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Tesla’s First Real Competitor: Apple Car?
Apple, Tesla

Reuters recently reported that Apple aims to produce a passenger car by 2024, grounded in proprietary battery technology. While the timing of an Apple car or a software licensing approach for traditional automakers is hard to predict, we continue to believe it’s likely Apple has a business related to autonomous vehicles in the next decade.

This begs the question: What does it mean for Tesla and separately TSLA stock if Apple were to enter the car market? For starters, we’ve long viewed Apple as the biggest risk to shares of TSLA; however, long-term, Apple does not pose a fundamental threat to the company.

  • Potential impact to Tesla. We see little fundamental risk to Tesla if Apple were to release a car. EV’s today account for 3% of cars sold; in 5 years we expect the share of EVs to be closer to 30% of all auto sales. We believe in 5 years Tesla will hold around one third global EV market share, leaving two-thirds of the market up for grabs. The bigger impact of an Apple Car will be on traditional automakers.
  • Potential impact to TSLA shares. In the near-term, Apple Car will likely weigh on shares of TSLA as Tesla investors integrate a new risk factor into their investment thesis. Anticipation of an Apple-branded car will likely level off in the months ahead. Longer-term, the Apple topic will remain and likely have some negative impact on TSLA’s multiple in 2023 and beyond.

Apple TV, a cautionary tale

For years, we predicted Apple would launch an Apple-branded television. All of the markings were there. The TV experience was broken, an Apple-branded TV fit nicely within the company’s product road map, and Apple hired people from the TV panel industry to build a prototype. To cap it off, Steve Jobs even mentioned “an integrated television set… I finally cracked it.”

In the end, I was wrong. Apple never did a TV. As talk of Apple Car gains momentum, I’m reminded of a valuable lesson I learned the hard way: just because Apple is working on a product doesn’t mean it will see the light of day.


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