Apple is poised to enter the electric vehicle market, and Wedbush Securities analyst Dan Ives predicted that the iPhone maker will announce an electric vehicle strategic partnership potentially with Tesla, Volkswagen, or other auto manufacturers in China such as Nio and Xpeng, that lays the groundwork to enter the burgeoning EV space.
“We believe based on our investor conversations over the last few days that many on the Street would rather see Apple partner on the EV path, than start building its own vehicles or factories given the margin and financial model implications down the road, coupled with the strategic product risk around such a gargantuan endeavor,” Ives said.
The chances of strategic partnerships with the likes of Tesla, Volkswagen or other auto manufacturers in China such as Nio and Xpeng are more than 70% over the next few years, according to Ives’ prediction. That could lay the groundwork for Apple’s establishment of its own line of EV autos over the next decade if its EV and autonomous venture are successful with consumers.
“This is similar to our view of what Chinese tech stalwart Baidu ultimately embarks on in the form of strategic EV partnerships in China, as opposed to launching its own auto product line right out of the gates,” Ives said. “In a nutshell, this would only expand the massive total addressable market TAM for Apple over time to go aggressively after the EV market.”
According to a Reuters report, Apple is moving forward with self-driving car technology and is targeting 2024 to produce a passenger vehicle that could include its own breakthrough battery technology.
Apple officially entered the automotive space in 2013 and announced the “iOS in the Car” plan. The company launched its Titan Project in 2014 to create unmanned pure electric vehicles.
Apple’s founder Steve Jobs was ambitious about making cars. He once said that Apple is equipped to design a car, and in the near future, it will. He said that a car has a battery, a computer, an engine and a mechanical structure, and an iPhone has these things too.
Apple has also been expanding its talent pool over the past few years. Apple has tapped a large number of talents from Tesla. According to media reports, as of the end of 2019, Apple had hired 500 employees from Tesla. In addition, Apple also poached 170 employees from Foton Motor.
It wouldn’t be a surprise if Apple decided to collaborate with a Chinese automaker as China has become an increasingly significant battlefield for electric vehicles as Tesla ramps up its output here and its local rivals are striving domestically and beyond.