Apple analysts question plans for low-margin self-driving vehicle
Dec. 22, 2020 8:26 AM ETApple Inc. (AAPL)AAPL, TSLABy: Brandy Betz, SA News Editor149 Comments
- Yesterday, Reuters reported that Apple (NASDAQ:AAPL) is planning a self-driving passenger vehicle that could enter production as soon as 2024.
- Morgan Stanley's Apple team sees "Project Titan (Apple Car) as a long term project where, similar to other markets like mobile and wearables, Apple can disrupt through vertical integration."
- The firm notes Apple's recent investments in five core in-house technologies that could help the vehicle efforts: processors, batteries, cameras, sensors, and displays.
- Morgan Stanley says Apple has the "key ingredients" for future success in the auto industry, which include access to capital, proven hardware design, top talent, and an established ecosystem.
- For Tesla (NASDAQ:TSLA), the firm has "long felt that tech players like Apple (working with manufacturing partners such as Foxconn) represent far more formidable competition than the established/legacy OEMs."
- The firm maintains Overweight ratings on Apple and Tesla.
- Evercore (Overweight on Apple) sees no reason for Apple to enter the low-margin, capital-rich auto production market but sees the tech giant as a natural partner for an automaker. The firm notes the lack of detail about Apple's battery but says a breakthrough could lower costs and push Apple Car into production.
- Citi is "very skeptical" that Apple will actually produce a car due to the low margins. The firm thinks Apple is more likely to push an operating system into the consumer and enterprise markets.
- Apple shares are up 2.8% pre-market to $131.83.
- Previously: Apple said to be pushing ahead on self-driving car in challenge to Tesla (Dec. 21 2020)