Hardly any product can make such an impact on consumers market as an Apple product can. There were MP3 players, and then came iPod. There were smartphones, and then came iPhone. There were tablets, and then came iPad. So, what will the car industry look like after the Apple Car? Or more importantly, how much will that car cost?
Recently, when taking a break from creating mobile apps, we had an interesting discussion at the office. Shoutem and Five teams debated over the cost of an Apple Car. Some of the team members pointed out that it won’t cost more than $40,000, will be a family car and will target a mass market. Most of the crew said that there’s no way it will cost less than $60,000, and with the Tesla Model 3 price confirmed, they’re even more confident in their claim.
There is one article on the web pointing out $55,000. The number boggled us so we did some research. It turns out that 55 grand is not even close — and here’s why.
Apple Car will change the industry, again.
First of all, if Apple is to enter car industry, they surely aim to become the leader. That means having one of the most sold cars in America. Not just the most selling electric car, but the most selling car. Period.
Apple Car will be in there for volumes and mainstream market and not some niche segment. Can you imagine someone at Apple saying: “Oh yes, we would be happy if we are the 20th most sold car in America”. I don’t think so. More like: “How we can get rid of the gas engine cars forever and dominate the car industry for the next 10 years”. If there is anything left of old Apple, that would be how they would think.
Here are some numbers that we’re looking at:
First on the list are two Toyotas, followed by three Hondas, Nissan Altima managed to squeeze in on the sixth place, and then there is another Toyota. All the cases are priced between $18,000 and $25,000.
This is the market Apple will want to own. Let’s say that most of the Americans are not ready to spend more than $24,000 on a basic model. On top of that you will probably spend $3,000-$5,000 on some premium packages.
Savings on the fuel and tax credit.
With low gas prices of $2 per gallon electric cars do not have that much of an advantage over gas cars any more in terms of long term savings. Electric car will save you only $670 per year which is much less than $1600/year that it would save few years ago. In terms of tax credits you can save from $2000 to $7,000 but not in all of the states.
So if we start with a basic car price at $24,000, add another $2,000-$5,000 for premium features, five years worth of fuel savings of $3400, tax incentives of $2,000-$7000, and put a 10–15% cherry on top (premium product price tag); it sums up from $34,000 up to $45,000.
Tesla Model 3 — the game changer.
At the time of writing this article, Tesla made more than 300,000 preorders at $35,000 price point. Apple might take a position of a premium product and set up a price little bit higher, but the question of the day is can Apple Car compete with Tesla without Steve Jobs running the company and Elon Musk being viewed as the “new Steve Jobs” by many. Apple have couple of advantages over Tesla and if they manage to announce the car out before the end of 2017 they will be very competitive. Tesla is known for glitches and problems in manufacturing and is now additionally facing a huge challenge of ramping up existing production line by 10 times in less than a year. Apple is rumored to go with existing manufacturing line which would help them ramp up the production much faster than Tesla.
You are also talking about $500B (Apple) company vs $30B (Tesla) and in such a big market game all that cash in the bank might give Apple an advantage to build higher quality car in bigger volumes and get it to market faster than Tesla.
And the verdict is… $39,000!
Based on everything said we would bet on a $39,000 price tag which makes a sweet-spot in the calculation above. It also makes sense because that price would open up a market big enough for Apple’s appetites and could shift the whole car industry to electric in the same way iPhone started a smartphone era.
Also, we’re sure Apple will announce it this year and start selling it already in 2017. What’s your thought about Apple Car? Can it really change the industry and what will the price tag be? Let us know in the comments below!
