How Apple Car could become the future car-as-a-service
Apple services are a cash cow that feed the company’s future. It’s obvious Apple intends building on the services it already provides and the company that gave us the iPod clearly understands that today’s digital consumers demand access more than ownership. They’re all in on the subscription tango in Cupertino.
Next-generation vehicles for a monthly fee
That’s why I think subscriptions will be a key component of the company’s’ strategy for the Apple Car. Whatever the speculation around that project, we know Apple has thousands of people working on it — and I doubt they’re being paid to waste time. The results of that effort may not be what we expect, but it’s most definitely on.
What do I mean by car subscription?
Look at Apple Music; subscribers have access to 100 million tracks on their Apple devices, and the company that curated the journey from ownership to access on an iPod can achieve something similar with cars.
Car subscription is a little like car leasing and a little like car sharing. In exchange for a regular monthly fee, you get to use the car of your choice.
What is it?
Unlike leasing, you are not tied to a (typically) three-year deal and unlike rental or car sharing, you effectively own the car you drive (within set milage limits). At the end of the car subscription, you return it, and it gets recycled or renewed, and pick up another vehicle — or move to ride sharing if your mobility needs have changed.
Existing car subscription schemes typically give additional benefits such as maintenance to subscribers, and you can upgrade to a new car whenever you like. Boston Consulting estimates car subscriptions in Europe and the US could reach $40 billion by 2030, accounting for up to 15% of new car sales. And just as Kyte currently lets you subscribe to a Tesla for around $1,000 a month, Apple could offer you an Apple Car.
Think what happens if just 1% of its billion or so customers subscribe. Ten million people springing $1,000 a month is a huge business. They might even juice that deal with a free Apple One subscription in every vehicle.
Apple will also sell you a vehicle, which I doubt will be cheap. And I think it highly probable it will support car-sharing schemes — either through its own service, an existing service, or in collaboration with at least some of the many such schemes now owned by major automobile manufacturers.
Existing car makers are most certainly exploring car subscription.
Car makers see the writing on the wall
Volkswagen recently acquired Europcar rentals and intends on making autonomous vehicles available through that service after 2025. Christian Dahlheim, CEO of Volkswagen Financial Services, explained: “Our expectation is that by far most people will still prefer individual mobility by 2030, but it will be more about using and less about owning vehicles.”
Now, we don’t know whether Apple will work with car manufacturers and we don’t know whether it will introduce its own vehicle, though we all think it might. All the same, to meet the needs of a transforming mobility infrastructure, it makes sense that if you want to get from A to B, you will be able to do so in an Apple Car. You’ll be able to own it, rent it, or subscribe to it.
Apple may not even need to make the car. It could license whatever cutting-edge new vehicle technologies it has been working on to vehicle manufacturers, boosting the deal with CarPlay access and split revenue sharing around in-car content delivery and acquisition.
BMW rolled back on its decision to charge motorists a subscription to use CarPlay in their vehicles, but don’t dismiss the significance of vehicle manufacturer’s attempts to sell in-car upgrades as additional price options the same way they sell vehicle trims.
Subscription services will extend to software unlocks for existing hardware features. Capgemini believes more than 20% of vehicle industry revenue will be software derived by 2030.
That said, I’ve never seen Apple as an add-on option, nor do I think the company sees itself that way. Which makes it far more likely it will want its own brand on its own vehicle. (It’s nice to think those vehicles will probably boast an international satellite-based emergency calling system to find help when lost in the desert or following accident in a lonely place. No wonder Elon’s Space X tried to ruin Apple’s Global Star party.)
At the same time, all vehicle manufacturers now realize they just can’t replace every vehicle on the road. Climate change targets and raw material shortages mean mass replacement on a one-to-one basis is simply not going to happen. The move to electronic vehicles is one that will eventually be characterized through scarcity, and in that model, access rather than ownership makes sense.
It’s around here that most people slot the stat that the cars we already use are left parked 95% of the time, which implies that we only really need to replace 5% of vehicles in use to achieve the same level of mobility. (And perhaps we can embrace remote working and staggered working hours.)
Do consumers trust EVs?
As for acceptance of electric vehicles (EVs), we’re not quite there, yet. And we all know the problem with charging points in some economies — either there aren’t enough, or the inherent power distribution infrastructure isn’t yet equipped to support too many of them. Car subscription services let consumers try EVs for a while. Anecdotally, consumers who try an EV don’t seem to return to fossil fuel vehicles, according to MyCarDirect. Apple’s people read the same statistics I do — and probably have access to a ton of additional data, such as where people go, how they drive, and when they want to. Apple’s Mobility Data was very revealing in the information it shared.
Apple’s commitment to environmental protection, which seems to go deeper than simple greenwashing, also has a part to play. We know the company seeks to build a closed-loop manufacturing system for its products. One key component to achieve this is to ensure old systems get returned to the manufacturer, which is an integral part of a car-subscription scheme.
Access to vehicles designed from the ground up to be as recyclable as possible, to run on renewable energy, and made available as a service surely sounds like the kind of offer our highly aware, highly motivated Gen-X consumers will be interested in.
I reckon Apple thinks so, too. It’s a plan that lets it reach new consumers, do the right thing for the planet, and make billions of dollars doing so. That’s very much the Apple way. And what’s even better is that we have at least three years in which to speculate about it.
Please follow me on Twitter, or join me in the AppleHolic’s bar & grill and Apple Discussions groups on MeWe.
- Chase UK's app-only bank hit with 24-hour ongoing outage
- Party Round’s rebrand is banking on founder bank accounts
- The White House passes an AI “Bill of Rights” that attempts to put your AI concerns at ease
- Micron to build largest chip factory in US history
- Hackers are breaching scam sites to hijack crypto transactions
- Activision Blizzard illegally withheld raises from unionizing workers, labor board finds