Apple vs. Tesla: Can the world's most valuable company compete against Elon Musk?

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• Apple (NASDAQ:AAPL) Chief Executive Officer Tim Cook once called cars “the mother of all AI projects,” and confirmed in 2017 that the tech giant was focused on autonomous systems for vehicles.
• But as the company gets closer to launching its own automobile, perhaps as soon as 2025 according to some analysts, others are questioning whether Apple (AAPL) can compete with the 800-pound gorilla in the electric car space: Tesla (NASDAQ:TSLA), and it's high-profile boss, Elon Musk.
• In a note to investors, Morgan Stanley analysts Adam Jonas, who covers Tesla (TSLA), and Katy Huberty, who covers Apple (AAPL), wonder whether the world's most valuable company can achieve second-mover advantage in electric vehicles, as it has done so successfully in MP3 players, tablets and most notably, smartphones.
• The analysts believe that the number of human hours spent inside cars will surge over time, rising from more than 600 billion today to 750 billion by 2030, and nearly 1.2 trillion by 2040. Given that Apple (AAPL) reportedly has aspirations to reach what some have called the "holy grail" of EVs, with no human intervention and full self-driving capabilities, that time spent is a considerable amount of time to do nothing, leading the analysts to believe it could open up the opportunity for the "mobile metaverse."
• "Full autonomy is critical to unlocking the potential of a mobile Apple Store, aka, the Mobile Metaverse," the analysts wrote in the note.
• The analysts asked a number of questions that, as of now, do not seem to have easy answers, including how Apple (AAPL) is capable of "moving the needle," given its size and recently hitting a $3 trillion valuation.
• Additionally, does Tesla (TSLA) see Apple as its most formidable competitor in EVs, or is it another company like Toyota (NYSE:TM), Volkswagen or even General Motors (NYSE:GM)? Given Musk's comments about Apple in the past, including calling them the "Tesla graveyard" several years ago, it could be an indication that Musk views the team in Cupertino, Calif. as its biggest threat.
• Although Tesla (TSLA) and Apple (AAPL) do not compete in the same industries yet, it's quite possible there is more overlap to come, especially as Apple continues to work on a vehicle, the analysts note. As such, it remains to be seen if there is anything that Tesla (TSLA) can or will do to delay Apple's (AAPL) entry into the mobility market, which they view as a "multi-trillion dollar" opportunity.
• As the number of hours people spend inside cars is expected to more than double by 2040, the possibility that Tesla (TSLA) could launch its own media studio or a "cyber phone" to capture some of that downtime is not out of the realm of possibilities, the analysts noted.
• In November, Jonas said that Apple (AAPL) entering the electric vehicle market would be the "ultimate bear case" for a number of companies, including GM, Fisker (NYSE:FSR), Ferrari (NYSE:RACE) and others.
• That said, Jonas doesn't believe that Apple (AAPL) will bring a car to the market in the traditional sense, as it's a possibility that the vehicle could lack a steering wheel or pedals to help make it a shared car and not one someone owns.
• Apple (AAPL) has advantages over Tesla (TSLA) in content, virtual and augmented reality and having its products all work together in a "seamless ecosystem," the analysts said. Conversely, Tesla's advantages are in energy storage, manufacturing and robotics autonomy. How these skills play out and which company is able to come out ahead in the mobile metaverse, assuming Apple (AAPL) does in fact release a car, remains to be seen.
• The analysts concede that many of the questions they poised do not have answers just yet and it's almost certain that more questions will come, given that an Apple Car is not expected to be released at least until 2025, if not longer, even if the tech giant has made technological breakthroughs tied to the vehicle in recent months.
• Nonetheless, they note that the Apple (AAPL) versus Tesla (TSLA) and other auto manufacturer story is "far bigger" than just the auto industry itself "and may represent one of the largest creations and transfers of value across industries witnessed in over a century."
• Loop Capital recently raised its price target on Apple (AAPL) to $210, tying a Wall Street high, on near-term iPhone strength.

Comments

[Up and Away]

Well, Tesla fell today but Apple needs to get sliced and diced also. Very high PE compared to all others. MFST, AMZN & GOOGL have all taken a hit so should Apple and then maybe the markets will stabilize. Of course, China could target Taiwan again and it will definitely topple and all those hiding out will get killed.

