Huge Catalyst for Apple Stock (and It’s Not the iPhone)
Apple Inc. (NASDAQ:AAPL) stock’s growth in the past several years relied mostly on surging “iPhone” sales. This time around, Apple stock might get a catalyst that’s even bigger than the iPhone.
I’m talking about “Project Titan,” which is the codename for Apple’s electric vehicle (EV) project. Although the company is yet to confirm it officially, Tesla Motors Inc (NASDAQ:TSLA) founder and CEO Elon Musk has said that Apple’s electric car project is an “open secret.” (Source: “Tesla’s Elon Musk Says Apple Electric Car is an ‘Open Secret’,” Fortune, January 12, 2016.)
Today, the EV market is dominated by Tesla, which shipped over 50,000 vehicles last year. The company has a huge fan base around the world. The only company that has a larger following and might have a chance at challenging the incumbent would be the iPhone maker.
Apple has made solid steps in its EV development. The company hired engineers from Fiat Chrysler Automobiles NV (NYSE:FCAU), NVIDIA Corporation (NASDAQ:NVDA), Tesla, and advanced battery-maker A123 Systems. Most recently, Apple hired Tesla’s former vice president of vehicle engineering, Chris Porritt, to work on “special projects.” (Source: “Exclusive: Apple Hires Former Tesla VP of Vehicle Engineering Chris Porritt for ‘Special [Car] Project’,” Electrek, April 19, 2016.)
Porritt has quite an impressive resume. Before his tenure at Tesla, he was the chief engineer of Aston Martin. He led the development of iconic cars including the “Aston Martin One-77,” the “V12 Zagato,” and the “DB9.”
Earlier this week, it was reported that Apple has a secret lab in Berlin, Germany. The lab is said to be dedicated to its electric car project and has between 15 and 20 people working in it. (Source: “Rumors Suggest the Apple Car Won’t Be Born in America,” Digital Trends, April 18, 2016.)
The report also suggests that Apple might be partnering with Magna Steyr, one of the largest contract automakers in the world. The Graz, Austria-based company is responsible for building some high-end vehicles, including the Mercedes-Benz “G-Class.”
Wherever it’s going to be built, the report points to a release date for Apple’s EV car between 2019 and 2020.
Also, it was previously rumored that Apple has filed permits to build an “auto work area” near Cupertino, has met with the California DMV, and even leased a super-secret testing facility. (Source: “What the Apple Car Might Do to the Car Industry,” Business Computing World, February 13, 2016.)
So, Apple’s electric car project is well underway. That being said, developing a car from scratch is going to be both time-consuming and capital-intensive. Musk got hold of Tesla back in 2004. Its first delivery didn’t happen until 2008. Tesla also had to deal with out-of-control burn rates and add another round of financing to avoid bankruptcy.
Still, Apple could be a legit contender in the EV business. Its first strength comes from its huge fan base. No matter where you live, if you go to your local Apple Store on the release date of its flagship iPhone, you’ll see long lines of people eager to get their hands on the company’s latest product. On Apple fan forums, people are already talking about how much they’d love to have an “iCar,” even though the company hasn’t even announced it.
And don’t forget that Apple has a huge amount of cash. While most of it is stored overseas, the company’s more than $200-billion cash pile means it doesn’t have to worry about liquidity issues when working on new projects such as Project Titan.
Last but certainly not least is Apple’s existing ecosystem. Many carmakers today offer smartphone apps to make their cars more connected. Apple might be able to take it one step further.
You see, Apple has a huge ecosystem of both hardware and software. An Apple car could be connected to your iPhone, “iPad,” “MacBook” or “iMac,” and even your “Apple Watch.” Moreover, since Apple uses its own operating system on all its devices, you should have no problem accessing your messages, music, and apps in your Apple car.
The Bottom Line on Apple Stock
Apple has been instrumental in reshaping the way we interact with technology. The “iPod” revolutionized the way we listen to music. The iPhone brought us to the smartphone era. Although Apple won’t be the first company to bring us electric cars, its huge fan base, giant cash pile, and technology expertise could guarantee success in its upcoming entrance into the EV market.
If you believe in the company’s upcoming car segment, you’ll want to consider getting onboard Apple stock before the company makes an official announcement.