Apple will maintain bumper to bumper control of 'Apple Car' project, says Morgan Stanley

Posted:
in General Discussion edited September 2020
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.
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.
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Comments

  • Reply 1 of 48
    cornchipcornchip Posts: 1,954member
    Please stop using that pic.
    dewmemike1Scot1beowulfschmidtlkruppanantksundaramrandominternetpersonJWSCpeterhartSpamSandwich
  • Reply 2 of 48
    plype11plype11 Posts: 11member
    Oh god, “that car” again. It’s been a few months since we’ve seen the image resurface. Always cracks me up lol
    dewmecornchipanantksundaram
  • Reply 3 of 48
    dewmedewme Posts: 5,534member
    Yeah, the vehicle in the MT picture is pretty heinous. It's like a chubby sized Apple Magic Mouse with wheels. You probably have to lay it over on its side to recharge it because they put the recharging port on the bottom.
    mailmeoffersScot1thinkman@chartermi.netplype11JWSCpeterhartravnorodom
  • Reply 4 of 48
    thttht Posts: 5,540member
    Uh, I thought a car is what everyone thinks Apple is working on? Is there anybody out there who thinks Apple is building self-driving car software that they will sell or license to other car manufacturers?
    fastasleep
  • Reply 5 of 48
    tht said:
    Uh, I thought a car is what everyone thinks Apple is working on? Is there anybody out there who thinks Apple is building self-driving car software that they will sell or license to other car manufacturers?
    No one outside of Apple executives know I suspect. This is all rumor and gossip and bankers creating wish-list so their portfolio of stock goes up. I would also guess - - that Apple themselves has various directions. I think the right answer is 'Nobody knows."
    dk49
  • Reply 6 of 48
    Very early on there was a really attractive concept image of what an Apple Car would look like………but it seems forever now that everyone writing about the mystery car uses this horrific image. Imagine a head-on crash with virtually no front end as this image shows. If and when an actual car is released, it needs to put the fine Tesla designed cars to shame. But most importantly it needs to be THE FULLY AUTONOMOUS CAR the world's been waiting for.
  • Reply 7 of 48
    chasmchasm Posts: 3,414member
    tht said:
    Uh, I thought a car is what everyone thinks Apple is working on? Is there anybody out there who thinks Apple is building self-driving car software that they will sell or license to other car manufacturers?
    tht: I completely agree with your assessment. Huberty is correct that this goes way beyond the infotainment system of CarPlay and that Apple needs more control (or at least sensors) of other parts of a car, but there is a near-zero chance of Apple producing its own vehicle, since they would have had to have started building assembly factories about six-to-eight years ago. I don't think Apple has any interest in producing and servicing "car parts," but I think they are developing a system of greater control over a vehicle that they will offer and license to other car makers.

    And, just like with CarPlay, it will get major pushback from the establishment until consumers demand it and they have to capitulate. :)

    And Thinkman: the only way you'll ever get fully autonomous cars is if the entire industry adopts that as a standard. Human stupidity is still too difficult for a computer to predict or deal with. :)
    cgWerkspeterhart
  • Reply 8 of 48
    KuyangkohKuyangkoh Posts: 838member
    Very early on there was a really attractive concept image of what an Apple Car would look like………but it seems forever now that everyone writing about the mystery car uses this horrific image. Imagine a head-on crash with virtually no front end as this image shows. If and when an actual car is released, it needs to put the fine Tesla designed cars to shame. But most importantly it needs to be THE FULLY AUTONOMOUS CAR the world's been waiting for.
    Well....it’s gonna be a longggggg wait. By that time Tesla would be logging miles and miles of robo taxis and autonomous vehicles, my 1 cent hehe
    caladanian
  • Reply 9 of 48
    canukstormcanukstorm Posts: 2,729member
    chasm said:
    tht said:
    Uh, I thought a car is what everyone thinks Apple is working on? Is there anybody out there who thinks Apple is building self-driving car software that they will sell or license to other car manufacturers?
    tht: I completely agree with your assessment. Huberty is correct that this goes way beyond the infotainment system of CarPlay and that Apple needs more control (or at least sensors) of other parts of a car, but there is a near-zero chance of Apple producing its own vehicle, since they would have had to have started building assembly factories about six-to-eight years ago. I don't think Apple has any interest in producing and servicing "car parts," but I think they are developing a system of greater control over a vehicle that they will offer and license to other car makers.

