Ford Hires Away Executive Leading Apple’s Car Project
bloomberg.com
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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.
It's an application you use precisely once and then it's no good upon the next tax cycle.
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.
Everyone wants the mob-buisness model, were you break the users legs, if they don't pay up all they can every fortnight. Open Source runs completely contrary to that and will clash - aka locked out due to vendor pressure. Aka, you cant have blender on a autodesk system.
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.
Yes the cost of building the product, infrastructure, running the company changes with the economy but even then the product pricing doesn't change frequently. If it does the customer will leave for the competitor anyways monthly billing or not.
So apart from locking-in within the platform, To show the MRR, ARR for that VC money is there really any merit for monthly subscription? Not everything needs to be a Netflix, Without complex licensing, two-sided market I'm not sure why every SaaS product has to compare itself to Netflix.
I've started offering lifetime subscriptions by default to my SaaS products, mainly because it seems hypocritical to not liking to pay monthly but expecting the same from my customers. One of the advantages of being an indie is that I can do this, I understand that a startup at the mercy of investors cannot.
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?
Further, there was no modularity to the hardware running the nav/entertainment/app platform, so the hardware got outclassed very quickly for apps anyway, with no ability to swap in a more powerful system.
Which is ironic, because in the 2012 Fords, it's literally just a PC behind your dash, USB ports, hard drive, and all running Windows. It sucks that people are compelled to upgrade a $50k vehicle for lack of $1000 in PC components.
I can understand why that would be a business model, but I really think the vehicle is like a smart TV - nobody should use the junky built-in "smart" platform, but instead use platforms like CarPlay and Auto to bridge/mirror their modular phone capabilities into the vehicle. Vehicles in time just need something like the OBD standard for connecting external processing/info platforms. CarPlay and Auto are steps in the right direction, but.. more abstraction/standardization/modularity please.
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?
What if, we can have faster than light travel. We can't realistically have ultralight anything, unless it's on rails.
To me it seems inevitable. A self driving AI so no accidents, then a minimal frame to keep the wind off, an chair to sit on, and a few tires. And the batteries are swapped as a service/variable cost like gas is today. Get where you need at 60 mph.
There is no way to build any 'minimal' frame for $1k with any material that's remotely lightweight. Heck, even the current battery technology is sort of low energy density. You get around 220Wh per kg (or 0.8MJ vs gasoline's 46MJ). A hundred kg would be 22kWh. With a lightweight body - 400kg (~900lbs) [price not withstanding], highly aerodynamic model on good asphalt - I'd say 250km (155miles in freedom units) is realistic - but then you need cooling system to charge them, unless you consider they can be hot-swapped (or willing to wait longer).
What you suggest is proper futuristic stuff taken from a sci-fi flick, none of it would happen anytime soon.
https://jalopnik.com/heres-what-the-worlds-cheapest-electric...
What exactly makes this case different?
Then you may not be paying attention. Battery costs have been dropping exponentially and we are only starting to really invest capital and scale production. Meanwhile: 1. Solid state batteries, 2. 3D printed metal, 3. Algorithmically optimized design.
Before 2018 battery production was basically negligible. We have only truly started to scale our need for storage in 2018.
Today 3D printed metal is in its infancy, but has truly significant potential. I’m very excited to see how companies like Relativity Space, etc mature this tech and how it will disrupt current manufacturing. Even just giga molding is disruptive, let alone printing which will use significantly less metal and significantly reduce capital investment for manufacturing (i.e. something like AWS for manufacturing).
Going back to your post verbatim, super computers today still cost hundreds of millions and need an entire building; the definition of what makes a computer “super” is what evolved, not their cost or other burdens.
https://jalopnik.com/heres-what-the-worlds-cheapest-electric...
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.
Maybe 10 years ago. I don’t really feel as though there’s a Porsche in the computing sector these days either.
Apple is Tesla. The rest of the industry is held back by the lack of any decent OS, and Apple has declined because they just don’t have any vigorous competition.
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.
But it is maybe deliberate. I am in Germany, I have no ideas where the model Y is produced but maybe the type of painting we have normally in Germany is different than the type of painting in other parts of the world.
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.
Again this is also done to death. There’s no new ground to be broken here.
