Katy Huberty takes the new Apple Car story very seriously

But she frames her analysis as a question: ‘From 0 to 60 by 2025?’

From a note to Morgan Stanley clients that landed on my desktop Friday:

Importantly, this is the first press report to include a broad number of data points sourced to Apple insiders and provides enough reported detail to potentially lend credibility to the idea that Apple’s Car launch could both accelerate adoption of new technology (EV + AV) and expand the addressable market similar to past Apple product launches. (We note that the report is unconfirmed and Apple has not commented.) We see the prospects of Apple Car – representing the clearest path to doubling Apple’s revenue and market cap – catalyzing a shift in investor narrative back toward the attractiveness of the platform (1 billion loyal customers) and long-term, sustainable growth. Below we highlight reasons investors should pay attention to Apple Car.

Huberty delivers five points — essentially five set pieces that draw on Apple’s history of market disruption — excerpted below:

First, history suggests Apple isn’t first to market. We can provide a number of examples from the last 20 years that show while Apple may not always be first to market, its innovation engine, differentiation via vertical integration, and manufacturing/operational excellence have allowed it to leapfrog first movers.

Second, Apple is likely to accelerate consumer adoption of AVs, as it did for smartphones, tablets and wearables. Evidence shows that when Apple enters new markets, it serves as a catalyst to expand the addressable market beyond what was previously imagined.

Third, success at Apple comes in the form of vertical integration. Vertical integration lies at the heart of all of Apple’s most successful products, and for good reason – with vertically integrated products Apple controls the entire technology stack, which allows for a unique and higher quality consumer experience.

Fourth, scale and supply chain execution are also important differentiators. Apple has immense scale and wide-ranging global supply chain relationships that give it a differentiated manufacturing footprint with which to produce a Car.

Fifth, the ultimate monetization opportunity is Services. Just 4% market share of the $10T global mobility market would double Apple’s current revenue base. Consumers spend an average of 1 hour driving each day. If that time shifted to engaging with mobile applications, it implies as much as a 25% increase in Services engagement for an Apple user that also owns Apple Car, all else equal.

My take: Wedbush’s Daniel Ives also released a quick take. The money quote:

We continue to believe its a matter of when, not if, Apple enters the EV race and this will add another $30+ per share of TAM to the Apple growth story over the next few years given the golden age of EV transformation on the horizon.

See also: Mark Gurman: Here’s why Apple’s stock popped Thursday

20 Comments

  1. Miguel Ancira said:
    wow…if Katy is already thinking about doubling the market cap, these are exciting times

    3
    November 19, 2021
  2. Jerry Doyle said:
    Retail investors have driven up stock prices of Rivian Automotive, Lucid, Tesla, Fisker, Inc., Volcon, Inc., XPeng, along with such legacy car companies moving into the EV space as Ford, GM, etc. It is difficult for me to believe that the same enthusiasm for investing in these companies driving up their respective stock prices isn’t aligned similarly with Apple resulting in higher share price value in the coming weeks and months. If investors begin to believe that Apple can do to the EV market what Apple did to the smartphone market, then we could see a disproportionate investor effect on the Apple stock price going forward as we have seen with Tesla’s prospects for future marketable growth. Just sayin’…..

    3
    November 19, 2021
  3. Robert Paul Leitao said:
    What conspicuous advancements will Apple deliver to an already crowded EV space? Apple has often allowed future competitors to do the public “beta testing” on their proverbial dime before entering a product market. What features, functionality and “value added” to the consumer will Apple deliver? In other words, what’s the “gaping hole” in the EV market that current makers are unable to fill?

    1
    November 19, 2021
    • Dan Scropos said:
      Safety. When an automobile has an inability to stop a drunk driver, someone from running 100+ mph from the law, stop a vehicle when a medical issue occurs, or any one of another countless scenarios, there is room for disruption.

      5
      November 19, 2021
      • Fred Stein said:
        Yes, Dan, yes a thousand times.

        Ads must be unhackable, Apple’s area of excellence.

        0
        November 19, 2021
      • Gregg Thurman said:
        stop a drunk driver, someone from running 100+ mph from the law,

        These two alone would save thousands of lives and dramatically reduce medical emergencies ($$$s) each year in just the US. That kind of impact would also greatly reduce insurance costs.

        0
        November 19, 2021
        • Dan Scropos said:
          Exactly, Gregg. What about parental controls for teens? Vehicle cannot go over 60 mph (or whatever the parental preset is), parents get an alert for erratic driving, and alerts for an unauthorized driver while the teen has the car. Just a few more examples.

          Apple will slay this industry with software disruption.

          0
          November 19, 2021
    • Bill Haymaker said:
      Driverless operation is the obvious one but facial recognition and Touch ID would likely put an end to the carjacking craze currently being suffered by the Twin Cities.

      2
      November 19, 2021
  4. Fred Stein said:
    WSJ today, Ford and GM to make their own chips; Qualcomm stepping up big time; Intel and NVIDIA sell their chips to car makers.

    All of the above are amateurs compared to Apple, full stack consumer products company.

    Regardless of when and if, Apple can provide the cheapest and safest AV technology. The rest is commodity stuff in an industry rife with redundancy. One can find dozens of nearly similar versions in every category from sub compact to luxury SUV.

    0
    November 19, 2021
  5. Roger Schutte said:
    Foxconn (Apple’s main manufacturer who will be closing on the Lordstown factory in Ohio in early 2022) showed three models of EVs last month (Model C – a 5-2 person SUV, Model 3 – a midsize sedan designed by Pininfarina, and Model T – a 40 passenger bus). If Foxconn proves they didn’t bite off more than they can chew and do get the Lordstown Endurance pickup up and running at that plant in Q3 2022 and gets Fisker’s second EV going thereafter, then it’s not too much of a stretch to see any one or all of Foxconn’s own designs used as bases for anything Apple designs or drops their ADAS (advanced driver assistance systems) software into. Or not.

    2
    November 19, 2021
  6. Kathy Corby said:
    Betteridge’s law of headlines is an adage that states: “Any headline that ends in a question mark can be answered by the word no.” — Wikipedia

    2
    November 20, 2021
  7. Kathy Corby said:
    But on a more serious note, I believe the reason that analysts and the investor community in general are taking this information seriously has to do with the source. Mark Gurman has been a thorn in Apple‘s side for nearly a decade I believe, because of the uncanny accuracy of his reporting. Whether his information comes from a highly placed and extremely discreet informant in the company, or whether it is actually leaked by Apple, it is nearly always prophetically true.

    2
    November 20, 2021

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