An Apple car has been in the rumor mill for about a year now. Even though the Cupertino company has not revealed anything about the car, reports suggest that it has assigned hundreds of engineers for the top-secret Project Titan. Now Jefferies & Co. analysts have estimated how much the Apple car would cost. In a 68-page research note, Jefferies said it would cost about $55,000, which is significantly less than the price of Tesla’s Model S electric car.

Apple Car To Be Cheaper Than Tesla Model S: Analysts

Apple may sell 200,000 units in the first year

Auto experts believe that Apple’s first automobile will be an electric, autonomous car, which is expected to hit the roads by 2020. By the time it arrives, electric cars will be more widely accepted. Analysts expect Apple to sell about 200,000 cars a year. By comparison, Tesla aims to deliver 55,000 units of Model S and Model X this year. Though Apple’s brand recognition may help it sell more vehicles, it is venturing into a territory full of challenges.

Analysts believe that $55,000 will be the “average price” of Apple car. The tech giant may introduce its car at multiple price points, some cheaper and others more expensive. Apple has been hiring top auto engineers and battery technology experts from companies like Ford, Tesla, Panasonic, Samsung, A123 Systems, and others. The iPhone maker has zero experience designing and developing cars.

Major challenges to Apple car

Apple has some major disadvantages in the automobile sector. So far, the company has made cool gadgets that are sold at as high as 40% margins. But the automobile is a low-margin business where even the largest automakers struggle to achieve double-digit gross margins. Further, by the time Apple car arrives, Tesla would have established a strong sales and supercharger network worldwide. Tesla has already built an excellent reputation for manufacturing top-quality luxury cars.

However, the Apple car would help the company diversify its interests and establish itself as a leader in Internet of Things. Google and Uber are also developing their own self-driving cars. Besides Tesla, these two companies also pose a threat to Apple’s car ambitions, especially when Google has already built a fleet of autonomous cars.