Car manufacturers have had their own internal markets in parts and manufacturing for years.
If anything Apple was copying the motor industry with phones.
But you are right that Teslas are kind of bland in their own right.
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?
Volkswagen is a top 3 auto manufacturer and was top 1 recently. Volkswagen, Skoda, Seat, Audi go exactly against what you're saying.
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...
Like Build-A-Bear for the auto industry.
Meanwhile the Taycan is such a smashing successful Porsche pushed back the CT to focus on it, the Mach E is making a per-unit profit day 1, the Ioniq 5 just lead Hyundai to their biggest profit in 7 years before even hitting US shores...
The doom and gloom would be funny if it wasn't so far off-base it went into this uncomfortable place of sounding like paranoid rambling.
If Tesla can't produce an extra bumper for a Model S that's been in production for 7 years what makes you think they can make skateboards for anyone?
GM and LG are partnering to make a battery plant for GM's cars: https://www.greencarreports.com/news/1126298_gm-lg-chem-anno...
Porsche is piggybacking on VW's battery ventures: "For high-volume models, Porsche will source batteries from its Volkswagen Group parent, which is building an extensive network of battery plants."
Like Tesla, VW is holding "Battery Day" events: https://www.theverge.com/2021/3/15/22325813/vw-volkswagen-po...
"One way Volkswagen plans to boost production of battery-powered vehicles is through a massive expansion of its manufacturing footprint. The automaker plans to have six battery cell production plants operating in Europe by 2030, which it will build alone or with partners.
The first two plants will be in Salzgitter, Germany, and Skelleftea, Sweden; a third plant will be established either in Spain, Portugal, or France; and the fourth factory will be based in Eastern Europe. The plants will have a production capacity of 240 gigawatt-hours a year, Schmall said."
The groups missing from this discussion: Ford BMW Toyota Mercedes Honda
Some of them will be able to piggyback LG and Panasonic, but realistically there will be a huge battery shortage for the next decade. The only ones with investments that look ready "soon" are Tesla, LG and Panasonic. Of those 3, LG and Panasonic seem far too small. Only Tesla seems poised to have supply in the near term.
That means companies w/o batteries are going to be shipping ICE cars, or forced to pay a premium in some way to those with battery supplies.
The Mach E, Taycan, and F150 Lighting are all amazing. They will not be able to make many simply due to battery constraints.
> Porsche is piggybacking on VW's battery...
You realize Porsche is part of VW right? It's like saying VW is "piggybacking" on VW... wait until you find out the E-Tron GT is literally a VW Taycan!
> The groups missing from this discussion: Ford BMW Toyota Mercedes Honda
... missing because you didn't mention them. Like, did you just use your omission as proof of a point? What?
BMW has 3 main battery suppliers including Samsung.
Ford has SKI and their USITC problem is cleared.
CATL is supplying everyone from BMW to Mercedes to Toyota to Honda... and even Tesla gasp
https://www.reuters.com/business/autos-transportation/chines...
Honda even bought a small stake in them to bless their partnership. Even Team "wait-for-hydrogen" (Toyota) is working on solid-state batteries with the backing of the Japanese government
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Edit: I just realized based on your comment you'll have no idea what half those acronyms are because you think Tesla LG and Panasonic are the only players in the space, which is hilarious given the topic of conversation.
They're also battery manufacturers. SK Innovation had a spat with LG over stolen IP that almost had them banned from importing materials from batteries, but they settled.
The fact you didn't bring up CATL... well kind of says it all. CATL delivered more capacity in cars on the road than LG and Panasonic this year. Model 3s made in China carry their batteries amongst at least a half-dozen other manufacturers.)
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Seriously what is this navel-gazing from people who have no clue about the auto industry or cars in general besides rantings of their pet billionaire? If this was a JS framework people without half a clue wouldn't be comfortable hollering about the end of days, but because of the general arrogance tech seems to carry itself with, every person off the street suddenly thinks they know some secret that big automaker is wayyy too dumb to see and their death is just over the hill.
Puhlease.
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 seems to be exactly what a lot of traditional car makers are doing though. Ford, Audi, BMW, VW, Hyundai, Renault, Nissan, Mazda all have or are adding EVs to their range, and that’s just off the top of my head. They seem to expect profits to reach similar levels to ICEs as well: https://europe.autonews.com/automakers/automakers-finally-se...
