Volkswagen CEO: We're 'Not Afraid' of a Potential 'Apple Car'

[ajfahey]

Time for this little oligarch to update his resume. Until then short VW Stock.

On second thought, maybe he is already in talks with Apple to be bought out. Apple has just over $75B in cash on hand and the VW market cap is currently under $110B. At the end of 2019, the last time a balance sheet was Published, they had $47B cash on hand.

 

[DrV]

When looking at the Model 3’s base price in the US, it should translate to ~37.300 Euro (incl. 19% German VAT, idk about other EU countries).

Surly there’s a bunch of costs associated with importing the cars into Europe but almost 9k Euro? Maybe Tesla wanted to position the Model 3 in a higher segment?

Let’s see:

Tesla Model 3 SR+: $36,500
in euros: 30,100 €
customs duty: 10 % = 3,010 €
VAT: 22 % = 7,300 €
Total: 40,400 €

Plus destination cost plus possible registration tax/cost depending on the country. The German VAT is exceptionally low, some countries have 25 %.

The USD is now exceptionally cheap. Repeating the calculation with the EUR/USD exchange rate a year ago (1.08 instead of 1.21) gives 45,400 € before destination cost etc. Historically, Tesla’s tax free prices in Europe have been very close to the US prices despite the more expensive freight. For some reason Tesla has not adjusted its prices to reflect the plummeting of the USD. (Just a personal opinion, please make your currency great again.)

And that customs duty... well.. five years ago there used to be good negotiations on harmonizing the technical requirements and removing duties on vehicles between the US and the EU. That would have created a large common market for cars. Wider choice and lower prices. Then someone wanted to make America great and cut off those negotiations. Maybe one day.

 

[Coheebuzz]

Holy mother of jinxes dude, you realise you are addressing gamblers, right?

 

[Alan Wynn]

No, no. I can buy all the spare parts the way they arrive at the assembly line and assemble an iPhone myself. Maybe you can't, but I can. And it isn't complex.

No, you are not assembling an iPhone with that any more than I am assembling my car when I change the belts and tires. I have completely rebuilt the engine on an air cooled 911, replaced transmission on a Ford Ranger, replaced the brakes, and many other car tasks, however, I would not say that I had manufactured a car.

However, this discussion is pointless as there is no definition of complexity and so it is meaningless.

Let us make this much more concrete. Is it your argument that Apple cannot design and arrange for the manufacture for a car? If you think they can then it does not matter where it falls on some abstract scale of complexity. If you think they cannot, then we have you on record and time will tell whether you are right or wrong.

 

[Jmausmuc]

That's when you know how much power Apple has. So much so that even the automotive industry feels the need to make public statements saying they aren't "Afraid" of what Apple may bring to the industry. No product has even made it to market nor has a prototype been made public and car companies are speaking out.

Hello VW when you make statements saying you're not afraid, you really are! 😂

Nope, he was asked. What is he supposed to do, decline to answer?

 

[DrV]

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.

You may be right. It is not realistic to think the auto industry would collapse in Germany. That would wreak havoc wider in the EU. The story of VW is not completely different from the story of GM. Not so stable all the time but too big to fall.

On the other hand, there have been big moves in the field. Opel used to be a proud German brand before it became an American brand and finally — to the horror of German car aficionados — a French one.

There will be car manufacturing in Germany, but not so necessarily with a VW logo on the roof.

 

[Alan Wynn]

The iPhone really isn't much different.

Actually, it is quite a bit different, but not with your definitions as loose as they are, not really worth arguing over.

The iPhone is built by contract manufacturers too, and many of the technologies used to do so are licensed from and supplied from other corporations. They may have Apple designed silicon and circuit paths, but they rely on TSMC and other vendors manufacturing technologies to produce them at smaller sizes. The iPhones Screens are produced by LG and Samsung, many of the chips, controllers, etc, all other companies products and technologies. They then rely on FoxCon to use their technologies to assemble the final product under contract.

Actually, much of the manufacturing technology for the iPhone is designed by Apple and the equipment is owned by Apple and housed at the facilities of their contract manufacturers. Again, however, with such broad comparisons, they meaningless.

I will ask you the same question I asked the other poster: Do you think that Apple is capable of designing and arranging for the manufacture of a car or not within the next 8 years? If you accept that they can do it, then it is irrelevant which is more complex, and if you claim that they cannot, then we will know whether you were right when we never see one.

The rest of this discussion is just arguing over how many angels can dance on the head of a pin.

