pill to swallow too. After that, it was the guys that built ocean liners and railroads that that had to pick up and move on. It’s just the way it works. And it’s not like the auto manufacturers can’t join the fray and make a competing product. They just refuse to do it, because they are stuck in their old model and can’t give up that control."
Freebaugh added, “The problem is we’ve got this great new way of doing things, but they are trying to retro-fit that into an outdated system. Automakers are mad because we don’t have to buy their overpriced cars anymore. Construction companies are mad because we don’t have to use their roads anymore. And tourism boards are mad because we aren’t being forced to drive through their [expletive] cities anymore.” When asked what message he has for the various Chambers of Commerce suing him, Freebaugh responded, “They should first realize that it’s a level playing field now. We can all go to any city we want, by any route, no matter how far it is off the beaten path. And they need to face the reality that they are going to have to come to the table with more to offer than just ‘this is the way it has always been.’ Give us a reason to go to your city and we'll go.”
So what does Apple have to say about all this conflict? Alison Remner of Apple’s public relations says “While some will be resistant to the idea, we expect many innovative cities and states to begin planning and structuring around what the iCar has to offer. These will be the cities that do the best in the coming transition from traditional automobiles, those that accommodate the inevitable changes.”
Sandra Kingsly, a Michigan homemaker, is attempting to organize an online forum for iCar owners, where consumers can express their concerns. “Right now we need an advocate for logic. The overall problem is that now we’ve got flying cars, but we’ve still got all these roads to deal with. Imagine if we’d started out with flying cars instead of the traditional car. There’s no way we would’ve ended up with our current highway system – it would be something very different. How do we reconcile that? Lawmakers need to realize that everything has changed now. It's a new game, with new pieces to play with. The existing roads are completely irrelevant, yet they are trying to fit them into the new plan. The fact is they have no part in the new plan, any more than postage stamps have a place in email."
Apple’s Remner added “Once more communities embrace the idea of the flying car, we will actually see a very positive economic shift. The iCar is priced to be affordable to anyone who would be driving a vehicle, and in fact the demographic reaches out much farther than that. We have opened the door to many potential consumers that never could have afforded a traditional automobile. What the auto industry hasn’t yet realized is that by supporting this shift in transportation, the number of vehicles sold will increase tenfold. While they won’t be selling any more of their higher-priced cars, we believe they will still see much higher profit margins from the sheer volume of sales, given the low price point.”
When asked what aspects are specifically limiting auto makers from making this transition, Remner answered "It's the dealers actually. Right now there is legislation in place forcing the auto makers to pay the dealers a fixed amount for every car they sell. The problem is that the low price of the iCar - and any similar vehicle Toyota or Ford might produce - doesn't allow the manufacturer to pay this fee to the dealer. So they are stuck." Is there a solution? "Not until they do away with this fixed fee," Remner says."If they would simply offer a percentage of sales profits to the dealers rather than the fixed fee, you'd see auto dealers - and manufacturers - making money hand over fist due to vastly increased sales. But until that happens, the auto industry isn't going anywhere but down."
At this early writing the implications of the iCar remain to be seen. “We’re still in the Wild West here,” Freebaugh concludes. “Eventually there will need to be some regulations and that’s fine. But it will have to look very different than it does now if it’s going to work. You just can’t expect people to go back to using roads. Not when they all have flying cars.”

