Why Apple Could Emerge As Tesla's 'First True Competitor'

Apple Inc's AAPL ambitions in the transportation space mean the iPhone maker could emerge as Tesla Inc’s TSLA “first true competitor,” Loup Ventures analyst Gene Munster said Monday.

Regardless of the approach the Tim Cook-led company takes, it has transportation industry ambitions that could result in “meaningful revenue” and pitch the tech giant head-on with Tesla, wrote Munster.

A Marriage Of Titans: “Apple building a car is not news,” the analyst noted — mentioning the company's self-driving car project, Project Titan, that started in 2014.

In that era, Munster says, the company had three avenues, “First, build an Apple-branded car. Second, build software and license it to other automakers. Third, acquire Tesla.”

The analyst dismissed all likely Project Titan outcomes, noting that the Apple-Tesla marriage, on the table five years ago, did not occur because both the firms felt strongly about design.

“While this combination would have been powerful, it unfortunately was a fairy tale,” the analyst wrote, referring to the never-materialized union.

A Car In The Works: This month, Munster had said that he only considers Apple as a potential competitor to the Elon Musk-led company. Munster’s latest musings on a potential Apple vehicle came after Reuters published a report that said Apple is working on a self-driving EV slated for release in 2024.

Apple's Wheelhouse: The analyst suggests that Apple will likely invest in building a car in the next decade as the Cupertino-based company has invested in mobility for the last seven years and the auto market is “at the cusp of a transformation.”

“This is Apple’s wheelhouse: find a big market that a competitor has already made progress in, enter the market a few years later, and revolutionize it,” theorized Munster.

Driving Forces: A factor that might drive the iPhone maker to manufacture cars is the size of the auto market, which is worth $2 trillion. Munster pointed to Apple’s $315 billion revenue as a means of gauging perspective.

Other factors that might drive Apple to autos is its emphasis on design and its knowledge of the anatomy of a car, as per the Loup Ventures analyst.

Potential Roadblocks:  An impediment against Apple's automotive foray include issues related to safety and the negative publicity related to fatalities as experienced in the past by both Tesla and Uber Technologies Inc UBER.

See Also: Apple Engineer Who Died In 2018 Tesla Crash Previously Complained Of Autopilot Malfunction

Munster also said his past experience with Apple-branded television has shown him that just because the tech giant is working on a product does not mean “it will see the light of day.”

Price Action: Apple shares traded almost 1.9% higher at $130.62 on Monday in the after-hours session after closing 1.24% higher at $128.23. On the same day, Tesla shares closed nearly 6.5% lower at $649.86.

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