Apple Car To Be Cheaper Than Tesla Model S: Analysts

iphone 8 apple stockElisaRiva / Pixabay

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 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.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com or on Twitter @VikShukla10

48 Comments on "Apple Car To Be Cheaper Than Tesla Model S: Analysts"

  1. You just proved yourself a liar.

    Tesla has announced they will have the $35,000 Model 3 by 2017 – exactly as I said.

    You have still completely failed to show anything that indicates that is not true so you have been proved a liar.

    Good job, genius.

  2. I did not fail to do anything. I assumed you were intelligent enough to do a google search yourself.

    Full production of Tesla’s supercheap Model 3 won’t happen until 2018
    http://www.businessinsider.com/tesla-model-3-may-be-delayed-until-2018-2015-6

  3. Tesla has openly and plainly stated that they will sell 500,000 EVs in 2020. They back this up by building the largest battery factory in the world on partnership with Panasonic, and signing contracts for massive purchases of battery-grade lithium. Very credible.

    Compare this to a dubious analyst’s projection that Apple will announce, design, and then magically ship 200,000 EVs in 2020 from a standing start. Just not credible.

  4. Rumor is the current design looks more like a mini-van. No joke.

  5. This is a very dubious article. Jefferies & Co. is an investment banking group. These are financial analyst. The only way they could arrive at that target is by extrapolating a straight line through 2 points. Something a first year algebra student does. By economies of scale we get a cheaper product. Simple but 200,000 EVs/yr requires 10-15GWhr/yr of battery storage. That’s technology independent regardless of lithium-ion or aluminum-ion and its no short order. The list of companies able to source that many batteries is fairly short starting from the largest Panasonic, AESC, LG Chem, and maybe Samsung SDI. Panasonic is partnered with Tesla, AESC is partnered with Nissan, and Samsung likely to be a competitor. Then we have Toyota, GM, Ford,Fiat,… with similar aspirations.

    Then again, we’re also ignoring the fact that Apple is not a manufacturer but instead exploits the cheap Chinese laborers who assemble their devices with little to no automation. Who will they subcontract to machine the automobile chassis? What a quality control nightmare if its all done overseas. Where will the electric motors and battery packs be built? These are things Tesla realized they had to build in-house. These are not consumer electronics as defects in manufacturing kill people.

    Then the dealerships, we have laws in every state that prevent vehicle manufacturers from selling directly to consumers. States are fighting ‘tooth and nail’ to keep that status quo.

  6. Wrong. The combined statement is directly from Tesla and you have completely failed to show any facts that prove it is incorrect.

  7. Tesla has stated that the Model 3 production will begin in 2017. They have also stated that the Model 3 base price will be $35,000. These statements are not to be combined. The base model will not be available until Tesla goes into “full production” which is definitely not in 2017 by Tesla’s own admission.

  8. The best they can do is have an Apple edition of the Tesla car like the eddie bauer edition of the Ford Explorer. Ship it to you in one of those Apple boxes and then you can peel off the Apple scotch tape and drive it to the Apple store and wait for some Apple slob help you debug it.

  9. A concept car that look so ugly?

  10. Incorrect. Tesla has stated they will have a $35,000 by 2017 – exactly as I said.

    From Wired 9/15: Tesla Model 3 will cost $35,000, launch in 2017

    There are scores of other article with this info, direct from Tesla.

  11. To be fair, the $35,000 EV is not possible by 2017 according to Tesla’s timeline. However, you are absolutely correct that this article is meaningless for the reasons you state.

  12. Actual I don’t normally get fired up, but his comment was incorrect – unless you think that a factory in the US whose output is a rounding error in Apple’s numbers really constitutes a manufacturing core competency? In addition his comment was delivered as an insult.. so not only was he wrong, but insulting… Your comment is true only if you consider such a small factory that important – but I don’t get why you think it is relevant? That plant is a $30 million factory in Apples supply chain of what? $20 billion – with 2000 Americans versus what ?? 2 million Chinese employed by Foxconn? it is more an experiment than the norm, but yes, that is a single smaller factory owned and run by Apple. I would love to see much more of the supply chain come back the the United States, but I think it is unlikely that much will come back here, unfortunately. This article points out that the USA is at a 60% cost disadvantage compared to offshore.
    http://www.bloomberg.com/news/articles/2013-12-18/apple-s-cook-kicks-off-made-in-usa-push-with-mac-pro

  13. You guys talk about Apple like they’re the only ones doing this. You do realize that this is standard practice for pretty much everything and anything sold in the U.S.? OK, not Tesla or other car makers, but Samsung, HP, Dell, IBM, GE, etc. Their assembly lines are under the the same roof as Apple’s.

  14. Wow, doesn’t take much to fire you up, having a bad day. By the way, you’re incorrect anyhow. Try looking at where the MacPro is made, oh ya, Texas, by Apple. Look who’s looking in the mirror now.

