Vitaliy Katsenelson, Market Watch:
I had this “Aha!” moment recently when I visited a Tesla store and saw its cars’ power train. It looks just like a skateboard — basically a flat slab of metal (which houses the battery), four wheels, and an electric engine the size of a large watermelon. That’s it — the Tesla has only 18 moving parts.
Many Tesla showrooms have that full size power train on display. It really is something to behold, a marvel of efficiency.
If both Tesla and Apple bypass the dealership model, the GMs of the world will be at an even larger competitive disadvantage. They will have to abandon the dealership model too. Yes, I know, selling cars directly to consumers is not legal in many states, but if the U.S. Constitution could be amended 27 times, the law on car sales (which is an artifact of the Great Depression) can be amended as well. The traditional dealership model is unlikely to survive anyway, as its economics dramatically degrade in the electric-car world. A car with few moving parts and minimal electronics has few things to break. Consequently, electric cars will need less servicing, throttling the dealerships’ most important profit center.
And:
Think back to the day when Apple introduced the iPhone. No one suspected that it (and the smartphones that followed) would enable a service like Uber, which is putting cabdrivers worldwide out of business.
The baby boomer generation romanticizes cars. Most boomers can recite the horsepower and other engine specs of every car they have ever owned. For the tail end of Gen-X (my generation) and Millennials, a car is an interruption between Facebook and Twitter.
Obviously, this is conjecture. We do not know if Apple is building a car. But the idea of an Apple Car is fascinating, and this article homes in on some interesting truths if Apple does go down that path. Read the whole thing.
screw the dealers. we dont need that model anymore.
There is one, rather important, catch to keep in mind with regards to laws and car dealerships. For whatever reason, there are a remarkably large number of people who both own a car dealership and serve in a state legislature in the US. So it isn’t just lobbying power car dealerships have but straight up seats in government. That is some serious entrenchment to displace. Even some pretty liberal and forward thinking members of congress own car dealerships.
Side note, GM, Ford, etc. want the dealership protections and model gone as much as anyone.
Is “For the tail end of Gen-X (my generation) and Millennials, a car is an interruption between Facebook and Twitter.” supposed to impress me or be a positive? Because it doesn’t and it’s not.
Great headline.
I mean, probably overstating it. But still a great headline.
I read this article in my Apple News feed this morning and found it to be incredibly naive.
The key thing to know about auto manufacturing is that it is incredibly capital-intensive. Essentially, the production of each car requires an initial investment in plants and machinery that is many thousands of times the value of that car, which needs to be amortized over a lifetime of production.
That any company that is brand-new to the auto industry could quickly “disrupt” it is just silly. Like the idea of moving an aircraft carrier with a dingy. Even Apple’s enormous resources don’t change this.
If Apple actually makes a car, which I’m skeptical of but it’s certainly possible, it would take decades for it to have the sort of effect in industry terms that the iPhone had in a couple years.
I agree. But dealerships are literally the largest source of municipal tax revenues in many if not most cities and towns. They have enormous influence. How do you fight against that?
Interesting. I’m going have to Google that and read up on why as well as how we can help them and help us in the process.
I’m in the generation X category and I have no idea what that’s supposed to mean either. I also found it to be an annoying statement. Maybe annoying isn’t the word…
It too depends on how many cars could actually move and how quickly. I for one have a just over three year old car, which will likely last me another 6, 7, 10 years?
Exactly. That’s the other side of the equation. Buying a new car, unlike a phone, costs tens of thousands of dollars. Consequently the speed of churn in the vehicle population is much, much slower.
Sloppy hyperbole.
I think it depends on how you define “having an effect.” Apple just entering the market could have an impact with other automotive manufacturers outside of just the bottom line, as they suddenly scramble to figure out a way to effectively compete against them. I don’t think we’ll see the same “they won’t just waltz in here” reactions from their new competitors that the iPhone garnered, if for no other reason than because Apple’s has played the “we’re going to enter this market and dominate it now, kthnxbye” card a few times now. It’s not a new thing with them anymore.