How Apple Car might eventually replace cars as a service

A subscription is probably going to play a big role in Apple’s go-to-market plan for the Apple Car.

Apple’s future is fueled by its services, which are a cash cow. It’s evident that Apple wants to expand on the services it already offers, and it’s also clear that the firm behind the iPod is aware that modern digital consumers prefer access to ownership. They’re all participating in Cupertino’s subscription tango.

Vehicles of the future for a monthly fee

That is why I believe subscriptions will be an important part of the company’s strategy for the Apple Car. Whatever the speculation, we know Apple has thousands of people working on it — and I doubt they’re being paid to waste time. The outcomes of that effort may not be what we expect, but it is unquestionably on.

What exactly do I mean by “car subscription”?

Consider 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 do the same with automobiles.

A car subscription is similar to car leasing and car sharing. You can use the car of your choice in exchange for a monthly fee.

What exactly is it?

Unlike leasing, you are not locked into a (typically) three-year contract, and you effectively own the car you drive (within set milage limits). When your car subscription expires, you return it and it is recycled or renewed, and you pick up another vehicle — or you switch to ride sharing if your mobility needs have changed.

Existing car subscription schemes typically provide subscribers with additional benefits such as maintenance, and you can upgrade to a new car whenever you want. According to Boston Consulting, car subscriptions in Europe and the United States could reach $40 billion by 2030, accounting for up to 15% of new car sales. And, similar to how Kyte currently allows you to subscribe to a Tesla for around $1,000 per month, Apple may offer you an Apple Car.

Consider what would happen if only 1% of its billion or so customers subscribed. Ten million people spending $1,000 per month is a massive market. They might even sweeten the deal by including a free Apple One subscription in every vehicle.

Apple will also sell you a car, which I doubt will be inexpensive. And I believe it is highly likely that 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 automakers.

Existing car manufacturers are almost certainly looking into car subscription.

How Apple Car might eventually replace cars as a service

Automobile manufacturers see the writing on the wall.

Volkswagen recently acquired Europcar rentals and plans to make self-driving cars available through that service after 2025. “Our expectation is that by far the majority of people will still prefer individual mobility by 2030, but it will be more about using and less about owning vehicles,” said Christian Dahlheim, CEO of Volkswagen Financial Services.

Now, we don’t know whether Apple will collaborate with car manufacturers or launch its own vehicle, though we all suspect it will. Nonetheless, in order to meet the needs of a changing mobility infrastructure, it makes sense that you will be able to get from point A to point B in an Apple Car. It will be available for purchase, rental, or subscription.

Apple might not even need to build the car. It could license whatever cutting-edge new vehicle technologies it has been developing to vehicle manufacturers, enhancing the deal with CarPlay access and revenue sharing for in-car content delivery and acquisition.

BMW reversed its decision to charge drivers a subscription fee to use CarPlay in their vehicles, but don’t dismiss vehicle manufacturers’ efforts to sell in-car upgrades as additional price options in the same way they sell vehicle trims.

Software unlocks for existing hardware features will be included in subscription services. Capgemini believes that by 2030, software will account for more than 20% of vehicle industry revenue.

Satellite celebration

That said, I’ve never thought of Apple as an add-on option, nor do I believe the company does. As a result, it is far more likely that it will want its own brand on its own vehicle. (It’s comforting to think that those vehicles will almost certainly include an international satellite-based emergency calling system for locating assistance when lost in the desert or after an accident in a remote location. It’s no surprise that Elon Musk’s Space X attempted to sabotage Apple’s Global Star party.)

Simultaneously, all vehicle manufacturers have realized that they cannot replace every vehicle on the road. Climate change targets and raw material shortages mean that one-to-one replacement is simply not possible. The transition to electronic vehicles will eventually be defined by scarcity, and in that model, access rather than ownership makes sense.

The majority of people make the assumption that since we leave our current vehicles parked 95% of the time, replacing the remaining 5% would be sufficient to maintain our current level of mobility. (And perhaps we can accept flexible scheduling and remote employment.)

Do customers believe in EVs?

We’re still not at the point where electric cars (EVs) are widely accepted. And everyone is aware of the issue with charging stations in some economies: either there aren’t enough of them, or the underlying infrastructure for power distribution isn’t yet ready to handle an excessive number of them. Customers can test drive EVs for a while using car subscription programs. According to MyCarDirect, people who try an EV don’t tend to switch back to fossil fuel vehicles. Apple employees certainly have access to a ton of other data, including where individuals go, how they drive, and when they want to, in addition to seeing the same information that I do. Apple’s Mobility Data provided a lot of enlightening information.

Another factor is Apple’s dedication to environmental preservation, which seems to go beyond straightforward greenwashing. We are aware that the business aims to create a closed-loop production system for its goods. As part of a car-subscription program, making sure obsolete systems are returned to the manufacturer is a crucial step in achieving this goal.

Access to cars built from the ground up to be as recyclable as possible, powered by renewable energy, and made available as a service sounds like the kind of deal that will appeal to our Gen-X customers’ high levels of awareness and motivation.

I’m sure Apple feels the same way. It’s a strategy that allows it to reach new customers while also doing the right thing for the environment and making billions of dollars. That is very much Apple’s style. And what’s even better is that we have at least three years to speculate.






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