Apple has the means to disrupt the electric vehicle space, analyst says

Posted:
in General Discussion
Apple's portfolio of existing technologies could make its "Apple Car" a formidable competitor in the electric vehicle market, investment bank Cowen says.

Credit: AppleInsider
Credit: AppleInsider


In a note to investors seen by AppleInsider, Cowen analyst Krish Sankar says that the current EV market has evolved in a way that could offer new methods or opportunities for Apple to enter the space.

The company is already well-positioned to do so, Sankar believes. Apple has a strong product and intellectual property portfolio in several areas key to the autonomous and electric car market. That includes software, AI, navigation, energy storage, and cloud services.

Sankar says Apple's expertise is enabled by its silicon design capabilities; its software platforms; its data center operations; a proprietary mapping database; a library of media and entertainment services; and an ecosystem of existing mobile devices.

"Branding aside, we think these strengths make Apple a desirable partner for traditional automakers," Sankar said.

But there are a few automotive-related areas in which Apple has yet to show promise. Sankar points to autonomous driving software and the ability to manufacture devices larger than a computer at scale.

With Apple's strengths and weaknesses in mind, Sankar outlines a few paths the Cupertino firm could take to enter the electric vehicle market.

The company could partner with an established automaker that currently lacks EV or AI expertise. Until recently, Apple's car project was said to be focused on under-the-hood autonomous systems, rather than actual vehicle design.

It could also release an actual production vehicle by outsourcing manufacturing to a third-party company. Current rumors indicate that Apple is in talks with Hyundai about its EV ambitions.

The acquisition of an existing electric vehicle company could also offer a "sustainable market advantage," but Sankar says that this method would lack the capital to scale up manufacturing. In early 2020, Apple reportedly mulled an acquisition of California EV startup Canoo before talks fell apart.

"We believe each option entails tradeoffs between time to market, capital efficiency, operating margin profile across demand cycles, and the degree of control over design or manufacturing outcomes," Sankar writes.

In any case, the analyst predicts that a $1 million unit "Apple Car" shipment base could generate about $0.25 of incremental earnings-per-share (EPS). That's about a 6% accretion versus its 2022 EPS estimate.

If Apple were to get its operating margins high enough, it could hit a $0.50 or 11% accretion in EPS.

Sankar's 12-month AAPL price market remains unchanged at $133 per share. That's based on a 25x earnings multiple to Apple's core business, including iPhone and hardware, and a slightly lower 41x multiple on the recurring Services segment.

Comments

  • Reply 1 of 16
    dt17dt17 Posts: 18member
    Wish they will have pick Honda for their car partner..
    watto_cobra
  • Reply 2 of 16
    “Here’s my opinion. I’m an analyst!”
    mknelsonkingofsomewherehotlkruppwatto_cobrabyronl
  • Reply 3 of 16
    dt17 said:
    Wish they will have pick Honda for their car partner..
    Honda has picked GM for their EV partner.

    They appear to be planning an initial vehicle based on the Bolt (very similar shape/size to the Fit), then models based on the Ultium platform.

    The Honda e is pretty good, but not a basis for larger vehicles for the North American Market.

    As for Apple's partnership options: Hyundai/Kia's models are quite well reviewed.
    CloudTalkin
  • Reply 4 of 16
    “Here’s my opinion. I’m an analyst!”
    I believe that's their job description.  :D
    SpamSandwich
  • Reply 5 of 16
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier
    razorpitbeowulfschmidt
  • Reply 6 of 16
    kkqd1337 said:
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier

    As long as Apple goes with CCS for charging (especially in Europe) then it won't be that much of a problem given the rate at which chargers are being installed, at least here in Europe.
    If they go with an Apple-specific charging connector then their whole project is DOA from day 1.
  • Reply 7 of 16
    lkrupplkrupp Posts: 9,454member
    kkqd1337 said:
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier

    As long as Apple goes with CCS for charging (especially in Europe) then it won't be that much of a problem given the rate at which chargers are being installed, at least here in Europe.
    If they go with an Apple-specific charging connector then their whole project is DOA from day 1.
    Well, as for Europe, both cities and countries are not that far apart. In the U.S. you can drive hundreds of miles and not pass through another town. The shear scale of the United States dictates a different approach to charging.
  • Reply 8 of 16
    lkrupp said:
    kkqd1337 said:
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier

    As long as Apple goes with CCS for charging (especially in Europe) then it won't be that much of a problem given the rate at which chargers are being installed, at least here in Europe.
    If they go with an Apple-specific charging connector then their whole project is DOA from day 1.
    Well, as for Europe, both cities and countries are not that far apart. In the U.S. you can drive hundreds of miles and not pass through another town. The shear scale of the United States dictates a different approach to charging.
    I would have thought the most important thing was battery size if you are driving huge distances ?
    On the matter of scale: The EU's population is larger than the US, and land size is also larger. As far as charging goes it is down to location not size of the country, and more importanly how many people drive these roads with no gas stations or charging points on them? Probably not a very large number, alot of regulars and goods vehicles maybe ? 
    There will always be a small number of poeple who do big milage ( I used to do over 100,000 miles a year around Europe ) and for who range is the biggest problem. But if there is enough demand for a charging station in the middle on nowhere, one will be built. 

