The Apple Car cometh (probably)

23 Sep 2015 | Author: | No comments yet »

Apple’s Car: If True, ‘One of the Most Important Moments in Transportation,’ Says Morgan Stanley.

Weighing in today on The Journal’s story yesterday that Apple’s (AAPL) going to ship its own car in 2019 are Morgan Stanley analysts Adam Jonas, who follows Tesla Motors (TSLA), and is one of the biggest bulls on its stock (he recently set a $465 price target, as my colleague Ben Levisohn noted), and Katy Huberty, the Morgan analyst who regularly follows Apple, and who is a bull on its stock.According to a report in the Wall Street Journal, leaders of the vehicle project, code-named Titan, were given permission to triple their 600-person staff as they work toward the goal. We believe the opportunity for tech firms to disrupt the auto industry is large enough to fundamentally and permanently change how investors view transportation… setting off a wholesale reassessment of end market sizing, growth, competitive dynamic, margin potential and valuation […] The addressable market for mobility is on the order of $10 trillion (10 trillion vehicle miles x $1/mile), more than 13% of global GDP. Look no further than the operating margins of the established auto makers: In the second quarter, Ford Motor posted an operating margin of 6.6%, according to FactSet.

The Journal reported that, despite hiring experts in driverless cars, the vehicle expected to be shipped in 2019 will not be autonomous and that Apple does not have immediate plans to create such a car. The authors suggest Apple might have ideas on the “non-productive” time that you spend behind the wheel — a collective 400 billion hours annually by all drivers: “What is the value of 400 billion hours a year? Technology writer Adrienne LaFrance explained in The Atlantic why it would make sense for Apple to introduce an electric car before an self-driving car, noting that easing into the market would allow Apple to test its operating systems while letting other companies fight what are sure to be bruising and protracted regulatory battles.

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