  15. Looks like an apple mouse. Thier pickup truck will look like a keyboard, no doubt.

  16. Okay, you have a point that a job is a job, but to be clear, those would most certainly not be $50 an hour. You are talking about minimum wage jobs here.

  17. When you see one on the road, let me know. I won’t be holding my breath.

  18. Ford, as all other car companies, are about 5 years behind Tesla in battery tech and they show no signs of catching up.

  19. This article is a fail. A car that won’t even be for sale before 2020 cannot be pronounced as less expensive than a Model S from 2015.

    It is simply a target price that may or may not be met by Apple. This article also fails to have any details about performance or range so any price comparison is, again, completely meaningless.

    The article also fails to mention that Tesla will begin selling a $35,000 long range EV by 2017. It is completely possible the Apple car specs will be much closer to that Tesla, so the actual truth is the Tesla may be much less expensive than the Apple car.

    Try doing some research before making useless predictions and writing misleading articles.

  20. Apple’s phones are made by subcontractors and then are sold by Verizon with a terrible user experience. My wife has had 3 generations of iphone and has never even seen an Apple store. When she has a problem with her phone, she talks to Verizon.

    I am not a super Apple expert, but somehow they let the user experience ball drop with us and Verizon.

  21. This is useless analysis unless you add some context on the market segment Apple is targeting. You might as well say the Chevy Cruz is cheaper than a MB Model S–its true but not useful. If rumors are true that was Apple looking at the BMW i3 as a foundation, then the more appropriate comparison might be the $35K Model 3 than the full-size Model S.

  22. That picture posted up looks like someone tried to turn an IPAD into a car, if this is your true concept car. APPLE you can forget about car manufacturing business.

  23. Reedman Bassoon | Oct 19, 2015, 3:23 pm at 3:23 pm |

    Apple presently buys a lot of lithium batteries. That is its only advantage in the electric car market, because batteries are the #1 cost item in an electric car. If Tesla succeeds at getting its Reno factory running, Apple will lose that advantage. Designing and building cars is easy — making them at a profit is hard (GM was building 10000’s of vehicles per day all the way into bankruptcy).

  24. We’ll see, Many say Elon Musk is the next Steve Jobs, some say he’s even better than Jobs. On the other hand Apple does not have Jobs anymore.

  25. Why is the author failed to mention by 2020 Tesla is expected to sell close to half a million $35K~$45K Model 3, Model Y a year? The Model S is at an entirely different market segment.

  26. Corporate Raider is an A hole | Oct 19, 2015, 1:45 pm at 1:45 pm |

    How about instead of guessing, we just wait and see. In 5 years, I put FORD at the top of the electric car business, just because they can.

  27. Does it make sense to compare the price of a car in 2020 to the price of a car today? Especially with the caveat that they will have multiple price points? Also – does it makes sense to compare Apple manufacturing 200,000 cars per year in 5 years with what Tesla manufacturers today? Shouldn’t he comparisons be to what the analysts expect Tesla to sell in 2020? Basically reporting on rampant speculation with irrelevant comparisons.

  28. Can’t see any reason why Apple would do this, other than to keep, or horde engineers.

    It is also impossible to price this mythical car.

    If it does come to fruition, it would be more like Google prototype robot cars not Tesla or a real car. Hopefully it won’t be hideous like Google.

  29. Peter Mortensen | Oct 19, 2015, 1:18 pm at 1:18 pm |

    When you look at modern consumers and what they desire, Apple is a company understanding it better than anyone. Today Apple is the most valuable brand with the best execution of ease of use and simplicity among a fairly narrow segment of consumer products.
    The automotive industry is on the other hand a tremendously conservative stubborn complacent industry carrying on traditions endlessly of dealers using snake oil tactics, dashboards that look like an old sci-fi movie spaceship’s complex control panel and a powertrain complexity that makes any service a bit of a nightmare.
    Ironically, Tesla Motors, mere minutes from Apple, have been the automotive company most effectively aimed at moving in the “Apple direction” of cleaning up the mess with a highly unified user interface, super simple powertrain and sales concept not very different from Apple stores. Perhaps only thing that occurs non-Apple about Tesla Motors is the car’s exterior design that could have come from Mazda or almost anyone.

    What would be more natural than Apple designing the cars visible attributes and Tesla Motors manufacturing it, perhaps using Model 3 as platform?

    Surely Apple is known for using contract manufacturers like Foxconn and it’s highly unlikely that Apple will build their own factory making cars. Whoever they use will have to be someone sharing their values and at this moment Tesla Motors does it better than anyone. With battery costs dropping rapidly I see no reason why Apple can’t launch a car at similar pricing as Model 3 of US$35K. Apple wont add crazy horsepower to the car but will rather focus on the software, user interface and design.

    Or…I could easily be wrong.

    Another option is that those contract manufacturers Apple are using have similar needs for growing into new business categories. So we might see Apple team up with Foxconn to mass produce cars.