 

[Alan Wynn]

Profit share is important. But where is it in the car industry?

Completely irrelevant to my argument.

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.

One hundred percent of what market? The Tesla market?

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.

My b/f leases his car and changes it every 3 years. That is roughly the same as the iPhone lease market (Apple’s deal is two years instead of three).

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

Everything you say was said about the phone market, and is absolutely true of the Android market today, and yet Apple Still manages to take about 80%-90% of the smart phone profit.

Apple may of course have something up in its sleeve. But what could it be?

If I knew and could patent it, I would have done so. However, the same statement was made about the phone market before they entered it.

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?

Who knows if anything? I do not claim, nor have I ever claimed that Apple will:

1. Build a car.
2. Sell a car.
3. Take all the industry’s profit.
4. Be successful in this market.

All I have said and am saying is that Apple historically has entered mature markets and over the course of time taken a disproportionate share of the profit despite people (including many of the incumbents) saying that they had nothing special and that all they customers were sheep and cultists.

 

[jz0309]

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.

we will see indeed ...
where is VW in regards to battery technology, charging infrastructure, autonomous driving? WAY BEHIND ...
and VW stated just recently to do SW development in-house, nothing has happened yet ...
Tesla is ahead, no doubt, but the automotive industry as we know it will be shaken up by the number of newcomers in the EV/autonomous space ...
Let's talk again in 5 years

 

[DrV]

Famous last words. A modern car is just a computer. Volkswagen has already proven they can’t produce a decent car in this era. They should go back to tin cans and four banger engines with no computers.

There is a lot more to a car than a computer, even though the computer system is a critical part of the car. You have to be able to master both, and no one does at the moment.

Volkswagen really proved they could not deliver useful software in time. Whether or not they can make it work is another question.

I have personally driven the ID.3 with three different software versions. When the first shipped in September, the software was almost unusable (laggy, buggy, a huge number of sporadic error messages). After the first update (around November) it became almost useful (laggy but much less buggy).

In December VW released version 2.0, which should have been called 1.0 beta. That is the newest software I tried, and I would call it mostly quite ok.

VW has promised version 2.1 with the OTA update capability within a month or so. It won’t make software an advantage for VW, but most likely software won’t be a show stopper after that.

A lot of stumbling, but I have been impressed (taking into account that we talk about a German car manufacturer) at the improvement they have been able to make in a few months. A bad start, but the race is not over.

 

[Alan Wynn]

often the profit share leader? Really? Besides the iPhone, in which other products is Apple the profit share leader?

Smart watches, wireless ear buds, tablets, etc.

 

[Dkka1]

No, you are not assembling an iPhone with that any more than I am assembling my car when I change the belts and tires. I have completely rebuilt the engine on an air cooled 911, replaced transmission on a Ford Ranger, replaced the brakes, and many other car tasks, however, I would not say that I had manufactured a car.

However, this discussion is pointless as there is no definition of complexity and so it is meaningless.

Let us make this much more concrete. Is it your argument that Apple cannot design and arrange for the manufacture for a car? If you think they can then it does not matter where it falls on some abstract scale of complexity. If you think they cannot, then we have you on record and time will tell whether you are right or wrong.

What I think is that building a car is more complex, industrial ecosystem intensive and market tight that anything they have done, and that Apple is an always has been a lifestyle, software and computer hardware design company. They can’t even catch up with Netflix or Spotify, which are sectors much closer, more tangential to their expertise.

They may get a car built for them, or a plane. But for all we know, the mighty trillion-whatever company talked to Hyundai to get it done. So, I can’t see how this is anything other than a branding/software exercise, given that Apple adds zero in terms of car manufacturing, battery tech, or basically any industrial good. And that’s OK, but it is what it is.

 

[LeeW]

Get a grip people, he was asked the question, he answered it. It was not an attack on Apple or a statement about them. So sensitive.

 

[Alan Wynn]

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

Apple’s margins have been remarkably consistent at between 20% and 25% for the last 10 years. I would expect they would target the same numbers in any new market they enter. Whether that is a threat or not is still to be seen.

 

[Rob_2811]

I don't actually think Volkswagen are even a potential competitor for Apple, I think Uber are. I'm not sure Apple is actually going to sell cars, i think it's going to be a service.

 

[Alan Wynn]

I don't actually think Volkswagen are even a potential competitor for Apple, I think Uber are. I'm not sure Apple is actually going to sell cars, i think it's going to be a service.

