I really disagree with this on so many levels, and I believe the market will ultimately reject it too. When you’re spending tens of thousands on a car, the last thing you want is some optional monthly fee for seat warmers and navigation features. This seems to be driven simply by the desire to have a monthly income versus what consumers actually want.
Na, Remember the time we used to pay once for a software and own it forever?
Hardware manufacturers have been biting their teeth to get those sweet SaaS recurring revenue in anyways possible and EVs have provided a perfect opportunity for the vehicle manufacturers for that.
Future of cars could be irreparable, vendor-locked in(parts), e-waste after 3 years if governments don't strengthen and extend their existing repair laws (if any) for EVs.
But if consumers have to take a stand we have to start with the SaaS products. Something which we might use twice every three months shouldn't be getting monthly payments from us.
Consumers buy content subscriptions like Netflix or Spotify, and hardware like phones and laptops, but they largely do not (and will not) pay for software tools. Google/Facebook/Microsoft/etc has trained them this way. And no, HN readers are not normal people, so just because you do, doesn’t mean most people do.
For business customers, a monthly subscription is highly advantageous due to it turning capex into opex on the balance sheet. It reduces the need for onsite IT staff, offloads data security onto an expert 3rd party, and allows for cloud based collaboration and continuous updates—-which “buy it once and use it locally” products never could do.
Saas is a model designed around the needs of B2B, and most big Saas companies make the consumer version free, so I wouldn’t count on consumers caring enough to push back.
Future is now already for some cars, Nissan Leaf is a good example of this policy - insanely priced or just unavailable batteries make perfectly good cars unusable junk - this is worse than some ICE cars which are still repairable after 15 or 20 years of usage. I'm 100% sure other brands will follow this trend.
Agreed, but if I pay for my actual usage I'm fine with that. There's no way I'm paying for an Adobe CS monthly sub, but I'd pay a few quid a day to be able to use it as and when. That's not a reliable revenue stream for the vendors though, so I can see why they're not keen on it.
Counter argument will probably be along the lines of "but we store your data even when you don't use it".
Anyway my local gym charges me monthly even if I go there only once a year.
I wish this were true, but unfortunately, I think too many consumers don't think critically when making purchases, even on things as large as cars, and that's exactly why we see the proliferation of this awful subscription for everything model. Just look at how most people buy cars. Every ad and salesman talks about "How much do you want to pay per month?". And most people are fine with that line of reasoning, when even a little bit of thinking reveals how dumb it is. I'm fine with a $6,000 a month payment, for example, so long as the duration of the loan is two months. Likewise, a $400 a month payment on a used car can look quite reasonable, unless you're looking at an 84 month loan at 3.5% interest.
Looked at in isolation, the amount of the monthly payment is irrelevant when it comes to the actual cost of the car, but that's all most folks look at, and that's exactly why car salesmen love it.
It makes me shudder even more when people talk about house purchases. I heard someone say something like, "I bought a $350,000 house with $50,000 down". No, at 3.5% interest on a 30-year mortgage you just bought a $534,968 house with $50,000 down. But you can bet your life that it was sold to them as, "A beautiful home for only $X dollars a month".
> I'm looking forward to switching to Creative Cloud at work [...] Going CC-only makes sense for business.
> I love Adobe CC. I would consider it the first thing Adobe has done right in a long time.
> I've been using CC since it came out [...] it's fantastic [...] They've really turned around and made this pirate into a customer.
> I think it's a great move and will benefit independent designers and creators hugely.
> I think the subscription model is far superior.
A minority of users were frustrated and made flat-out incorrect predictions, as you mentioned:
> Adobe just priced themselves solidly out of the prosumer market.
> I wonder if Adobe abandoning traditional software licensing will spur new free software development.
> I hope antitrust regulators will look at Adobe with more scrutiny.
> Adobe is going to lose plenty of money and customers over this.
But again, these were by far the minority, even on HN. I would say that opposition to the subscription model has actually increased quite a bit since Adobe's announcement nearly a decade ago.
