The so-called Apple car has been in the rumor mill for more than two years. Initial reports claimed the Cupertino company was building a full-fledged self-driving electric car. But most recent rumors suggest that Apple has scaled back its car project to focus on the autonomous driving technology. It means once the company has developed the self-driving technology, it can either partner with an existing car manufacturer or design the car in-house and outsource manufacturing.
About 22% respondents want an Apple car
It’s unclear if and when the Apple car would hit the roads. But a survey conducted by Baird Equity Research reveals that consumers are enthusiastic about an Apple-branded vehicle. More importantly, Apple has the financial clout to enter the automobile market. It ended the December quarter with a record $246 billion in cash and cash equivalents.
Baird analyst William Power asked 3,000 US consumers what new offerings they want from Apple in the next five years. As many as 21.6% of the respondents wanted Apple to develop a car. A Netflix-like streaming service was the second most desired offering (19.5%). They were followed by a virtual reality (VR) headset (16.1%), a wearable device with more advanced health features (16%), and an Amazon Echo-like smart home device (11.7%).
Apple unlikely to make big-ticket acquisitions
There have been speculations that Apple could buy Tesla, Netflix or even Disney. But William Power believes these acquisitions are unlikely. Baird has an Outperform rating on Apple stock with a $145 price objective. The analyst believes that instead of buying Netflix or Tesla, Apple would likely invest its huge cash reserves in strengthening its “Services” business.
Tesla, with a market value of about $40 billion, would barely add 4-5% to Apple’s 2017 revenues. Netflix with an even higher market cap of $62 billion is likely to add more than 5% to Apple’s revenue. Disney would be a huge acquisition that would create a “conglomerate as opposed to a company laser focused on a few key products.” However, there have been indications that Apple is working to expand its TV business by offering original programming.
Apple car is still years away
Some analysts believe that the Apple car may arrive in 2020 or 2021 at a price tag of $75,000. Though the actual product may be years away, concept designers have come up with a wide range of renderings imagining what the vehicle might look like. In November last year, Apple acknowledged in a letter to the National Highway Traffic Safety Administration (NHTSA) that it was investing heavily in a self-driving car. It has also registered many relevant domain names like Apple.auto and Apple.car.
Last year, the Cupertino company hired the technical director of Porsche’s race car program to work on its highly secretive Project Titan. Alexander Hitzinger, now at Apple, was previously involved in the development of Porsche’s 919 hybrid sports car.