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Is an AAPL-TSLA Showdown Brewing?

Apple announced it is getting into driverless cars, and a delicious AAPL-TSLA showdown is looming. But should Tesla investors actually be worried?

Thanks largely to its cutting-edge automotive technology, Tesla (TSLA) has become one of the hippest, most innovative companies in the eyes of investors. It’s a space that Apple (AAPL) occupied about five or six years ago. But with word that Apple may be getting into driverless cars, an epic AAPL-TSLA showdown could be in the works.

Artificial intelligence is one of the hottest buzz words on Wall Street these days, and driverless cars are at the forefront of that movement. Right now, Tesla is leading the charge. Last year, the electric carmaker declared that all its new cars would come equipped with self-driving capabilities such as cameras and ultrasonic sensors that can detect both hard and soft objects. Using a “supercomputer” created by red-hot chipmaker Nvidia (NVDA), Tesla reportedly has the most sophisticated driver assistance software on the market.

There’s plenty of competition in the driverless car space, including Google (GOOG). Now, Apple is apparently throwing its hat in the ring.

Is Apple a Threat to Tesla?

In an interview with Bloomberg this week, Apple CEO Tim Cook said his company is moving into “autonomous systems,” including driverless cars. Analysts at Morgan Stanley think Apple could pose a serious threat to Tesla’s stranglehold on the self-driving market in part because it has the resources to create its own car installed with its own platform, instead of outsourcing to a company like Nvidia.

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Recent signs suggest Cook is serious about going toe-to-toe with Tesla. In April, Apple received permission from the state of California to test driverless cars on certain public roads. Later in the month, Apple joined Tesla in asking the state to alter its autonomous-car policies. Clearly, Apple is laying the groundwork for a full-on move into self-driving cars—however that may look.

For Apple, the move makes sense. Investors and consumers alike have been grumbling for a few years now about Apple’s failure to come out with something truly new, aside from the latest iPhone. As Apple’s brand has become stale, AAPL stock has stagnated: though it has rallied nicely of late, it’s still up less than 12% in the last two-plus years. A self-driving car from Apple could finally give investors what they want, and create a whole new revenue stream for the company.

AAPL-TSLA Showdown Years Away

But that doesn’t mean Elon Musk should be shaking in his boots. Tesla already has the technology for driverless cars. Apple is trying theirs out. An AAPL-TSLA showdown is years down the road. Tesla’s more immediate competition will come from Google’s Waymo, which is already operational in Phoenix, Arizona, and General Motors (GM), which has the technology and something Google and Apple don’t have—actual experience making cars. To me, those companies are the more immediate threats to Tesla’s perch atop the fledgling self-driving car heap.

Apple’s passive-aggressive declaration of driverless-car war prompted a few Nervous Nellies to sell their Tesla shares on Thursday; the stock was down more than 3% in early trading. But I doubt the panic will last long. Not with the new Model 3 being unveiled next month and TSLA stock humming, up 72% year to date.

The looming AAPL-TSLA feud is great fodder for the tech blogs and the CNBC talking heads. But it’s not cause to go selling your Tesla shares just yet.

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Chris Preston is Cabot Wealth Network’s Vice President of Content and Chief Analyst of Cabot Stock of the Week and Cabot Value Investor .