    The average drive is the most important distance, not the minority who do longer drives.  For example the average daily drive ( to work ) in the US is 29 miles and in the EU is 19 miles ( I search for it ). Even the smallest electric car could do that easily.
    Imagine how frustrating it would be if all the manufactures had differnet plugs?
    There will be ( if not already? ) a world standard for charging plugs just like USB. So going with a well know tried and tested plug would be common sense, can you imagine a dongle to convert from one to another?

    Anyway once batteries improve ( hopefully ) all these issues will go away.
  • Reply 9 of 16
    cg27cg27 Posts: 127member
    kkqd1337 said:
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier

    As long as Apple goes with CCS for charging (especially in Europe) then it won't be that much of a problem given the rate at which chargers are being installed, at least here in Europe.
    If they go with an Apple-specific charging connector then their whole project is DOA from day 1.
    Apple should indeed do CCS, plus MagSafe to aid robotic arms in aligning and connecting the charger so that one doesn’t have to remember to charge at night in their garage, or go through the chore of plugging and unplugging.  Obviously would need to be completely bullet/idiot/child proof given the high volts/amps.  
    byronl
  • Reply 10 of 16
    razorpitrazorpit Posts: 1,796member
    elmer said:
    lkrupp said:
    kkqd1337 said:
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier

    As long as Apple goes with CCS for charging (especially in Europe) then it won't be that much of a problem given the rate at which chargers are being installed, at least here in Europe.
    If they go with an Apple-specific charging connector then their whole project is DOA from day 1.
    Well, as for Europe, both cities and countries are not that far apart. In the U.S. you can drive hundreds of miles and not pass through another town. The shear scale of the United States dictates a different approach to charging.
    I would have thought the most important thing was battery size if you are driving huge distances ?
    On the matter of scale: The EU's population is larger than the US, and land size is also larger. As far as charging goes it is down to location not size of the country, and more importanly how many people drive these roads with no gas stations or charging points on them? Probably not a very large number, alot of regulars and goods vehicles maybe ? 
    There will always be a small number of poeple who do big milage ( I used to do over 100,000 miles a year around Europe ) and for who range is the biggest problem. But if there is enough demand for a charging station in the middle on nowhere, one will be built. 

    The average drive is the most important distance, not the minority who do longer drives.  For example the average daily drive ( to work ) in the US is 29 miles and in the EU is 19 miles ( I search for it ). Even the smallest electric car could do that easily.
    Imagine how frustrating it would be if all the manufactures had differnet plugs?
    There will be ( if not already? ) a world standard for charging plugs just like USB. So going with a well know tried and tested plug would be common sense, can you imagine a dongle to convert from one to another?

    Anyway once batteries improve ( hopefully ) all these issues will go away.
    According to Wikipedia the EU is 1.7 sq miles and the United States is 3.7. Not even close.

    Eu’s population is 445M and the US is 331M.

    I think that supports @lkrupp’s argument. “You can drive hundreds of miles and not pass through another town.”
    muthuk_vanalingam
  • Reply 11 of 16
    razorpit said:
    According to Wikipedia the EU is 1.7 sq miles and the United States is 3.7. Not even close.

    Eu’s population is 445M and the US is 331M.

    I think that supports @lkrupp’s argument. “You can drive hundreds of miles and not pass through another town.”
    Did you perhaps miss an exponent?  I'm thinking Europe is a little bigger than 1,000 acres...
    muthuk_vanalingamSpamSandwich
  • Reply 12 of 16
    kkqd1337 said:
    the key to unlock the EV market is public/widely available/on-street charging. 

    the cars are not the main problem or barrier

    As long as Apple goes with CCS for charging (especially in Europe) then it won't be that much of a problem given the rate at which chargers are being installed, at least here in Europe.
    If they go with an Apple-specific charging connector then their whole project is DOA from day 1.
    my point is, a new car wont disrupt the EV market.

    fyi i live in london

    i would by a Tesla, or in fact i can think of a couple of EVs i would buy tomorrow, but i dont have off street parking or a garage to charge it at home.
  • Reply 13 of 16
    wood1208wood1208 Posts: 2,542member
    Like Tesla, Apple will manufacture it's first EVs in USA in partnership with Hyundai/Kia than with Foxconn or someone to build in China.
  • Reply 14 of 16
    kkqd1337 said:
    my point is, a new car wont disrupt the EV market.

     “PC guys are not going to just figure this out. They’re not going to just walk in.”
    watto_cobralkrupp
  • Reply 15 of 16
    lkrupplkrupp Posts: 9,454member
    kkqd1337 said:
    my point is, a new car wont disrupt the EV market.

     “PC guys are not going to just figure this out. They’re not going to just walk in.”
    Famous last words of Blackberry. And tech blogger John C Dvorak begged Apple to cancel the iPhone before it destroyed the company’s reputation and brought it to ruin.
  • Reply 16 of 16
    crowleycrowley Posts: 8,720member
    lkrupp said:
    kkqd1337 said:
    my point is, a new car wont disrupt the EV market.

     “PC guys are not going to just figure this out. They’re not going to just walk in.”
    Famous last words of Blackberry.
    Palm actually.  And the words were said before the iPhone was even unveiled, when I think a bit of scepticism wasn't entirely unwarranted.  Everything looks obvious with hindsight .
    beowulfschmidtbyronl
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