Apple will maintain bumper to bumper control of 'Apple Car' project, says Morgan Stanley
When it comes to the long-running Apple Car project, Morgan Stanley analyst Katy Huberty expects Apple to invest significantly in researching and developing a "vertically integrated solution."
An 'Apple Car' concept rendering by Motortrend.
In a research note focused on Tesla seen by AppleInsider, analyst Adam Jonas recruited Huberty to compare and contrast Apple to the Palo Alto automaker. While most of the research was focused on Tesla's position within the technology and automotive industries, Huberty did provide several tidbits about Apple's work on vehicular tech.
For one, Huberty said that Morgan Stanley expects Apple to spend nearly $19 billion on Research & Development this year, and compared that number to the $80 to $100 billion spent on R&D across the entire auto industry. That massive influx into R&D is one reason why Apple and other tech companies are probably going to be "disruptive over time" in the car market.
Huberty adds that Apple see vehicular tech as a "large market where (it) can contribute to a better solution," similar to how it views health and financial technologies. When it comes to the end goal, the analyst forecasts that Apple's entry into vehicular tech will be a vertically integrated solution.
"The end game can't just be a more advanced version of CarPlay in partnership with other auto makers," Huberty said. "They need to control the design, the guts and the experiences and services on top of the platform."
Asked about whether Apple and Tesla would partner up, Hubery said that they're likely to remain competitors, since, eventually, Apple's ambitions seem to hint at it releasing a competing product to the Tesla.
Apple has long been rumored to be developing an "Apple Car," and though it isn't clear what form it could take, more recent rumors and reports suggest that it'll be a physical Apple-produced vehicle.
Huberty also spoke about Apple's transition from a "seller of devices" to more of a services-based company.
For example, Apple began de-emphasizing unit shipments just as Services started to become more of a meaningful contributor to revenue growth. The analyst added that investors have begun to appreciate the "subscription nature" of iPhone repeat purchases, as well as the attach rate of new services and products.
"In other words, Apple's financial model is behaving less like a transactional hardware business and more like a digital service."
Morgan Stanley maintained its $326 price target for AAPL, based on an enterprise value-to-sales (EV/Sales) multiple of 3.7x on mature hardware, 3.8x on Wearables, Home and Accessories, and 7.1x on Services. Together, that results in a 4.4x FY21 EV/Sales multiple and a 21.8x target FY21 price-to-earnings ratio.
An 'Apple Car' concept rendering by Motortrend.
In a research note focused on Tesla seen by AppleInsider, analyst Adam Jonas recruited Huberty to compare and contrast Apple to the Palo Alto automaker. While most of the research was focused on Tesla's position within the technology and automotive industries, Huberty did provide several tidbits about Apple's work on vehicular tech.
For one, Huberty said that Morgan Stanley expects Apple to spend nearly $19 billion on Research & Development this year, and compared that number to the $80 to $100 billion spent on R&D across the entire auto industry. That massive influx into R&D is one reason why Apple and other tech companies are probably going to be "disruptive over time" in the car market.
Huberty adds that Apple see vehicular tech as a "large market where (it) can contribute to a better solution," similar to how it views health and financial technologies. When it comes to the end goal, the analyst forecasts that Apple's entry into vehicular tech will be a vertically integrated solution.
"The end game can't just be a more advanced version of CarPlay in partnership with other auto makers," Huberty said. "They need to control the design, the guts and the experiences and services on top of the platform."
Asked about whether Apple and Tesla would partner up, Hubery said that they're likely to remain competitors, since, eventually, Apple's ambitions seem to hint at it releasing a competing product to the Tesla.
Apple has long been rumored to be developing an "Apple Car," and though it isn't clear what form it could take, more recent rumors and reports suggest that it'll be a physical Apple-produced vehicle.
Huberty also spoke about Apple's transition from a "seller of devices" to more of a services-based company.
For example, Apple began de-emphasizing unit shipments just as Services started to become more of a meaningful contributor to revenue growth. The analyst added that investors have begun to appreciate the "subscription nature" of iPhone repeat purchases, as well as the attach rate of new services and products.
"In other words, Apple's financial model is behaving less like a transactional hardware business and more like a digital service."
Morgan Stanley maintained its $326 price target for AAPL, based on an enterprise value-to-sales (EV/Sales) multiple of 3.7x on mature hardware, 3.8x on Wearables, Home and Accessories, and 7.1x on Services. Together, that results in a 4.4x FY21 EV/Sales multiple and a 21.8x target FY21 price-to-earnings ratio.
Comments
Well, that, and AI (artificial intelligence, not AppleInsider) in reality, isn't the sci-fi fantasy we've been 'sold.' It isn't really up for anything its creators didn't count on or 'teach' it.
The reason I say insanity with the licensing route is mostly because of economics and Apple's ethos. Car makers, like for any device of significant effort, contract out lots of work to sub contractors. In this type of relationship, the amount of money going to the sub contractor - in this case Apple is a sub contractor - is minimized. There is a reason car software is basically shit. It's incompetency driven by the nature of how contracting works, where the sub for the software is squeezed to provide a solution at minimum dollars while the sub has to minimize the product to the point of actually making money. Apple isn't going to work this way. Every time they try, it turns out to be shit, like the Moto iTunes phones, and they know to stop.
That's just the working environment. Just wait to see what happens when the lawsuits and investigations start. This will happen. As a sub, Apple is basically going to eat it, with the car maker blaming it entirely on them at every opportunity. Apple isn't going work this way either.
I am an Apple fan, and also a ‘car guy’, and I don’t find any idea about an Apple Car appealing to me. Tesla is an impressive company, and went from zero marketshare to the leader in electric car technology...but I would never own one.
as a car guy, I want less automation, and more driver-oriented experience and performance. I really hope that this never comes to fruition because, unlike car companies such as Porsche, which sell SUVs and big sedans for big profits so they can continue to sell excellent sports cars, an Apple Car will, worst case, be a drain on resources that Apple would normally use to continue developing and selling market-leading products in the space where we traditionally see Apple products. They will never be a market leader in the vehicle market.
Your expectations are way too low. Apple has got to go for the proof of concept vehicle that will demonstrate their full vision. They won’t go the route of iTunes on a Motorola again, which didn’t work out too well. For Apple, it’s either go all the way or go home.