Apple Car Idea Is Not Totally Bizarre: Bernstein

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Apple Car Idea Is Not Totally Bizarre: Bernstein
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The auto industry around the world felt threatened by the speculations that Apple is considering to enter the car manufacturing space. It was reported that it will start producing the Apple Car by 2020.

According to Bernstein analysts, the idea of an Apple car is not totally bizarre, but the threat to the auto industry is still years away because the tech giant needs to overcome a number of technical barriers.

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Apple aims domination when entering a category

In a note to investors, Bernstein analysts said, “The idea of an Apple iCar is not totally outlandish.” The analysts noted that Apple normally aims “domination” when it enters a business category.

According to them, “A huge number of technical barriers will need to be overcome, and a series of revolutionary developments will need to align simultaneously—notably competitive electric power trains and autonomous driving” in order for Apple to become feasible in the auto industry.

“The timing of such industry transformation still seems a long way off,” said Bernstein analysts. They made their conclusion after evaluating Apple’s financial power, design and engineering resources, likely strategic considerations and the auto industry’s financial & competitive dynamics.

Apple may be in concept design stage

Bernstein analysts suggested that it is becoming clear that Apple is assessing the auto industry based on press reports, but its depth of commitment to entering the business remain uncertain. However, the analysts believe that the tech giant may be already at the concept design stage of building an Apple Car.

The analysts noted that it was easy to dismiss the idea of an Apple Car as farfetched since automakers highlight the car manufacturing complexities, but they emphasized that the reports about Apple’s interest were credible. According to them, investors should take the tech giant’s interest in the auto industry seriously even if the probability of its entry is still low.

Apple Car will like be all electric and autonomous

Bernstein analysts believed that the Apple Car will likely all electric and autonomous based on their understanding of the tech giant’s approach to product development.

In addition, they assumed that Apple will likely introduce a limited variety to allow simplicity in manufacturing and distribution. It is expected to offer unique and compelling consumer experience, and will target a premium price for the Apple Car.

The analysts noted that Apple has a record of “feature absolutism.” They explained that the company “tends to push the technology envelope in the spirit of innovation, and decides to remove older technology options to remove complexity.”

In addition, the analysts emphasized that Apple has the substantial cash to make its entry in the auto industry affordable. They pointed out that its $740 billion market capitalization is significantly larger than BMW’s $80 billion, GM’s $62 billion and Tesla’s $25 billion.

According to them, if Apple will assemble a team of experts similar to Tesla (around 400 people working on Apple Car with a salary of $250,000 each), its expenses will be small—around $100 million. That is 0.05% of its revenues and 0.15% of operating income.

Furthermore, the analysts suggested that Apple may manufacture the Apple Car similar to its other products. They think the tech giant will establish partnerships with manufacturers to build the vehicle.

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Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.
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