[CR Spencer]

@Up and Away I have my own views of China vs Taiwan which I've not seen mentioned anywhere else. I think China may not care about Taiwan nearly as much as others do. The biggest lesson that those in power learn is that secrecy and deception are very useful. It's easier to take something when no one is watching or they are watching something else. This is how magicians work of course. So if we are worried about Taiwan then we're not worrying so much about somewhere else.

Hopefully Ukraine will serve as a lesson to all nations that overpowering other countries can be very expensive. You would think that both Russia and the US would realize this after their many expensive losses but the temptation for a large country to just do what it want's is strong.

[Up and Away]

@CR Spencer
Sounds like some of our major companies who deflect with how privacy is so important.
Do you think Russia or China care about this? USA, Yes

[CR Spencer]

@Up and Away I'm sure that the Chinese government is trying hard to stay in control using the latest in computer technology. I'm sure though that their systems aren't foolproof. Corruption is everywhere and the corrupt don't care where they get their money or power from. The all powerful Chinese government is really a necessary illusion and it built on a whole lot of sand. Their real estate investment system would even amaze Ponzi. We may feel that the truth is illusory here but I would guess we have no idea how bad it is there. Nothing based on lies can be too solid.

[EBIX EBUCKS]

Can Tesla compete against the world's most valuable company?

[CR Spencer]

@Blunder Boy It seems unlikely to me that any of the largest companies would bet the farm or a big part of it trying to outcompete any newly established industry leader on their own ground. Apple and Tesla both came up with new products that made them superpowers. Nibbling at the edges of an empire is different of course and is to be expected. There are a lot of inefficient industries that are ripe for takeover though. I would guess all of us have different empires that we would love to see crumble.

[User 47360129]

@CR Spencer 5 car models that only represent less than 2 % of the auto market does not a superpower make. People need phones more than cars so comparing the 2 companies doesn’t match up. Tesla is more like the google pixel, a good top notch model but only a small share of the business. And google is an actual tech company that makes hardware, not a manufacturer with a small amount of tech like Tesla

[CR Spencer]

@Matty48 I dispute all of your 'facts'. The reign of internal combustion is clearly ending. That means that 90% of those cars sold last year will likely be discontinued in less than 8 years. In the US; one of the 3 leading car markets, Tesla built 75% of the EVs sold. WIth 2 new factories coming on line, Tesla is poised to double it's production rate this year. Every new battery electric car is being compared to Tesla's offerings because Tesla is the clear leader with their 3rd generation EV models whose profit margins exceed all others. Tesla also leads the industry as only it's cars have online updates, worldwide production in all 3 major markets, and their own fully functional charging network in all those markets.

In addition to being the largest consumer of lithium batteries by volume, Tesla researches and builds their own. They also build a larger proportion of their cars major parts by cost than other manufacturers and have signed contracts for more battery grade lithium than all the others.

More phones are purchased than cars but the price of phones goes up to a bit higher than a thousand dollars and the price of cars goes up to over a hundred times that. People do replace their phones more often but not one hundred times more often. I would hazard a guess that one quarter as many people buy cars and they keep them for twice as long but buying those cars consumes 40 times more of their income. Tesla products are the fastest growing major ones in the whole automotive market. There are of course some companies who made 10 BEVs in 2020 and 40 in 2021 but no others near the scale and value of what Tesla has.

[Up and Away]

This is a different market since this article was written. Some investors would rather hold a stock with a dividend while other want appreciation from growth in time like this. Me? I just hold both and will wait tumultuous times out like I have for the past 50 years and I am still doing well. GL to everyone.

[Elon beat me with jumper cables]

Omg, this is it. Thanks for just about calling the top. Comparing Apple to Tesla, ha!

[Hudson Investments]

Both AAPL and TSLA is where I am placing my investment $$$.

[Robert S Dot]

Let‘s face it, smartphones are for the girls.

[Buffetts Disciple]

Clickbait "article"

[wakawaka]

Apple will destroy Tesla like ot destroyed blackberry

[Actionable Conclusion]

@wakawaka

Right line of thinking but not entirely correct...

Apple destroyed Blackberry, Nokia and Motorola...

As Tesla is in the early innings of destroying GM, TM, and BMW.

PS. Apple was by far my largest holding from 2010 to 2020. Rotated out of the king disrupter (Apple) of last decade, and into the king disrupter (Tesla) of this decade. Now Tesla is by far my largest holding.

