Wedbush: Apple is playing the Apple Car dating game

Despite demurrals from Nissan and Hyundai, analyst Daniel Ives still expects Apple to choose a partner before the end of the year.

From a note to clients that landed on my desktop Monday:

With reports that EV talks with Nissan dissolved, we view this (along with the recent Hyundai news) all part of a detailed process while Apple picks its EV and autonomous partner.

We believe at this point it’s a matter of “when not if” Apple will enter the EV race over the next few years. While the timing of an EV partnership remains a key focus of the Street and EV industry over the coming months we assign a 85%+ chance that Apple will announce an EV partnership/collaboration over the next 3 to 6 months.

With US auto stalwarts GM and Ford announcing very aggressive EV endeavors over the past few weeks along with Jaguar today and a Biden-driven green tidal wave on the horizon, we believe now is the time for Apple to dive into the deep end of the pool on the EV front.

Clearly the undisputed heavyweight champion of EV today is Tesla as Musk & Co. continue to dominate the EV industry globally with China the “hearts and lungs” of the Tesla growth story.

Taking a step back, the EV industry is entering a golden age as we believe the broader consumer demand trends, innovative battery technology, regulatory EV incentives/tax credits around the globe, and sleeker/affordable models are creating a perfect storm of the demand for sector. To this point, demand is skyrocketing for EVs in the field as we believe overall that EVs, which make up 3% of global auto sales today, could reach 5% by the end of 2021 and 10% by 2025. With a market that could be $5 trillion+ over the next decade, if Apple gets just 5%-10% of share this could represent another major growth pillar within Cupertino.

Maintains Outperform rating and Street-high $175 price target. 

My take: Golden age? Perfect storm? Major pillar? Block those metaphors! (But thanks, Dan, for the Dating Game.)

10 Comments

  1. Michael Goldfeder said:
    Once again Apple appears to be poised at the right place at the right time with their entry into this market. This will continue to be an interesting year for Apple and its products making greater inroads than ever before.

    1
    February 15, 2021
  2. George Ewonus said:
    Steve Job’s 1983 Macintosh Software Dating game video with Bill Gates came to mind immediately! Substitute Tim for Steve and car manufacturers for Bill and there you have it, complete with music.

    1
    February 15, 2021
  3. Robert Paul Leitao said:
    The question, in my view, isn’t whether or not Apple will produce a car. The question is: Who will Apple choose to assist in disrupting hugely inefficient processes and deeply entrenched industrial interests in the manufacture, sales and distribution of cars? It’s no wonder incumbents in the space are quite cautious.

    3
    February 15, 2021
  4. Horace Dediu said:
    Tesla has 15% market share of electric cars. Dominance seems relative.

    2
    February 16, 2021
  5. James Dearborn said:
    Will an Apple developed SOC, tuned to the requirements of autonomous vehicles, give an Apple Car an advantage?

    1
    February 16, 2021
  6. If Nissan is out we can probably eliminate AvtoVAZ, another Renault Groupe subsidiary. They make the Lada, among other rides. GAZ and UAZ are likely out too, Putin drives too tough a bargain. The UAZ-469 is hardly a claim to manufacturing fame. My final guess is Magna Steyr. Honda/Acura would be fun, I suspect they might land the Service work.

    0
    February 16, 2021
    • David Emery said:
      It’s certainly possible that Apple could partner with a car company that has no current US presence. But that would mean instituting a lot of logistics chain, for parts and for dealership training, etc. Tesla shows that’s not a barrier, but it’s additional complications. (One could argue, of course, that having no existing infrastructure is also A Feature, since there’s no legacy chain to maintain.)

      (Where’s my Electric small pick-up?)

      0
      February 16, 2021
        • Bart Yee said:
          Valmet in Finland could contract manufacture for Apple as well. I’m quite sure they could consult / help Apple set up a new factory in the US if needed.

          If no current maker wants to partner, then Apple would be forced to invest in their own factory using someone to consult on design, and probably Foxconn to run it in the US. Whether Apple will go down that CapEx rabbit hole will be a big question mark and would any state woo them?

          0
          February 17, 2021
  7. Magna Intl has ~170,000 employees & plants all over the world. Based in Ontario, Canada. They’re the largest auto parts manufacturer in North America. Heavily invested in Austria but also China, their Magna Steyr division seems to have no issue with assembling advanced cars for any marque.
    I could not find out much about the Apple VW T6 van. The ‘first’ Apple car. In 2018 this whole Apple car story, with same marques, played out. Deja vu.

    1
    February 16, 2021

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