Similarly Honda have announced they’re going to phase out ICEs by 2030 (iirc). Toyota just announced around 10 billion dollars of investment to expanding battery production to 33x current levels and 5 billion in battery technology R&D.
Digital cameras destroyed Kodak’s business model of selling film. For car makers though selling EVs is essentially the same business model as selling ICEs. They sell cars not particular types of drive chain.
Tesla is now well established as a luxury car brand but I think smaller EV startups are about to be washed out by competition from traditional makers. Smaller traditional makers will likely struggle to make the investment required to make the transition though. There’s likely to be a period of industry consolidation.
Their problem is the same one as Kodak, but it's not that they're too optimized for the legacy technology. It's that they don't want to give up the cash cow.
Digital cameras don't need Kodak film. Electric cars don't need oil changes from the Chevy dealership.
GM absolutely can make electric cars. They don't want to, because that's the end of their service business. It's the end of people buying a new car because their old car won't pass emissions. It's the end of people spending $2500 to put a new transmission in their $8000 car.
All they get instead are battery replacements, but the cost of a battery replacement is mostly the cost of the battery, not the labor. And batteries are a fungible commodity, so they have to compete on price with Panasonic and LG and they won't get anything like the margins they currently get for engines and transmissions.
They don't want this so they drag their feet. In the meantime it's an opportunity for competitors to eat their lunch.
Whether they get on the ball in time to not become Kodak remains to be seen.
The car manufactures have nothing to lose from the loss of oil changes, only the independent dealers.
> It's the end of people buying a new car because their old car won't pass emissions. It's the end of people spending $2500 to put a new transmission in their $8000 car.
Most cars are replaced because the lease was up on the old one. Even way down the line, most places don't have emissions testing for old cars: the car is replaced because the parts wear out. Ever seen a car with 250k miles on it - don't use the door handle to close it, it will just break off more, just ignore the worn spot on the seats, the AC will work for another two weeks if I recharge it - the above is real from my last car - a small number of all the little things (and it still ran great)
Transmissions are generally rebuilt by a third party.
> All they get instead are battery replacements, but the cost of a battery replacement is mostly the cost of the battery, not the labor.
NO, the cost of the battery is they have the ability to replace it. Either you replace all the individual cells (if 18650 a lot of labor - and you need a new chargers for the new chemistry), or more likely the manufacture is keeping everything around to make it even though the car it went in is out of production. Either you are paying for labor, or paying for a battery assembly process for an obsolete car. Third parties might do this for popular cars, but you never know when you buy a car if that battery platform will be used enough for someone else to start production when you need it.
From a bit of cursory research just now, only a quarter to a third of new cars in the last few years in the US have been leased rather than purchased, so I'm pretty sure this is not true. (Of the folks I know who've leased cars in the past, about half of them actually bought out their lease at the end, too, although obviously that's anecdotal.)
I think the rest of your comment's on point, I just think you're underestimating how many people treat cars closer to the way you apparently do. :) While this is again an anecdote, when I traded in a Mazda 3 after eight years, I was surprised at how many friends and acquaintances I talked to -- including other folks right here in Silicon Valley, making more money than I am to boot -- reacted to that as "only eight years?"
Someone who has built a company with complicated long logistical tails, deep R&D, high fashion and is looking for a recurring growth industry might think of a way to do that with cars.
$500/month from 10M drivers in the US would add at least another $1T to the APPL valuation.
The dealers' incentives are going to play some significant role in legacy EV sales. VW dealers were actively steering buyers away from VW's EVs. Also YouTuber "Tesla Economist" has been doing an informal survey by calling legacy auto dealerships and inquiring about EVs. Apparently, legacy auto dealers are now marking up EVs by $2000, $4000, in one case by $13000! (The Ford dealerships are steering callers towards EVs now, so at least Ford has that going for them.)
The loss of oil changes is going to have some not-insignificant effect on the auto servicing industry. Clearly!
The dealers and the manufacturers are a symbiotic relationship.
If the service department stops being a cash cow, is the manufacturer supposed to give up more of their margin?
Because the dealers are independent just enough that if they decide to fold, the manufacturer can't just swoop in and keep everything running.