[Ev star]

@wakawaka
Tesla will destroy Apple! Apple goes for EVs because the smartphone and tablet market is becoming Asian dominated. But it will come to EVs 20 years late, and not like smartphones that came in 1st...

[nate311]

@Actionable Conclusion apple valued at high end of fair range...tesla ridiculously valued on metrics highly likely to eventually be rationally "de-ballooned". buffett: "A pin lies in wait for every bubble. When the two eventually meet, a new wave of investors learn some very old lessons: First, many in Wall Street -- a community in which quality control is not prized -- will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest".

[shelan1]

Long NIO and AAPL.

[Jeff_Canada]

Just own both…I do. 🚙🍎

[Titiss]

Easy, Apple just has to make money. Tesla has never done that.

[Jolinar_cz]

@Titiss
Tesla does it now every quarter

[katieliu76]

LOL is this a joke? TSLA has been building the best cars on the market and collecting data for their AI rollout for DECADES. No way AAPL catches up so quickly. Just ask Sandy Munro...

[flumeride]

@katieliu76 “Decades…. That’s a stretch. I’ma fan of Tesla but they have only been in production since around 2008 and the first for years with only the Roadster. So is said Tesla has been collecting data for a decade.

[SimonR2]

@katieliu76 'Best cars' That's pretty subjective, but note they have one of the shortest lead times in Europe for EV's, customers are prepared to wait longer for other brands such as BMW or VW so that market clearly doesn't agree that Tesla is the best.
They clearly haven't been collecting data for decades, and even if they have, the data is of no value unless it's used/useable of which there is currently no evidence.
Ask a Tesla shareholder...hmmm.....and of course Sandy hasn't seen AAPLs offering yet anyway.

[Josh.Gotcha]

well, seemingly they do try to get into each other's backyard, i.e the rumored Apple Car and Tesla PI phone. If I have to pick 1 out of the 2, I will go for Apple (given the adverse macro encironment), otherwise I will happily bet on both.

[doubleE]

@Josh.Gotcha

There is no such thing as a Tesla phone in the works

[Josh.Gotcha]

@doubleE ok... you know this how? care to share more?

[Yuan Thomas]

@Josh.Gotcha there will be no phones in the future, just like $2,500 telsa will be replaced by RoboTaxi. Phones as you know it now will be replaced by Neuralink Implant.

[flumeride]

First … the premise of Apple vs Tesla is just fantasy. Apparently a fantasy created by 2 analysts at Morgan Stanley. I’m sure Morgan Stanley did this to create hype.

Second … This is not an article, it is list of bullets based on what these analysts have said. I guess the author took the bait.

The idea of Apple creating, building, and selling cars is just vapor wear. The automobile industry is something that doesn’t fit Apple. Creating software for smartcars fits Apple better.

If Apple were to bring a car to market in 2025 they would be late to game. There will be too much competition from not only Tesla, but from Ford, VW and others.

For Apple to offer just one model while the competition has multiple offerings is not going to take over the world. Unlike smartphones automobile market is much more diverse. You have sedans, vans, pickups, and semi’s. It is not a one size fits all market. Apple can not come in and be a game changer. Tesla has already become the game charger in the auto industry.

Yes Apple has a great ecosystem. They should offer that ecosystem though existing auto companies. Let the auto companies deal with all the low margin stuff.

To think Apple is going to come out with a car that has no steering wheel and no pedals … that is preposterous.

[NowRetired2021]

@flumeride “The idea of Apple creating, building, and selling cars is just vapor wear. The automobile industry is something that doesn’t fit Apple. Creating software for smartcars fits Apple better.”

At one time people would have said: The idea of Apple creating, building, and selling phones is just vapor wear. The telecommunications industry is something that doesn’t fit Apple. Creating software for smartphones fits Apple better.

That being said I do agree that it is preposterous to think that Apple will bring out a car with no steering wheel and no pedals.

[EV_supporter]

@flumeride

The right approach Apple should have taken was to invest and own 25% of Tesla shares. They missed the boat twice. They had so much cash, amazing mistake.

[flumeride]

@NowRetired2021 Actually Steve Jobs vision from the beginning was a small portable computer that was useful to the everyday consumer. It’s just that the technology want available in 1980. So when he came back to Apple it wasn’t a huge jump of faith after Blackberry demonstrated the we had the technology to manufacture a smartphone.