    And, just like with CarPlay, it will get major pushback from the establishment until consumers demand it and they have to capitulate. :)

    And Thinkman: the only way you'll ever get fully autonomous cars is if the entire industry adopts that as a standard. Human stupidity is still too difficult for a computer to predict or deal with. :)
    That's going to be a tough sell considering that most major automakers are developing their own in-house self-driving systems
    randominternetpersonJWSCfastasleeplollivercaladanian
  • Reply 10 of 48
    cgWerkscgWerks Posts: 2,952member
    cornchip said:
    Please stop using that pic.
    No doubt! After all, Jony isn't there anymore.

    chasm said:
    And Thinkman: the only way you'll ever get fully autonomous cars is if the entire industry adopts that as a standard. Human stupidity is still too difficult for a computer to predict or deal with. :)
    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.
  • Reply 11 of 48
    GeorgeBMacGeorgeBMac Posts: 11,421member
    I'm not sure this analyst knows what "Vertically Integrated" means:
    At least traditionally it has meant being in control of all phases of the production of a product.
    For example, in the case of a steel company it meant mining your own ore, transporting it using your own shipping company, making coke and iron ore in your own furnaces, etc...

    Even for cars, Ford at one time produced their own steel in their own steel mills.

    So, is this analyst suggesting that Apple will produce its own batteries or steel?
    It sounds like, instead she simply means they will assemble the whole car and, knowing Apple, they will be using a host of feeder companies, likely global, for the parts & pieces.
    JWSCchasm
  • Reply 12 of 48
    thttht Posts: 5,540member
    chasm said:
    tht said:
    Uh, I thought a car is what everyone thinks Apple is working on? Is there anybody out there who thinks Apple is building self-driving car software that they will sell or license to other car manufacturers?
    tht: I completely agree with your assessment. Huberty is correct that this goes way beyond the infotainment system of CarPlay and that Apple needs more control (or at least sensors) of other parts of a car, but there is a near-zero chance of Apple producing its own vehicle, since they would have had to have started building assembly factories about six-to-eight years ago. I don't think Apple has any interest in producing and servicing "car parts," but I think they are developing a system of greater control over a vehicle that they will offer and license to other car makers.
    Apple licensing automotive control software to car makers sounds like insanity to me, especially for a company like Apple. They are designing a car. They will likely have contract manufacturer build it for them, just like they do with all their devices today. They will sell it as an Apple branded vehicle. They will probably follow the Tesla model of direct sales and have in-home, onsite service for the vast majority of service needs. They won't announce anything until they feel they have a competitive product and a go-to-market strategy.

    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.


    randominternetpersonJWSCfastasleeplollivercaladaniancgWerks
  • Reply 13 of 48
    lkrupplkrupp Posts: 10,557member
    Kuyangkoh said:
    Very early on there was a really attractive concept image of what an Apple Car would look like………but it seems forever now that everyone writing about the mystery car uses this horrific image. Imagine a head-on crash with virtually no front end as this image shows. If and when an actual car is released, it needs to put the fine Tesla designed cars to shame. But most importantly it needs to be THE FULLY AUTONOMOUS CAR the world's been waiting for.
    Well....it’s gonna be a longggggg wait. By that time Tesla would be logging miles and miles of robo taxis and autonomous vehicles, my 1 cent hehe
    Right, Apple always late to the game... and then they wind up dominating the market, my 1 cent hehe
    Xedmdriftmeyerlolliver
  • Reply 14 of 48
    esummersesummers Posts: 953member
    tht said:
    Uh, I thought a car is what everyone thinks Apple is working on? Is there anybody out there who thinks Apple is building self-driving car software that they will sell or license to other car manufacturers?
    No chance.  Apple might allow services like Apple Music and TV+ to run on other platforms, but they would never build a component of someone else’s system.  The user experience is the most important thing for Apple.  They wouldn’t give that up.  Even CarPlay uses the dashboard as an external monitor so that as much as possible can stay in an Apple device.  This will definitely be a full vehicle or it will be canceled and the tech factored in to other Apple initiatives like AR.  It wouldn’t surprise me if they have a traditional automaker assemble the Apple car if they can find an automaker that would agree to this, but it would be fully designed and branded as Apple.


    edited May 2020 fastasleeplolliver
  • Reply 15 of 48
    esummersesummers Posts: 953member
    lkrupp said:
    Kuyangkoh said:
    Very early on there was a really attractive concept image of what an Apple Car would look like………but it seems forever now that everyone writing about the mystery car uses this horrific image. Imagine a head-on crash with virtually no front end as this image shows. If and when an actual car is released, it needs to put the fine Tesla designed cars to shame. But most importantly it needs to be THE FULLY AUTONOMOUS CAR the world's been waiting for.
    Well....it’s gonna be a longggggg wait. By that time Tesla would be logging miles and miles of robo taxis and autonomous vehicles, my 1 cent hehe
    Right, Apple always late to the game... and then they wind up dominating the market, my 1 cent hehe
    Apple is better at creating mobile devices then anyone, so I’m sure they will dominate AR.  It is hard for anyone to match them in that space, but I’m not sure about automotive.  I think it will at least be a good product if it is released.  The biggest advantage is their work in custom processors and AR to help create a self driving feature.  This is otherwise new territory.  I think the iPad was largely a success because Apple was so much better at making mobile electronics then anyone else coupled with the existing app ecosystem that nobody else had a chance.  There is nothing like that for cars so this is the product I’m most uncertain about Apple absolutely dominating in.
    edited May 2020 fastasleepcaladanian
  • Reply 16 of 48
    rbnetengrrbnetengr Posts: 73member
    I equate that ‘Apple Car’ image to the poop emoji

    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. 