    If Apple launches a car at US$35K, you can bet a lot of Apple fans, who want everything Apple, will also want the Apple car just out of an almost obsessive desire. The number of such people is staggering in the millions. Thus Apple could make something of an “iPhone” effect happen in the automotive industry and a big challenge would be about manufacturing capacity.

  30. Conservative411 | Oct 19, 2015, 1:12 pm at 1:12 pm |

    And keeping with Apple’s traditions, Apple will only allow you to drive it down certain streets.

  31. makes sense – iCar that looks like an iPhone

  32. who will make the key stuff…batteries? Hanwha?

  33. I don’t deny that.. but his comment was that ALL its jobs are sent overseas…. Not MANY of their jobs are sent overseas.

  34. Toyota’s too invested in the Pruis, or rather too lazy to move on the from the Pruis to electric cars. Foolcells also have poor durability and hydrogen is corrosive so those cars will need lots of frequent servicing to keep them from blowing up like the Hindenburg.

  35. AND?? All companies that outsource still keep their HQ and R&D here. Those $4 jobs would be paying $50-$100/hr plus benefits here. THATS where Apple’s profit margin comes from. Converting good paying American jobs into starvation apartheid wages. Tesla shows you don’t have to treat humans like worthless cattle to be a successful manufacturer. Is Apple going to get the memo and change their cold-hearted evil ways?

  36. Thats because Apple plans on buying up all the used Tesla’s and rebadging them. About the only way they’ll be able to compete with Tesla.

  37. Silly boy! Apple is not a manufacturing company – they are a software, engineering, design, and marketing company, which is extremely successfully in implementing user solutions through innovative ideas and user experience – what planet are you on? They outsource completely the manufacturing process to Foxconn – pray tell, please share with us your vast knowledge of the business model Apple uses and share with us your divine knowledge so that we can be as advanced in knowledge as you are -what exactly is it that Apple manufactures? And before you answer, every product ends in Foxconn and outsourced manufacturing – not with Apple. .. Maybe you should take a look in the mirror and heed your own advice? In Summary – where exactly are they going to outsource automobile manufacturing? They are NOT in the business of owning and running manufacturing plants – nor do they want to be.

  38. Apple is far more than a software company. It’s the worst most valuable brand, focused on hardware design with simplicity as a core attribute and they are building brand loyalty through software aimed at maximizing ease of use. I can see why Apple could succeed hugely in an automotive industry tremendously conservative not comprehending modern consumers desire for ease of use and simplicity.

  39. apple is not a software company. it is not in the business of building software that runs on HW that other companies make.
    Apple is in the business of creating an end to end solution for end users. in regards to cars that means its nor a supplier but a manufacturer.

    apple does not want to build software that daimler then puts in their cars to screw up the end user experience. So while you are all the super apple experts, maybe you ought to think about what you are saying and how well you understand the business model of apple.

  40. For a company that double or triple the actual cost?

  41. I think that is exactly where Apple is heading. They are getting into the supplier business for automobiles. Yet all these specialists / analysts love jumping the gun on their often incorrect assumptions and predictions. The CarPlay is their next target along with IOT components for cars. Even possibly electrical systems, power supplies to drivetrains.

  42. I don’t believe this at all…if they are working on cars, it is likely in order to maintain superiority or at least parity on the operating system, not the hardware. I do not believe we will see an apple car, but google and apple will fight it out on the software side which is where they both shine.

  43. I hope this rumor is false -t his would be a monumental strategic blunder.

  44. What you just said is only true on the manufacturing side – ie.. low paying jobs in China through Foxconn that pay the equivalent of $4 per hour. . Almost all research and development has not been sent overseas (and these are the top paying and good jobs). Lets hope it stays that way. So far, Apple continues to invest in R&D and top research, design, and development – witness the new investment in Austin recently for R&D.

  45. This would be an extremely short sighted and stupid investment by Apple. They are far better at creating a OS for automobiles, and then partnering with companies to integrate fully with the partner’s cars. Apple has no history or natural ability to manufacture automobiles… Apple would be far smarter to concentrate resources on higher margin things like entertainment (Apple TV and the capture of the living room for example with a complete control center for gaming, streaming, cable, etc)… Far higher margins, and much more in line with Apple’s core competencies.

  46. apple sends all its jobs over seas, will never buy one. I am gonna buy a Tesla as soon as they make there cheaper version. mark my word Tesla will be king regardless of apple.

  47. By 2020 the model S might be 40k since Tesla has the largest Battery factory in the WORLD. Apple still has to buy their batteries. By 2020 Tesla might be bigger than Ford. Since the major auto makers are way behind the evolving times. They insist on making ice cars so they can keep charging us for servicing. Why do you think Toyota wants a hydrogen car. You can still service that beast.

  48. Patrick James Bayham | Oct 19, 2015, 10:31 am at 10:31 am |

    the only car Apple will make.
    a small electric cart for their new headquarters .

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