The jump from computers and phones and watches to an electric car is much larger in many ways. For example a desktop, laptop, or smartphone can be manufactured at the same facility or similar facilities. There is no way a car will be manufactured in the facility as an iPhone.

[Illuminati Investments]

$AAPL buys $TSLA and can charge even more for their products, plus Elon Musk becomes Tweeter in Chief and drives the combined market cap to $10T...

[Hank890]

@Illuminati Investments
Nonsense.

[jsberg]

Apple Maps

[Illuminati Investments]

@jsberg You think they'll use those for autonomous driving? Yikes!

[timeinthemarket]

just load up on AAPL & TSLA and get rich in 10-20 years

[EV_supporter]

@timeinthemarket

This is a great strategy. I think about where I will spend my money in the next 10-20 years. My investment money goes into that company now.

My future purchase: Tesla Model S plaid, quad motor Cybertruck, Model X plaid, Tesla solar and powerwall, Tesla bots... Apple iPhone, AirTag, Mac...

My Tesla position is way larger than my Apple position.

[Hank890]

@Blackboxtrader1

AARK is dumping it.

[aarc]

These are the benchmarks:

- Apple = most profitable company;
- Tesla = fastest growing company.

- AAPL long-term (23 yrs): www.tradingview.com/...

- TSLA long-term (10 yrs): www.tradingview.com/...
- TSLA performances: www.tradingview.com/...

AAPL used to be a small company in late 1990s that almost went bk'ed, with revenue growth rate went up massively after inventing the iPad to compete against Sony's Walkman. And since it became a mid-cap already after inventing the iPhone to compete against Nokia, revenue growth rate was no longer better than before. As it became a mega-cap chances for revenue growth rate is to slow down further, with the prestigious iPhone, AAPL became the most profitable company in terms of earnings. When it comes to net profits, there are ways to improve via operational efficiencies and also ways profits could implode at any time due to exogenous factors.

TSLA used to be a small company back in early 2010s and revenue growth rate, and like the unprofitable AMZN and NFLX during early years/decades, rallied massively as it cash burned lots of $Billions to disrupt entrenched giant car manufacturers and succeeded to become a big-cap company; at $1Trillion market cap it is already a mega-cap like Apple and Amazon but is still growing it's revenue at better than 50% per year for now, including 75% growth rate on earnings the past few years.

The difference is that TSLA's total addressable market (TAM) is still HUGE Tesla need not invent any new products in order to keep growing revenues/earnings very fast, while Apple's TAM is practically saturated already with smartphones and hence has to invent new products in order to grow it's revenue faster.

When it comes to Autonomous Vehicles (AV) Software there are dozens of competing companies and nobody could possibly predict which one will be the first to succeed and which one will eventually be the winner over the long run hence is is still highly speculative comparable to gambling with lotto or roulette for that matter. For the Robo-Taxis of the future, obviously TSLA has an indomitable edge over AAPL for the moment but no guarantee be the winner into the far future.

----------------

Apple is a prestigious blue-chip company and a value (dividend stock) member of the Dow Jones Industrial for several years already; while it could take several years for the most recently popular Tesla to become very profitable (and with dividends) before being accepted as a blue-chip company, if ever.

Assuming AAPL remains the leader in earnings and TSLA for revenue growth; history shows growth trumps value over the long run. But over the longer run value could trump growth using DRIP if the %dividend is big enough.

- the Grand 1-2-3-4-5 Rally: drive.google.com/...

- DJ Historical Performances: www.tradingview.com/...
- SnP500: www.tradingview.com/...
- Nasdaq: www.tradingview.com/...

- Commodities (oil, gold, etc.): www.tradingview.com/...

From say 1974 to 2000 = 26 years secular rally, Nasdaq won hands down vs. Dow Jones. But with DRIP and from 1974 to 2016 = 42 years including 2000 to 2009 = 9 years of secular correction in between, Dow Jones eventually won based on total returns (TR). SnP500 is a hybrid of growth + value stocks. Crude oil and gold don't have dividends but the miners such as XOM and GOLD issued distributions (dividends) for decades and are considered value investments for retirement.

- DJ = 1,930% cap gains; 4,370% TR with DRIP, from 1974-2000 = 26 years;
- Nas = 9,200 cap gains with nil to zero% dividends ... ditto.