Internet history is fun!
That said, Adobe has a much more influential market position where it is than Ford or any auto maker does; and Adobe didn’t slap a recurring fee on top of the one time purchase price but made the full shift to a service model.
It is quite reasonable that automakers do the same transition. Most of the people finance their cars anyway, so they pay monthly. Just move the financing burden to the automaker and add usage/features flexible billing and there you have it. Nowhere as objectionable.
Company says it's the "future of business" and consumers are pushing for it, not companies. Then one day the company switches over to a new business model to milk us all even more and completely removes any other option. Other big players roll out an identical business plan within days. Cue blog entry/tweet from the company saying people clearly love it since profits are up and they'll never return to allowing customers to just buy a one-off product.
It can even be justified by saying that the car isn’t yours to begin with, so the real owner has a right to charge extra for features that will now incur a maintenance cost due to your use.
Would that change your mind?
But until that happens you can choose to just not use the premium options.
Remember when Tesla temporarily unlocked extra range on their (existing) customer's cars because of a hurricane? Software-mediated market segmentation is already here, and has been for a while - I think binned microprocessors are the earliest example I can think of.
Of course this is true today. But what if an ultralight EV in 2030 only costs $1,000? How does that change your assumptions about market behavior then?
That said, even an electric car wears out. The paint fades, the plastic oxidizes... it's not like I'd expect a modern car to last forever, but I still do favor ownership.
Rumor has it they were talking to Kia at some point. That does not instill a lot of confidence. Fine cars, but sort of the equivalent of the beige boxes that Apple once competed against when IBM PCs were a thing. Munro did a review on a Kia the other day and the lack of enthusiasm for it was quite obvious. It's not that it was a bad car (he actually liked it, just not for himself) but just a bit boring, bland, and cheap. Alright if that's what you can afford. But kind of not the market Apple is after. Partnering with Kia would be the equivalent of letting Compaq or Dell take care of producing the imac in 1999. It took Steve Jobs to figure out that mess. Better beige boxes weren't the answer and he pretty much axed that first thing into his second round at Apple and rebooted what is now the most valuable company on the planet.
You can see the dilemma here. They basically lack internal skills/knowledge for building a car manufacturing operation and partnering is alien to them. So, how do you create a car with a screen and some fancy Apple experience when you've basically never build a car and your entire vision revolves around what's on that screen? Perhaps they should just outright buy their own car company and get it over with. They are certainly rich enough and there's no lack of suitable companies struggling to survive but yet still competent enough to innovate. I'm surprised they haven't already. Allegedly, they opted out of acquiring Tesla when they had the chance.
The Apple of cars is Porsche, not Tesla. Porsche’s design language, desirability, quality and customer service is Apple-like in the car industry. Tesla is the opposite of that. High volume $40k cars with horrendous quality control issues, subpar interior quality and customer service.
Tesla, however, does set the bar high when it comes to being an EV and technology integration. Everything else, not so much.
For example, The Grand Tour's James May was full of praise for the Kia Stinger in 2017 ( https://www.youtube.com/watch?v=ht1Zh-1q7LU ).
More recently, the Kia Telluride was 2020 "World car of the year". In 2019 it was basically sold out everywhere, and it ended up moving more than double the numbers as the Hyundai Palisade, which is essentially the same car with a different exterior design.
The evolution has been attributed by some to their poaching of European talent, like German car designer Peter Schreyer of Audi TT fame.
Then the next part is simply Apple thinking their core value has to be experience and AV. Since AV is still years if not decades away. They are only thing left will be in car experience. But is experience really enough to sell cars?
Part of the advantage Apple has with AV is that it requires lots of custom silicons. It is literally a giant iPhone with lots more sensors running on battery around the cities. And Apple has the expertise and scale over pretty much all other players.
But I still dont believe AV will be a thing any time soon. It could be done now if we could get rid of human drivers on the road in some cities. But adding human into the equation is just putting an infinitely variable into it.