    Why Apple seems driven to produce a vehicle is beyond me. While they have a ton of cash in the bank, as well as a huge market cap, a vehicle is so far out of their realm that, in my mind, wouldn’t even be associated with Apple. And the startup costs can drain that big fat bank account pretty quickly, as can big lawsuits over autonomous car-caused deaths.

    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. 

    -rb
    edited May 2020
  • Reply 17 of 48
    SpamSandwichSpamSandwich Posts: 33,407member
    lkrupp said:
    Kuyangkoh said:
    Very early on there was a really attractive concept image of what an Apple Car would look like………but it seems forever now that everyone writing about the mystery car uses this horrific image. Imagine a head-on crash with virtually no front end as this image shows. If and when an actual car is released, it needs to put the fine Tesla designed cars to shame. But most importantly it needs to be THE FULLY AUTONOMOUS CAR the world's been waiting for.
    Well....it’s gonna be a longggggg wait. By that time Tesla would be logging miles and miles of robo taxis and autonomous vehicles, my 1 cent hehe
    Right, Apple always late to the game... and then they wind up dominating the market, my 1 cent hehe
    Artificial Intelligence is a game that will be won over a stretch of time, but the effects of both Moore’s Law and the approaching Singularity hint to us there is a definitive end point.
  • Reply 18 of 48
    JWSCJWSC Posts: 1,203member
    I'm not sure this analyst knows what "Vertically Integrated" means:
    At least traditionally it has meant being in control of all phases of the production of a product.
    For example, in the case of a steel company it meant mining your own ore, transporting it using your own shipping company, making coke and iron ore in your own furnaces, etc...

    Even for cars, Ford at one time produced their own steel in their own steel mills.

    So, is this analyst suggesting that Apple will produce its own batteries or steel?
    It sounds like, instead she simply means they will assemble the whole car and, knowing Apple, they will be using a host of feeder companies, likely global, for the parts & pieces.
    I interpret “vertically integrated” to mean that Apple will design everything down to the nuts and bolts. It’s not out of the realm of possibility that Apple would license Tesla battery technology, although the form factor would be of Apple design.
    fastasleeplollivercaladanian
  • Reply 19 of 48
    JWSCJWSC Posts: 1,203member
    chasm said:
    tht: I completely agree with your assessment. Huberty is correct that this goes way beyond the infotainment system of CarPlay and that Apple needs more control (or at least sensors) of other parts of a car, but there is a near-zero chance of Apple producing its own vehicle, since they would have had to have started building assembly factories about six-to-eight years ago. I don't think Apple has any interest in producing and servicing "car parts," but I think they are developing a system of greater control over a vehicle that they will offer and license to other car makers.
    Absolutely no chance of that happening. No competing automaker in their right mind would cede system control to Apple. It would be like Bill Gates offering IBM an OS for their new IBM PC. That kind of dumb only happens once.

    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.
    fastasleeplollivercaladanianGeorgeBMac
  • Reply 20 of 48
    chasmchasm Posts: 3,414member
    JWSC said:
    Absolutely no chance of that happening. No competing automaker in their right mind would cede system control to Apple.

    So CarPlay (which completely takes over the infotainment system) doesn't exist. That's funny, it does in my vehicle ...


    Believe me I would love for Apple to take end-to-end control and produce a vehicle. But its clear that none of the commenters who imagine this have given any thought to what that actually takes. Have any of you been to a car assembly plant? Those take years to build, and years more to really get up to speed. Apple doesn't have any of those.

    If Apple's going to design "all the parts,"  or even just the new parts they may be inventing, they'll need other factories to make those parts. Apple doesn't have any of those either, and again that's a massive employment and building effort -- Foxconn isn't going to shift direction, let's put it that way.

     Tesla still struggles to make cars on a mass scale -- and they were founded 17 years ago! It's still difficult to find charging stations for Teslas in a lot of places, and even more difficult to find parts outside the dealership. That's why I don't think Apple is making a whole car -- but your comments have caused me to consider that Apple may already have a secret partner in this venture that is an already-established carmaker, and that would certainly cut down the time required to get to where Tesla is now. But as no details of that nature have really been established, you're still talking years from now.

    edited May 2020 JWSC
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