- DJ = 11,500% TR with DRIP from 1974 to 2016 high = 42 years;
- Spx = 10,700% TR with DRIP ... ditto.
- Nas = 9,600% TR, ditto with nil to zero% dividends;

- Gold = 4,300% TR from 1968 low to 2011 high = 43 years, w/ zero% divs.

However since secular bull runs for DJ, post WW-II, were only 23 years and 26 years from 1942 to 1965 and 1974 to 2000 respectively; practically all stocks suffered during the secular corrections of 1965-1974 = 9 years and 2000-2009 = 9 years. Hence, probability wise, value stock Apple will not be able to catch up against growth stock Tesla in terms of TR in the next 10 years or so assuming history will repeat or at least rhymes with the past and another Lost Decade or worst another Four (4) Lost Decades happens again starting early to mid-1930s.

,

That's it folks, assuming back-to-back catastrophic exogenous events never happen in the next 10 years or so; and all things remain equal so to speak, my big bet based on statistical probability is with TSLA based on historical performances of Growth vs. Value. And I intend to cash out at least 1/3 of portfolio at or near the $69,000 nominal target of the Grand 1-2-3-4-5 Rally of the venerable Dow Jones. I already discussed the grand rally @ previous aarc Comments.

- Bitcoin long-term: s3.tradingview.com/...
- AMD long-term: s3.tradingview.com/...

I bottomed fish AAPL in Oct2011 during the EU Debt Crisis and became a very successful investment, then bottomed fish TSLA in Apr/Oct2018 and became much more profitable investment thus far. GBTC bottomed fish in Nov2018 is my most profitable based on CAGRs followed by AMD bottomed fish in Feb2016.

Based on long-term EWA, I expect AAPL to slowly keep ramping up for several years since it has just completed a sideways super-cycle correction the past several years; while TSLA has to start another 4+ years of sideways cyclical correction soon depending on how far the 3-rd wave rally lasts, then again rally massively toward early to mid-2030s for the 5-th wave; Bitcoin has a nominal target of $140K and should start another catastrophic correction of 80+% soon within this year or next; while the fast growing and becoming very profitable AMD still got a very long runway for several years before undergoing at least a few decades of secular correction with the 3-rd wave up having a nominal target of $228 before a limited 14 months or so of sideways correction to happen for the 4-th wave also most likely starting this year or next year before ramping up toward $800 nominal target for overall 1-2-3-4-5 super-cycle rally on the long-term monthly chart.

Remember, rallies are exponential hence don't be surprised by the seemingly big (linear) price differential from 1-st to 3-rd to the 5-th waves.

Cheers and Good Luck.

[kan2905]

@aarc you should write an article. Much better than most rants that some authors put on here

[Dodgers19]

I believe Seeking Alpha responses should be like a woman's dress. Long enough to cover the subject, yet short enough to be interesting.

[Booban]

@aarc Just tell me the next one you bottom fish in please.

[Dodgers19]

I think Musk is a more dynamic visionary than Cook. That said, just because their market caps are so high doesn't mean they are or will be competitors. I think there's a much better chance of Tesla diversifying into the cloud/software/hardware space than Apple having success in the EV/car space.

[User 47360129]

@Dodgers19 yes, but they re already getting unsecured cars hacked so there will be problems with that

[EV_supporter]

@Matty48

Pay attention to details so you can tell what is FUD what is truth.

Focus on what's important and thank me later.

This is from someone who weathered through all the dramas with Tesla in the last decade.

[User 47360129]

@Blackboxtrader1 “Pay attention to details so you can tell what is FUD what is truth.
Focus on what's important and thank me later.”

I don’t know what details your talking about? You just make a blanket statement like only you have the facts. All I mentioned was something that happened in the news, nothing more or less, and you can say it wasn’t a big deal, but it shows there will be hiccups along the way that need to be addressed. When the WSJ reported about Theranos, they tried to bury it and claim it was all about the “haters” but the facts couldn’t be twisted anymore.

I’m sure you’ve weathered many dramas about Tesla over the years but right now your peddling fomo which is your right, but maybe some people can’t afford to gamble their hard earned money. They ridiculed the guy who said the emperor had no clothes either. See how the weather holds up in the future

[nicholas__t01]

I'd prefer to see Apple create the software and integrate it and sell it to auto manufacturers. Even this may be a stretch.