If they are talking to a company like Kia, it’s not to relabel an existing Kia family sedan. It’s to manufacture a custom Apple design. Whether or not Kia designs nice cars, they know how to manufacture them well (something Tesla is still struggling to figure out).
Who will be the Foxconn of cars? That’s what Apple needs to figure out if they want to bring a car to market.
Apple will talk to, and partner with anyone in the industry to learn the ropes and eventually stab them in the back/go it alone. The Moto Rokr/iTunes phone didn't instill a lot of confidence either, but it's how Apple learned to navigate the mobile industry, and identify talent to poach, all the while secretly working on the iPhone.
I'm in the automotive field and I came across some of their job postings, and based on the JD it looked to me like they were pretty serious about bringing something to market.
Me and a bunch of my friends and colleagues were contacted by recruiters and it seemed like they wanted people with experience bringing a car to production.
Has Tim Cook indicated in a chat at the bar that maybe Apple is not so serious? I don't know. Has the exec looked at Apple and thought "I don't know how to turn you into a car culture?" Or maybe its all about the Benjamins.
There are a lot of issues at play - I am not sure which I would go for - a possible side-player at the worlds best funded company, or a saviour figure at a company that will have to live on subsidies for a decade? Career choices can be weird
However, something must have changed to convince Doug Fields to move. One can only speculate but I guess it would be revealed later.
When Tesla survived and thrived I believe this caused Apple to take a step back and watch how the market plays out for a bit before committing...trying to find out of there really was a play there.
In addition, Tim Cook is a supply-chain guy, and the supply chain for electric vehicles is still very immature and extremely dependent on technology that Apple doesn't really have expertise in (yet), batteries. There's just not a good selection of suppliers for batteries that can produce at Apple's volume needs, and at car scale.
Except cars can't compete for your attention. Your eyes must be on the road.
I think they're giant smart TVs on wheels. Apple is right in complimenting the primary function of the vehicle with an offboard services solution, which replaces the crappy built-in 'smart' platform.
If they want to make an "Apple" car with some bells and whistles on it, why not take an existing vehicle and enhance it. See what happens with that at least. I'm thinking like Shelby did with Mustangs: https://en.wikipedia.org/wiki/Shelby_Mustang
Cars are capital intensive products. Also they would need something that really distinguishes them from competitors! Can they compete with the heritage and engineering of say Mercedes-Benz?
Why would they be able to offer a better product? Taking into consideration that they lack dealer ships and service center.
Apple stands a good chance of breaking into that evolved form of the business. They are, after all, very good at marketing and design.
There’s a lot of consolidation going on in the market. https://en.wikipedia.org/wiki/PSA_Group already had quite a few brands, but merged with https://en.wikipedia.org/wiki/Fiat_Chrysler_Automobiles to form https://en.wikipedia.org/wiki/Stellantis.
https://en.wikipedia.org/wiki/Volkswagen_Group similarly, has quite a few brands.
Ferrari at sometime was part of https://en.wikipedia.org/wiki/Fiat_Chrysler_Automobiles, the predecessor of PSA group.
Maserati already is part of a larger group. It is owned by Stellantis.
Lamborghini is owned by Audi, which is owned by Volkswagen.
[1] Ford paid $6.5 billion for Volvo in 1999, ten years later, in 2010 10,000 Bitcoins was worth 2 large pizzas, and 8 years later in 2018 Ford sold Volvo to Chinese carmaker Geely for $1.5 billion (30,000 BTC by today's valuation).
Skateboards simply aren't that hard to make, the legacy makers will have them within a decade. They won't be as efficient or have large capacity as Tesla, because meanwhile Tesla will keep building on it's technical lead and stay on top for at least a few years, in my estimation.
They'll potentially be lapped by miraculous new battery designs, but with current batteries? Who can top Tesla in the 2020s?
Basically, all the specs that matter will be coming from the skateboard as far as performance, battery life, handling, and so on. What incentive is there to try to build a new box when someone else is making the chocolates?
