Apple has the means to disrupt the electric vehicle space, analyst says
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
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.
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
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.
the cars are not the main problem or barrier
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.
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.”
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.