Right now people don't appreciate how happy the manufacturers are to sell the car to the dealer and take their money. If a car sits on the lot for a year it's not their problem (unless all of them do that is and there's no room)
Service departments and Finance departments are the two things that keep that relationship going. Right now part of the resistance to EVs from dealers is also likely the potential buyers.
You can guestimate EVs have a 10k premium over comparable ICE vehicles right now going based on a base Model 3 vs a Camry. The people who have money for that premium likely have better credit scores and can't be hit with extremely lucrative subprime rates.
Someone with an 800 credit score won't let them tack on a 3% finance reserve to their 1% loan, but someone with a 650 score being told their rate is 11% isn't going to question why it's so high...
Honestly this stuff is way more complicated than HN tends to assume. There are so many forces at play here that trying to make statements like "maybe tesla will make cars for all the other brands" is never going to be realistic.
> Transmissions are generally rebuilt by a third party.
This is an aside, but transmissions are often replaced by a dealer. Most places will not sell the average person on rebuilding their transmission lol, that sounds like a relic of yesteryear. Today a used replacement would be the middle ground offered for an out of warranty owner.
Really? I mean I know dealers do some transmission work, but everything I can tell says that transmissions generally will last far beyond the warranty.
By the time it is time to do something the car is on the 3rd owner. Very little of such work is done by the original dealer. (though in the case of some heavy trucks transmission wear is common enough that the dealer will automatically rebuild every single one they take in - but these are not the original manufacture dealers but an independent used dealer) Most will go to an independent transmission shop, even smaller dealers will take a car needing transmission work to an independent shop because that is specialty requiring training they don't give their mechanic.
Even at that, transmissions have enough non-wear parts that the manufacture will rebuild them in general. There is a reason when you buy a transmission from anyone there is a core charge: they send it back to be rebuilt.
Nissan CVTs for example, are known to die multiple times before 100k. Nissan even bumped up the warranty to avoid a proper recall.
People are offering rebuilt transmissions, but like you said the average individual is at most going to use their transmission as a core for a rebuilt one that very specific places make.
The dealer isn't going to point them to a transmission shop (or take their car to one)
The car manufacturers sell their cars through the dealers. If every time they make an EV, the dealerships don't order them and steer every customer away from buying them, that's just as much a problem for the car manufacturer.
> Most cars are replaced because the lease was up on the old one.
The leased car still goes to someone else who then needs to service it.
And if the old cars start lasting for 40 years instead of 15 then the value of just off lease cars goes down due to increased supply, which makes leasing more expensive to offset the loss of resale value, which makes fewer people buy new cars.
> Even way down the line, most places don't have emissions testing for old cars: the car is replaced because the parts wear out. Ever seen a car with 250k miles on it - don't use the door handle to close it, it will just break off more, just ignore the worn spot on the seats, the AC will work for another two weeks if I recharge it - the above is real from my last car - a small number of all the little things (and it still ran great)
Nobody replaces the door handle on an ICE car with 250,000 miles on it because they know the powertrain will give out in another 10,000 miles and then the car will be scrap.
But batteries don't work like transmissions. As they go bad they have 150 miles of range instead of 300. For many people that's enough and they'll drive the car that way another five years, and then it's worth replacing the door handle.
Meanwhile battery prices are falling like a rock. The lower they get, the older the car is before it has to be scrapped because a new battery is too expensive.
> Transmissions are generally rebuilt by a third party.
Transmissions can be rebuilt by a third party. That doesn't mean nobody goes to the dealer or buys a new transmission from the carmaker.
> NO, the cost of the battery is they have the ability to replace it. Either you replace all the individual cells (if 18650 a lot of labor - and you need a new chargers for the new chemistry), or more likely the manufacture is keeping everything around to make it even though the car it went in is out of production.
Carmakers have the incentive to standardize this. If every GM EV for twenty years has one of two or three different battery packs, people will be making those indefinitely.
Meanwhile the labor of replacing individual cells in old batteries will happen in countries with lower labor costs because it isn't labor that has to happen at the repair site.
The result is that remanufactured batteries could end up being very inexpensive.
But that's not how cars are sold, at least not in the United States. Manufacturers don't leave it up to the dealers to decide what vehicles they can push and what vehicles they can steer customers away from.
