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Volkswagen CEO: We're 'Not Afraid' of a Potential 'Apple Car'
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Yes, high end ID.3 and low-end Tesla Model 3 have some overlap, even though they are very different vehicles. However Tesla does not want to sell low-end Model 3, whereas VW leans heavily on the lower end of the spectrum in its plans.
The initial overlap with VW ID.3 1st models has been considerable, but there is a huge market which VW can reach but Tesla cannot with its current models. In that sense ID.3 is a competitor for Model 2.
The competition between Model Y and ID.4 is much more direct. But that segment will be very crowded anyway. At the moment it seems that ID.4 (and its siblings) will take a considerable share of lower end of that market (clearly less expensive than Tesla), but at least Nissan Ariya, Polestar 2, and Hyundai Ioniq 5 will be tough 1:1 competitors (price, size, features).
An interesting ingredient in this soup is that this is a must-win battle for VW AG. They are pumping 60 B€ into EVs, and if that fails, the largest (or second largest) car manufacturer in the world may collapse. Now we have a big and desperate player in the game.
I will still be shocked if Apple ever makes a car. I will also be extremely surprised if we see a mass market for self driving cars without a total overhaul of the road infrastructure in the US. I know Elon Musk makes big promises about self driving tech every year, and a few of his customers have died using his tech. I am not holding my breath.
I don't at all think this is fair. Firstly EVERY car manufacturer has had customers with fatal accidents so this is not unique to Tesla. There are plenty of cars on the road with manufacturing defects that resulted in death to the driver so by your logic you might as well never buy a car from any manufacturer. Secondly from what I read people were using the Auto-Pilot mode on their Tesla which is not the same as a Self-driving car. These people were engaged in other things while the car was in their mind, "Self-Driving". One article explained a person playing a video game and had no attention paid to how the car was driving so it was that person's fault. Negligence is the #1 reason for car accidents and deaths.
The only way VW falls is if Germany goes bankrupt. The whole EU will deploy an industrial nationalism strategy if necessary before letting them fail, like they did before with the Diesel culture.
Take the biggest countries in the EU: Germany, France, Italy, Spain. In every single one of them, the car industry is the most important industry of the secondary sector.
That would be worse than letting Airbus fall.
Profit share is important. But where is it in the car industry?
Premium cars have high gross margins, but as the number produced is low, the development cost is high per vehicle sold, and the total profit remains low. Tesla started with this segment and has remained there without making profit despite having almost 100 % market share for years.
Cars are more difficult than mobile phones because the absolute amount of money spent on a car is high. I like to change my phone every two years, and I like to have a nice model. Now I am typing this with a 12 PM. This vanity costs me approximately 2 €/day, and I guess there are a lot of people who can afford that, if they really want.
But if I wanted to have a high-end 100k car, that would cost me maybe 15k extra (compared to a good car) a year. That is a lot of money, and most people cannot afford it even if they wanted to.
Large part of the car market is very rational, price vs. features tend to be the same for all manufacturers. It is a highly competitive market with no room for high profits per vehicle. Some brands are able to get a bit higher prices, but they have to work very hard to maintain the
Apple may of course have something up in its sleeve. But what could it be? Very good and polished UX is one possibility (and desperately called for in car industry), but is that enough? Fully autonomous driving would be another possibility, but that is not coming anytime soon.
What would enable Apple to make high profits with cars?
Even with Tesla selling all the cars they can make they still have less than 0.5% of the market for cars sold. Tesla have been selling cars for only 10 years...but it took them nearly 8 years to to first one. I am sure if Apple were to make a car (not sure it will be a whole car, but perhaps the tech for autonomous cars) they also could sell all of what someone else makes for them.
Quite possible. Teaming up with the letter soup company is always strategically dangerous. Before having lunch with them, check the menu carefully, as you may on it.
Also, if VW manages to get its system software good enough, it has a very important asset. But the road has not been smooth, and the way VW has stumbled along that road is not very convincing. Might be a case of great strategy combined with poor execution. In my experience, it works better the other way round.
I would not be very surprised if Apple were thinking of creating their own CarOS and associated hardware. It is a critical piece of a modern car, and Apple would be able to do it much better than car manufacturers. (The commercial side is difficult due to thin margins in the industry, though.)
I seriously doubt that Apple will be an immediate threat to the auto-industry. Tesla's are very advanced and they are not a threat currently. As for completely autonomous? Yeah, that's not going to happen for a long time. Not without a massive digital infrastructure with sensors and communications between vehicles as well as the roadway. Not to mention the downsides of an EV such as limited range, lengthy charging (even with rapid charging), battery degradation with extreme cold, etc. Regardless, the first Apple EV will be outrageously expensive and it may take a decade before the tech becomes practical and affordable.
