Apple Inc. is said to have several hundred employees working secretly toward creating an Apple-branded electric car. Many technologies used in an electric car, such as advanced batteries and in-car electronics, could be useful to other Apple products, including the iPhone and iPad. Moreover, Apple’s industrial design team is staffed with several people who have experience at European automakers.
On the other hand, the production of automobiles involves very different economics and much higher entry barriers than the other types of products that Apple makes and sells. Manufacturing a car is enormously expensive, costing hundreds of millions of dollars for design, tools and production and certifications. It also requires a supply network for the thousands of components that go into a car. A car would take several years to complete.
1. Would you consider this move to be related or unrelated diversification? Explain your answer.