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I'd love to hear more about the potential future of gross margins on any automotive Apple products. I've heard auto manufacturers have notoriously low margins,

I'd love to hear more about the potential future of gross margins on any automotive Apple products. I've heard auto manufacturers have notoriously low margins, but in reality they seem just as fine as any other business. That being said, those same margins are not at all within the realm of what Apple current enjoys. That all means unless some further accounting engineering goes on, it spells a less attractive future for Apple in terms of overall margins, but one would hope a better future in terms of free cash flow. Apple already obscures some details from shareholders in ways that I find less than scrupulous.

dcolkitt 6y ago
A lot of the reason margins are so thin is because the suppliers now make more money than the actual carmakers. If there's one thing Apple's good at it, it's squeezing suppliers on costs. Going EV also helps here, as there's fewer parts required.
esja 6y ago
The PC hardware market also had fairly thin margins, if I remember correctly. It didn't stop Apple carving out a profitable niche and then expanding it.
- andrewmcwatters 6y ago
  That's true, but their ASP declined over time, and continues to do so just like everyone else's. You may pay marginally more comparatively, but their relative advantage has never improved over time.
Zelphyr 6y ago
That's where I think Apple making a car might be interesting. They've already shown they can handle effectively renting a phone. And we know for sure their car isn't going to be cheap. What I suspect they're going to do is make it so you can only finance through them with the option to trade up after five years. They'll take the car back after that time and either refurb and resell it themselves or offload that to third-parties. That gives them steady revenue for years with comparatively high margins. And, like Tesla, they'll sell direct. No dealerships for the Apple Car.

dcolkitt 6y ago

A lot of the reason margins are so thin is because the suppliers now make more money than the actual carmakers. If there's one thing Apple's good at it, it's squeezing suppliers on costs. Going EV also helps here, as there's fewer parts required.

esja 6y ago

The PC hardware market also had fairly thin margins, if I remember correctly. It didn't stop Apple carving out a profitable niche and then expanding it.

andrewmcwatters 6y ago
That's true, but their ASP declined over time, and continues to do so just like everyone else's. You may pay marginally more comparatively, but their relative advantage has never improved over time.

Zelphyr 6y ago

That's where I think Apple making a car might be interesting. They've already shown they can handle effectively renting a phone. And we know for sure their car isn't going to be cheap. What I suspect they're going to do is make it so you can only finance through them with the option to trade up after five years. They'll take the car back after that time and either refurb and resell it themselves or offload that to third-parties. That gives them steady revenue for years with comparatively high margins. And, like Tesla, they'll sell direct. No dealerships for the Apple Car.