Dealers get a vehicle allocation. Some of the allocated vehicles are cars that are easy to sell. Some of the allocated vehicles are cars that aren't easy to sell, but the manufacturer wants to push them. If the dealer wants to get more of the cars that are in demand allocated, they need to push the models the manufacturer wants them to push.
The eTron was built on a rework of the Audi platform that's in twelve ICEs before hosting it's first EV.
I mean, there's a reason the manufacturers will give you a 100k mile powertrain warranty, but won't cover a broken cup holder past 40k.
ICEs have been iterated to the point of boredom. Most engines today are 3rd or 4th generations of their original designs with emissions improvements and moderate power gains.
Making flexible platforms, having a supply chain that isn't so starved they're actually able to provide parts post-sale (current global woes notwithstanding), things like that's...
That's what make the notion that car manufacturers suddenly can't make cars just because the powertrain changed is what I find laughable.
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Actually, funnily enough people don't realize this has actually happened before.
1970 Clean Air act and the 1970 oil crises might as well have been a "reset" in powertrain development.
Many cars could no longer exist as they did, and manufacturers had to adjust to a completely new market, with new competition from efficient overseas competitors (who's efficient-focused powertrains previously had no place)
Sound familiar?
Some companies that were already floundering did fold. American Motors died off and Chrysler picked up the pieces.
But for the most part the industry adjusted and moved on. Because at the end of the day the powertrain is just that, the powertrain. It's supposed to be boring for the manufacturers because people will put up with a infotainment system that can't play video games when you're parked, but they won't put up with an engine that works when it wants to.
Infotainment is pretty much independent of the engine (apart from some icons/visualizations/settings here and there), as are most driver assistance systems, safety systems, anti-theft, chassis, mirrors, lights, wheels, brakes, doors, trunks, etc.
Infotainment is pretty much independent of the engine (apart from some icons/visualizations/settings here and there), as are most driver assistance systems, safety systems, anti-theft, chassis, mirrors, lights, wheels, brakes, doors, trunks, etc.
From what little bit I know about testing of automotive systems, there is a vast warren of disconnected, diverse microcontrollers and separate communications busses in the typical ICE vehicle from several years back.
Tesla turned this all on its head. Just about every system with software in a Tesla vehicle can be upgraded by a car's central computer through an over the air update.
Exactly the situation you describe above is what some would naively term, "set up for ICE." It's set up for the legacy ICE world, where there were no over the air updates, and the car wasn't a computerized robot on wheels. This legacy can be seen in the failed updates coming out of GM and Ford. There have been reports of legacy auto updates requiring buyers to go back to the dealership, but then the dealers are afraid to apply the update, because they experienced "bricking" the vehicle.
Those developments are basically unrelated to ICE vs EV, at least from what I've seen. Car companies are working on that in ICE models too (and tried before they announced EVs). Car companies make EVs that don't have this kind of integration, and will continue to do so. Some probably have decided to align it and develop it in parallel for EV models only, or at least pretend to do so for marketing reasons, but it's not a fundamental property of either/or.
"Having" to do both now of course doesn't make life easier for car companies, many of them still struggle very much with this "software" thing, and it shows.
They could do this with ICE couldn't they? What does that have to do with EV specifically? It seems it just adds to the lore of Tesla - The Tech Car
Actually, ICE is quite significant in the degree of computerization Tesla can achieve. Since engine compartments can get very hot, ICE manufacturers have to use slower, specially hardened chips in such spaces. The Tesla cars, being EVs, don't need to do this. This results in more computing resources and less expensive components.
Granted, the other manufacturers could do this as well. But this should cause us to ask, why haven't they? Even GM and Ford haven't been able to achieve the kind of integration Tesla has. That warren of diverse microcontrollers and systems is associated with a warren of supplier relationships.
So, maybe it does have more to do with being "The Tech Car" -- but isn't that even more powerful and tied to the principle of disruption than just being electric?
All Kodak shows is that it is possible to not use your prime position. Sometimes companies fail to transition, sometimes they don't. Only time will tell.
On top of all this, you can now route power through electrical wires, rather than needing an accessory belt to distribute mechanical power to the A/C, oil pump, power steering etc.
