Apple Inc.: Apple Car Could Be “Show Piece” for Tim Cook

Apple stockMuch Hype About the Apple Car

There has been much talk about Apple Inc. (NASDAQ:AAPL) getting ready to launch a car. Given the Apple name trend, it is reasonable to expect such a car to sport the name “Apple Car,” or even the “Apple iCar.”

The Apple Car, codenamed “Project Titan” as rumors have it, would represent a major leap for the Cupertino company. But then again, the “iPhone” and “Apple Watch” were also gadgets that stretched the company’s focus away from traditional computers. The fact is that there is nothing traditional about Apple and the automobile bosses in Detroit aren’t taking any chances.

While the automobile industry is not the kind that any company would enter lightly, consider Tesla Motors Inc. (NASDAQ:TSLA). Yes, its valuation is stratospheric. Indeed, it’s so “out there” that it’s far beyond unrealistic. And the company hasn’t even turned in a spec of profit. The Apple Car would leverage the same aspects that have propelled Tesla, which has woken up Detroit, Tokyo, and Stuttgart to the importance of “greenwashing” cars to appeal to wealthy environmentalists with more money than sense and more smugness than Donald Trump. Therefore, the Apple Car has an “iMarket” ready to pounce on whatever it churns out.

The Apple Car Will Be a Show Piece

However, an Apple Car would also serve as the platform to show off everything that Apple can do. Google has developed an advanced driverless technology. Facebook has a drone that delivers Internet connectivity, the “Aquila.” has drones that are ready to deliver anything from toilet paper to gold watches—even together. Apple needs something big to promote its image and innovative strength, an invaluable display of strength in the modern technology–obsessed world to sustain Apple stock’s price and its weight among Silicon Valley peers.

But Apple does not need to take on the kind of risk that Tesla has chosen, starting up a new car company and all in this modern day and age. Fiat Chrysler Automobiles NV’s (NYSE:FCAU) CEO, who has been looking for partners to build a driverless car and has chosen Google in the process, knows a thing or two about the costs of launching a new car. He believes, with sound reason, that Apple will enter the “car wars” without actually building a car. In other words, according to Victor Marchionne, the Apple Car will be like the “iPhone”—created by Apple but put together by a different company.

If the Apple Car Flops, Apple Stock Could Collapse

There’s too much at stake to build a car itself. It is crucial for the iPhone maker to get this right because Apple stock could crash if its venture into the automobile business fails. Conversely, if the company gets it right, Apple stock could reach unprecedented altitudes. (Source: “Ferrari boss thinks Cupertino will outsource Apple Car,” Apple Act, October 21, 2015.) So, a more traditional manufacturer, say like GM or Ford, might build the Apple Car for the company, vastly reducing Apple’s risk—just as Foxconn makes Apple’s iPhones.

Still, Apple does not appear to be in a rush about making Apple Cars. (Source: “Apple’s electric car might not hit the streets until 2021,” Engadget, July 21, 2016.) One thing is certain, though: a project as big as a car cannot remain secret for long.

Some reports from 2015 suggested that Apple has been working to give Tesla a hard time and that hundreds of employees are already working on Project Titan. (Source: “Here’s everything we know about Project Titan, Apple’s rumoured electric car,” Business Insider, February 16, 2015.)

And the Apple Car rumors are becoming ever more frequent. They are not loud enough yet to reveal a clear-cut answer to the question of whether or not there will be an Apple Car, though. The international media has recently suggested that Apple may be working on the project in Germany, the United Kingdom, or California (Source: “Apple poaches top British Tesla engineer for ‘secret’ electric car project,” The Telegraph, April 19, 2016.)

The Bottom Line on the Apple Car

The bottom line on the Apple Car is that, rumors or not, this is something requiring a much bigger investment than Apple’s usual gadgets. If an iPhone stops working, it’s inconvenient. If something goes wrong on the Apple Car, presumably loaded with special features, it could kill.

The responsibilities and risks are on an altogether different scale. The idea of outsourcing an eventual Apple Car concept to a proven manufacturer, as FCA boss Marchionne suggests, makes the most sense for Apple Inc. and Apple stock shareholders.

Image source: Flickr; Image copyright 2015, LPY974