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The Apple Car

Updated: Jan 17, 2021

It's coming in the next few years and is likely, if its history of capturing consumers is anything to go by, to corner a good percentage of the EV market. Interestingly, an Apple car would only need to capture 2 percent of the market to equal the revenue that it currently gets from the iPhone, according to Morgan Stanley researchers.

Apple has blazed a trail over the last couple of decades, creating products that everyone wants and loves. PCs, laptops, iPods, watches and iPhones - all have been phenomenal successes, turning the company into one of the largest and most profitable companies in the world. Currently Apple has around $200 billion in cash, so plenty of financial power to develop new products, like a car, which it has reportedly been working on since 2014.

Apple fans are clearly excited by the prospect and the internet is awash with design ideas but none of the visuals have actually been published by Apple itself. However, the Apple electric car project, code named "Titan," is estimated to have around 5,000 employees working on the various aspects of it.

“Most cite Apple’s strong brand and an impressive balance sheet [as a reason to build an Apple Car],” the analysts said, according to a transcript of a recent conference call. “But we see several other reasons why it is quite likely that Apple does a car. One is the size of the market. Smartphones are a $500 billion annual [total addressable market]. Apple has about one-third of this market. The mobility market is $10 trillion. So Apple would only need a 2 percent share of this market to be the size of their iPhone business.”

The team of researchers - which consisted of Apple analyst Katy Huberty and Chinese and European battery experts - went on to say that, while Apple is new to this market, a “noticeable percentage” of Apple revenue each year comes from products and services that didn’t exist three to five years before..

Another interesting point in the conversation, according to Cult of Mac, was a response to the frequently voiced concern that the automotive industry enjoys slimmer margins than smartphone makers, and that this would make entering the field unappealing for Apple.

“When Apple entered the PC, handset and wearables market, the margins of competitors were [also] razor thin,” the Morgan Stanley analysts said. “And through vertical integration, as well as driving significant scale, Apple has been able to enter industries with low profitability and earn very strong margins. I don’t see why autos would be any different…. The auto market looks very similar to the industry structure and profitability of many other markets Apple has entered in the past.”

The analysts concluded by saying that a “timeline of four to five years out makes sense” for an Apple Car - but a couple of extra years are possible as well.



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