The electric car's tech advances are mostly in the battery technology (and vapourware "Level 5 automation in 2019"). Tesla will have a unique differentiator in battery tech and production, but it's not crazy to retool an existing ICE manufacturer to EVs.
Sandy Munroe did a disassembly of an EV motor oil pump just a few days ago. (In fairness, he also notes that one manufacturer has done away with this oil pump, and uses the heat pump instead.) Also, some EVs also have transmissions.
The Taycan for example, is clearly not focused on being as efficient as possible. It's an opulent car with all the heavy soundproofing and insulation people buying these types of cars expect.
The Mach E is probably the most normal looking EV suv, and it's Cd ends up being the highest of the bunch despite not even having door handles.
I don't think efficiency is the big win people are acting like it is. Just like there are gas guzzlers and econoboxes that get miles and miles per gallon, there will be more or less efficient EVs.
Efficiency by itself is not going to be a differentiator forever because past a certain range figure, most people's needs are met. From there "splurging" an extra 5 cents per mile to have their preferred car is not a problem
ETA: What I'm trying to say is that existing automotive supply chains may not be a massive advantage, if the relevant supply chains are battery/motor tech and Tesla has developed the best supply chains for those specific technologies.
>something sure is [the blocker]
Yeah, they didn't want to lol. It's exactly what I said above, they didn't want to go all-in on EVs so they didn't. I know people don't want to accept it's that simple, but that's good old organizational inertia.
Like a rolling boulder, once it slowly picks a new direction, it's not going to lose that momentum either
> if the relevant supply chains are battery/motor tech and Tesla has developed the best supply chains for those specific technologies
So Tesla theoretically has the "best" supply chain for the powertrain (that's questionable)... and the rest of the car?
Batteries and motors are the easiest place to be behind. The raw capacity using "behind" tech can be smoothed over with eating some margin.
But the rest? Even simple body panel availability had eluded Tesla before COVID gave an excuse for it. And that was after 7 years of production! It's unheard of in the industry.
Tesla's supply chain is not anyone's envy in the automotive industry. The only force that can stop major manufacturers from staying competitive just because we changed the engine cars use is their own reluctance, and all signs (and money) point to that no longer being the case.
However, they seem to be severely limited in production capacity due to the limited number of cells available. Right now, everyone other than Tesla seems to be hitting that issue, and Tesla is at least a year ahead. More if they can actually get the 4680 lines running on schedule, but that's a big if.
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.
I can't believe people are seriously entertaining the idea that a major auto manufacturer would need Tesla to make cars for them.
At that point what is the manufacturer bringing? Tesla's totally-not-marketing has brought them more cachet than anyone "boring" like Ford or Toyota
The trend I see, is that the more people know about what it takes to mass-manufacture an EV, the more they expect that legacy auto companies are going to turn to another manufacturer for the battery pack and the drivetrain.
At that point what is the manufacturer bringing?
The strength of the brand. It's hard to deny the brand strength of Ferrari, Rolls-Royce, Maserati, and Lamborghini. People will pay ridiculous markups to own brands like that. This opens up the margins such companies would need to survive.
Tesla's totally-not-marketing has brought them more cachet than anyone "boring" like Ford or Toyota
Does Tesla have the equivalent cachet of Lamborghini? It's debatable, I think.
A Rolls-Royce is a BMW. My M4 had RR chimes in it's hidden configuration settings.
A Lamborghini is (usually these days) an Audi. The Urus is a Q8 and the Huracan is an R8 (or the other way around, hard to keep track at this point)
A Maseratis has an infotainment system out of a Jeep Cherokee and shares transmission bugs with a Chrysler 300
Their brand cachet doesn't matter to this conversation because they're not the ones who control its application. The "boring" parent company will.
And why will the parent company do that for their ultra-luxury brand that's all about image and not their normal cars? They won't.
So the parent company needs to have a reason to go to Tesla.
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A skateboard is not just a drivetrain, it's the entire platform.
Manufacturers have just spent millions and billions in R&D to develop modular platforms that can do things like transition from ICE to BEV without feeling like an electrified ICE.
They're going to throw that away? Because their margins on batteries aren't quite as good as Tesla?
Lol if that's the case I think the last thing that helps margins is having someone else provide the whole platform.
