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Tuesday, May 11, 2021

Apple Car doesn't require Tim Cook to build an auto-assembly line

Apple Car doesn't require Tim Cook to build an auto-assembly line

The long-rumored Apple Car is reportedly in the works, but it likely won’t be the stand-alone vehicle that fans of the tech giant are hoping for, according to Wall Street analysts.

While Apple’s so-called Project Titan, its autonomous vehicle initiative dating to 2014, has set a goal of producing a stand-alone vehicle by 2024 with "breakthrough" battery technology, according to Reuters, analysts don't believe that means CEO Tim Cook will move into vehicle production from the ground up.

The chances of Apple releasing its own vehicle by 2024 are just 35% to 40%, “given the Herculean-like auto-production capabilities, battery technology ramp, financial model implications, and regulatory hurdles involved in such a game-changing initiative,” wrote Dan Ives, an analyst at Wedbush Securities. He noted an autonomous vehicle would take even longer to make due to safety and regulatory issues.

There are methods short of an auto-assembly line that the iPhone maker could use to gain entry into the market, however.

Ives sees Apple forming a strategic partnership with an established player like Volkswagen or Tesla, whose CEO, Elon Musk, approached the tech giant about buying the electric-car maker when it was struggling financially in 2017.

Such an approach is also being considered by Chinese tech giant Baidu, according to a recent Reuters report.


Goldman Sachs analyst Rod Hall believes Apple might go the route of services provider – much the same strategy the company used with television – despite its edge in integration capabilities and ability to create software and hardware.

Tech companies want to be in the auto business “due to the large amount of time future consumers are likely to spend in self-driving vehicles using information services as they make their way from point A to point B,” Hall wrote.

But while the electric vehicle space could grow to $1 trillion over the next decade, providing a massive opportunity, the auto industry's profit margins are lower than technology, he noted. That might make the services model more appealing to Apple.

Additionally, both Apple fans and investors should be warned that many products/strategic ideas that happen in the labs “ultimately never leave the confines of Apple Park,” Ives pointed out.

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