If Tesla realizes it's more profitable to sell skateboards to BMW, then they'll happily do that. They're a basic capitalist company in that regard.
To what degree will existing automakers get national level protections in order to protect global interests? Germany certainly won't sit by while BMW & MB go under; they'll take some action even if it's forcing Tesla Germany to sell skateboards to BMW. Japan will do something similar to preserve Toyota & Honda, as will China and South Korea.
Disruption will be very interesting in how it plays out...
The car companies that have the supply chains, the know-how, and now the motivation to electrify (the key component previously missing), will somehow defer to Tesla to build their platforms.
If Tesla can figure out how to turn their market cap larger than every other automaker into basic spare parts availability, that will be a starting point.
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Also FYI, 2 out of 3 luxury manufacturers you mentioned already do that with established auto manufacturers
The Maserati Ghibli platform can trace its roots to the Chrysler LX platform like most FCA products and is intermixed with Chrysler/Jeep parts
Lamborghinis share platforms with various Audis
Only Ferrari is really putting out really independent platforms
The car companies supply chains are set up for ICE, not EV. Likewise, their know-how is also for ICE, not EV. It's like saying Kodak was in a prime position to take advantage of the digital camera (which they invented), but it was actually the opposite - they'd spent decades optimizing around a separate core technology and couldn't change until it was too late.
I'm not a fan of Tesla for a myriad of reasons and I love cars. But the notion that traditional car companies can magically start cranking out profitable EVs (Tesla made most of their money from tax credits which are essentially gone now) is laughable.
That takes some doing, as GM is finding out with the Bolt EV catch-fire recall, costing them many 100's of millions. Even if they can source the batteries, and get to a minimum level of quality and dependability, they will probably still be far behind in terms of margins, power density, and efficiency -- for several years at least.
Also FYI, 2 out of 3 luxury manufacturers you mentioned already do that with established auto manufacturers
Indeed. And at this point, Tesla is the most established EV manufacturer.
https://www.popsci.com/cars/article/2002-10/hy-wire-act/
https://books.google.com/books?id=aQAAAAAAMBAJ&lpg=PA49&dq=%...
Edit: My mistake, Maserati is owned by Stellantis, which is the parent company of Fiat's parent company, and Ferrari went independent in 2015. So this does still apply to Ferrari.
From a business perspective, possibly because it's a huge market and Apple has a lot of cash to invest. It's quite different to what they currently do, but they are limited in how much they can expand in their current markets so they're probably going to want to try something new. Entering the phone market was pretty ambitious too (not as ambitious, but they were a much smaller company then), and they were prepared to take their time doing it. I believe precursor forms of the iPhone were in development for over 10 years before it was actually released.
I'm not going to say that Apple will decide to manufacture cars, or that they'd be successful at it if they did decide to. But I wouldn't rule them out either.
If you look at previous behemoth companies, like GE, they tried to hit all these industries and overextended. There was GE energy, GE Capital, GE digital, GE Healthcare, GE Transportation systems, GE Aviation, and some part of that made light bulbs. With Apple, they can’t just keep producing phones and grow so the challenge is to break into new neighboring sectors. Their goal with the car was not so much to manufacture it as it was to provide industrial design, branding, and software support as an initial foray. They were turned back by Kia/Hyundai as not bringing enough to the table.
Apple is so big, they have to look to giant markets to expand into.
At their scale, they should probably always 'be thinking about making a car' because the potentiality is so big, but being prudent enough to say 'no' almost all of the time. To the point that I think it's unlikely they will make one.
They partnered with Motorola just before the iPhone to dip their feet, so watch out for that one, i.e. the fully integrated Fiat, designed by Aplle or something.
You would have said something similar if you had heard about Apple's Phone plans back in 2004-2006
Maybe they just try everything because they have infinite money, and don't want to become the next IBM or Microsoft.
I am wondering about the same question. Cars are not a high-margin business.