I have no idea if they will even do anything in the space at all, but even if that was what they did, that would make them a competitor to VW. Pretty sure I have been picked up by Urber drivers in VW cars. If Apple changed the model to be a self driving car as a service, that would affect all the existing companies (it it was successful). Lots of speculation, just pointing out that even a different approach to the market can change the market.

 

[ArtOfWarfare]

People keep making the mistake of comparing the Apple Car with the iPhone. That’s not an apt comparison. Apple is handing a lot of control over the hardware to a partner - this is going to be a repeat of the Motorola ROKR, not the iPhone.

 

[Tech198]

Ya, this guys got guts..


I'd probably say there is no reason to get scared.. Apple car will be like any other Apple product, only for those users.. Its not gonna be another iPhone take-over the world, which changes the industry,...... that you can be sure off..

Also talk of also expanding to electric cars as well, everyone will have to play well together, they all have their own nitch.

 

[ipponrg]

Yup, actually it is. If Apple makes enough money on their car, they can ensure it can be serviced where ever it is

Yep that makes sense if you were dreamy and living in utopia. If Tesla was the golden boy, look at the location of its service centers.

Profit share it what matters to Apple’s competitors. It does not matter if they sell 1% or 50% of the cars if they take all the profit. Profit is what matters to manufacturers, not just volume.

Right but competitors want to sell volume in addition to profit. Arguably volume tells you where to create service centers. With the way you are being vague in your posts, I originally interpreted your statement as profit is the ONLY thing that matters.

 

[Docsta80]

If you’re not afraid, then why say anything at all?

 

[Tech198]

Yep that makes sense if you were dreamy and living in utopia.

haha... "prices will go down"....

 

[Alan Wynn]

What I think is that building a car is more complex, industrial ecosystem intensive and market tight that anything they have done, and that Apple is an always has been a lifestyle, software and computer hardware design company.

Yup you keep saying that.

They can’t even catch up with Netflix or Spotify, which are sectors much closer, more tangential to their expertise.

Actually, Apple surpassed Spotify in paid customers in the U.S. in 2019 and has remained ahead. Given their iPhone market share is much lower in the rest of the world, I would be surprised for them to dominate there. As for Netflix, you are correct, Apple in the first year after launch during a global pandemic, has been unable to displace Netflix. Clearly doomed.

So, I can’t see how this is anything other than a branding/software exercise, given that Apple adds zero in terms of car manufacturing, battery tech, or basically any industrial good. And that’s OK, but it is what it is.

Glad you put that on the record. I guess in a few years we can evaluate your statement.

 

[loby]

“We’ve learned and struggled for 84 years here figuring out how to make a decent car,” Volkswagen CEO said.

“PC guys are not going to just figure this out. They’re not going to just walk in.”

Software guys think that everything can be solved by writing some software.

The Auto industry is a different animal then going after "competitors" like Apple did with the iPhone and iPad.

Self driving cars will take a lot of time to get people to convert to it if the technology comes to be reliable soon (may take time some time).

Probably Apple would come out with a high end luxury people driving car first. Does anyone really think that it would be something that will be economically feasible to the masses to "take over"...please. It will be expensive for elites or for those who "have to have" apple stuff and a nitch item. Did the Apple Watch "take over"...please.

If anything...it would be another option in the mix. That is why the auto industry is not worried.

I see it like the Mac Pro.

To "take over" it would have to be like a $299 economy PC. Not even considered.

 

[novakk86]

How will Apple Cars be. serviced at Apple Stores?

Apple Genius: "Flat tire? Sorry, we need to replace the motor", "Oh, and there seems to be water damage so no warranty for you"

 

[Alan Wynn]

Yep that makes sense if you were dreamy and living in utopia. If Tesla was the golden boy, look at the location of its service centers.

Not sure why Tesla is your proof. They have barely made any money, and even with their sky high valuation, do not have anywhere near the same amount of cash on hand as Apple does.

Right but competitors want to sell volume in addition to profit.

Yet Apple has never been about volume. They just want almost all the profit in a market, while selling enough units to have a healthy ecosystem.

Arguably volume tells you where to create service centers. With the way you are being vague in your posts, I originally interpreted your statement as profit is the ONLY thing that matters.

Geographic sales distribution would certainly factor in siting service providers, but if the product is profitable enough, it would not be the only factor. AppleCare provides onsite service for the MacPro everywhere in the U.S. and I guarantee they do that despite it being a low volume product. If Apple sold only one car a year but took all the industry’s profit, I am pretty sure they would be fine with that.