Apple electric vehicles are coming. Can it dominate one of the world’s fastest-growing industries the way it’s dominated others?
Henry Ford didn’t invent the automobile. Rather, he took a machine that was merely the interest of curious hobbyists and made it available to everyday Americans.
Steve Jobs, the co-founder of Apple Inc. (AAPL), didn’t invent the personal computer. He simply took a machine that appealed to a specific niche and made it mainstream.
And ever since, Apple has proven again and again to be more curator than inventor. It takes an idea, refines and improves it, and creates a premium product that’s accessible to the average consumer.
Apple didn’t invent the first personal music player, tablet computer, or smartphone. But by using its tried and true recipe, it has succeeded in swallowing up significant shares of various markets, all while amassing a cult following and a massive cash hoard along the way.
Could electric vehicles (EVs) be its next big target?
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I wrote about this as far back as 2015 but Reuters recently reported that the autonomous Apple car may start production in 2024 and will feature “next level” battery technology. The news service cited someone “who has seen Apple’s battery design” as saying it could “radically” reduce battery costs and increase range.
The rumors swirling around the so-called “project Titan” stem in large part from three things: Apple’s hiring of several well-known auto experts and designers, a lawsuit with car battery company A123 Systems over poaching employees, and applications for autonomous vehicle testing in California.
The electric car’s adoption hasn’t been without a few speed bumps, however.
Despite significant federal and state tax incentives, concerns about range, price, and falling gas prices have hurt the electric car’s progress.
If Apple succeeds, it will dominate the auto industry of the future as Henry Ford dominated the early 20th century. Here are five reasons it has a chance.
5 Reasons to Be Bullish on Apple Electric Vehicles
1. The company has a longstanding culture of innovation. And with its recently acquired employees, it’s ready to capitalize on the rapidly advancing battery industry and manufacture the ultimate EV battery that will offer both relative affordability and unprecedented range. The Apple car will likely boast a wide array of technological advances, perhaps even the rumored autonomous driving capability.
2. Former Apple design folk hero Jony Ive is a well-known car enthusiast and has been rumored to frown upon the “tasteless” auto designs of Detroit. The Apple team may be able to apply his signature design principles to create a truly distinctive and premium product.
3. Apple is one of the most powerful brands in the world. Between its advertising power and horde of groupies, the company instantly garners immense media attention. Plus, an electric vehicle will likely operate seamlessly within the Apple ecosystem, adding to its appeal. And as the king of affordable luxury, Apple’s products are priced highly enough to make them premium, but not so high as to make them inaccessible to most Americans.
4. Perhaps most importantly, Apple could win the EV battle because of its enormous cash reserves. The tech giant could leverage its war chest to scale up in even the capital-intensive auto industry. And if it applied that cash hoard toward the EV industry, who’s to say it can be stopped?
5. The final reason why Apple may make the plunge is the overlap between the market for Apple products and electric cars, giving users one more opportunity to express their Apple brand loyalty.
Even better, since the car is likely to be self-driving, that opens up a whole new slate of opportunity for Apple to offer its products directly to drivers. Music, videos, movies, even games—drivers will be looking for new distractions while their cars take them wherever they want or need to go.
In short, electric vehicles are just one more reason to buy Apple stock.
Perhaps the biggest additional question and follow-up investment idea is to find out which auto company would be the most likely partner for Apple. I’m looking into this on behalf of my Cabot Global Stocks Explorer subscribers.
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