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.
Ford has delivered a total of 12,975 electric vehicles year-to-date as of fiscal 2Q 2021, or the period ended on June 30, 2021.
Can non Tesla car companies make enough EVs?
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.
Making pocket/rucksack electronic doodads is one thing. Cars are on a completely different level of industrialisation, supply chain management, dealer networking, service support... and existing competition.
And the plausible market capture is much smaller.
It would be like Apple trying to compete against NEC, Fujitsu, and IBM with a commercial mainframe project. They could surely get a product out. But why? And then what?
I think it's quite different. The car market is huge, and it's also a consumer market. Apple would struggle to make headway with enterprises, but they're good at consumer markets.
A lot of people would have said the same at the prospect of Apple competing with Nokia, RIM, etc in the phone world. And then they came out with a product that completely blew everyone away. A car is harder for sure, but they have the money and they also have the time so I don't really see why not.
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 clearly has healthcare ambitions by the Apple Watch. They're building stupidly popular medical monitoring devices, and a health data research platform. Seems like they could tip-toe their way towards medical records management software too.
I am surprised they don't offer more cloud services for app developers, but i'm guessing its hard for them to compete with the major clouds.
Apple does not have the manufacturing or sales chops to sell whole cars. While Apple Geniuses are great at fixing an iphone, they're ill equipped to service cars.
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.
- The set top box works with any TV and it's one SKU. The number of sizes/screen quality/prices that people would require from a TV is so not apple's MO. As much as apple loves integration, they'd prefer a one-SKU device more.
- Airplay is value, but they haven't really added to it lately. The existing AppleTV already does it, and so do 3rd party tvs.
- TVs are very low margin, and they don't own screen manufacturing so they're likely not able to take outsized profits from the market.
Regarding the Car - Its an open question if they're still doing it, but maybe like the TV, they shouldn't wont...
- They want to control the software and GUI and that's done now. Unless they want to control the car itself (eg. doors, alarms, etc. or self-driving) they don't need deeper integration.
- Cars are very complex, even for apple standards - and not complex in the way apple is familiar with. They have no experience building or differentiating in this industry (like screens wrt to TVs but 1000x less experience).
- CarPlay added tremendous value, and most cars have it now. Deeper integration of the phone as the brains makes sense. But does anything else?
https://www.apple.com/ios/home/accessories/#section-tv
And they sell Apple TV devices, which when plugged into a TV with HDMI CEC controls (all of them nowadays), renders TVs indistinguishable from one another except for picture quality and maybe how quickly they turn on and off.
I guess it is possible for them to integrate the Apple TV device directly into a TV, but I do not see the profit motive on the part of Apple nor the convenience motive on the part of the TV user as it is pretty easy to stick an Apple TV onto the back of a TV.
Sony/LG/Samsung have plenty of low-mid-high quality TVs for whoever wants them. There is nothing extra Apple can provide there.
HDMI CEC allows you to take a new TV, plug an apple TV in, and just use the Apple TV remote. The TV will automatically turn off and on switched to the Apple TV input, hence a dumb screen + Apple TV.
At least it works like that with Apple TV, I do not to see why Sony and Nintendo and Microsoft would not implement the same thing Apple did.
And there is no first time setup. Of course, to change the TV picture’s settings themselves you would have to use the TV.
Kind of works most of the time. I mainly use my Nvidia Shield for most things, but if I touched the playstation controller the inputs would compete for a bit and flip back and forth.
Just try it out, most of your stuff likely has it (if they're not 15 years old). They're called a lot of different things in menus between brands though, so google it for yours.
> can we make a version of this product that is differentiated enough to be meaningful in the market?
FWIW, I think the answer is 'No', unlike e.g. AR glasses or smartphones pre-2007.
Heck, Apple TV and the homepod each are struggling relative to competitors and apple really hasn't delivered anything innovative in those spaces. Aside from truly wireless headphones, I can't think of any successful apple product that isn't primarily a computer.
I've never heard any rumors after maybe 2010 of an apple TV product that isn't a set top box.
And other things. Car Play is great, but currently one of Apple's buggiest products.
I am wondering about the same question. Cars are not a high-margin business.
A car is basically a computer on wheels theses days.
I am almost certain they have moving parts.