If apple prices their cars like they do computer technology, then it won't be a threat to current auto makers at all. Having an extra 50% markup on a couple $100 or $1000 item is one thing...applying that to 10's of thousands isn't going to work the same way
If we take the three players (Tesla, VW, Apple), they all have different worries.
VW is trying to figure out how to push EVs to the mainstream. They will sell Volkswagens to Volkswagen customers. Solid, reliable, conservative cars with no statement sold to middle-class middle-aged average Joe. Good cars for ordinary people who do not want to make any bold statements. (Executive summary: dull but useful.)
In addition to this VW recycles its tech to several parallel brands. Seat is a bit sportier (and riskier; who would buy a Spanish car?), Skoda is even more sensible (more inexpensive with even fewer bells and whistles), Audi is for those who want to drive a VW but want to show their superiority, and Porsche has the ability to evoke real feelings.
Tesla is the king of the hill. Tesla has great tech, owning a Tesla is a statement, and the cockpit is futuristic to the point of sacrificing usability. Teslas are sporty, and driving a Tesla gives you your youth back.
Apple makes premium equipment with heavy emphasis on design and usability. Apple makes its money on online stores, and its greatest strength is in the infrastructure. Apple has several times tried to make premium more affordable, but has not been very successful.
VW must become the biggest player in the EV world, it has no choice. Tesla needs to survive in the tightening competition, but it is good at surviving. Apple has the luxury of choice, it can skip lose-lose games.
I do not think Apple is the biggest threat to VW. More likely, Apple is a small dot on their risk chart. Toyota, Hyundai, Nissan, PSA &al. are the real competitors in the VW Golf segment, which VW needs to win.
VW, on the other hand, is a problem for Tesla at least in Europe. Until now Tesla has not had much real competition, but Model Y will face a lot. Also, a lot of people have settled with Model 3, as there have not been better alternatives (less expensive, more suitable body models, more premium feeling, more reliable, less futuristic, etc.). VW will inevitably take part of Tesla’s market share, but the market may grow so fast that it is not necessarily a major problem for Tesla.
However, it seems logical there could be severe competition between Apple and Tesla. Both talk about statements, design, self-driving, premium. Take Hyundai Ioniq 5, equip it with Apple’s UX know-how and latest self-driving technology, and Tesla will be given a good run for their money. Apple could hit Tesla hard, but why would Apple do that. Where is the money?
But then again, it is very difficult to see what happens in the next ten years. For example, if Toyota gets its solid state battery technology up and running, the game may be completely different. There are a lot of moving parts.
My plan would have created an actual EV that was compelling (not the Leaf). Even if it lost money for 5-10 years. So when you actually needed to handle a threat like Tesla or Apple, it wasn't with something like the Bolt. I know Tesla is still a minor player in terms of market share. They are a major player in EVs. No one else comes close.
You can't just start up an EV program in a year or two. GM could have developed the EV1 into the EV2 and 3...etc but they killed it off in the 90s. BMW should have created a 5 series EV (new platform) 5 years ago but made the really lame i3. Nissan with the Leaf...etc. Nothing as serious as the Model S which came out in 2012.
We will see. Byton just closed it’s US and european operations because of a lack of money. They seem to be closing down. NIO is being hyped by daytrader but other than that is has not been looking great in the recent two years.
Tesla is big for sure and here to stay but I would not be so sure about Lucid. They will be very low volume and will be suprised at how hard it is to scale. Tesla went trough production hell with the model 3 and almost went bankrupt. Lucid has no idea what’s waiting for them. And they don’t have someone like Elon Musk to lead them. It’s gonna be unbelievably tough.
VW has been going all in on EVs and software recently. They are not behind anyone but Tesla. Porsche Taycan, new Audi E-Tron GT, VW i3 all came out of VW recently and they are great cars.
The just updated Model S Plaid will probably be the first car to beat the Porsche Taycan on a racetrack and it took them more than a year to beat it.
TLDR: Tesla is the only Company that’s ahead of VW. Lucid is just a concept car they still have to proof that they can mass produce.
There's no way in hell I'd buy an Apple Car and (likely) be held hostage to their consumer hostile service practices. It's bad enough with computer hardware let alone my sole means of transport.
Nice the VW CEO thinks that. I will still keep buying Apple stock and not VW stock.