Apple is a disruptor. The company completely reinvented personal computers, smartphones, the music business, and more. If the company’s past achievements are any indicator, an Apple car would tremendously disruptive for the auto industry.
The reason Apple will likely enter the car business is simple, according to J.P. Morgan’s Apple analyst, Samik Chatterjee: It’s a huge market. New cars top more $2 trillion in sales around the globe annually. Apple, he says, will likely stick to higher-end vehicles, so the iCar’s addressable market would be equal to roughly one-third of the total vehicle market.
An Apple partnership would undoubtedly be a boon for whomever the tech giant selects. In the broker’s Monday report, J.P. Morgan’s Korea auto analyst SM Kim highlighted Hyundai Motor as a potential iCar partner… Investors should also remember that the auto supply chain is a lengthy one, and Apple represents another large customer that will need to buy parts. That could benefit both Korean and global auto suppliers, according to J.P. Morgan.
In the end, J.P. Morgan suggests that Apple will be as disruptive in the car business as it was in the phone business years ago. Chatterjee says Apple will target operating profit margins of about 15% on car sales and higher than that on ancillary software and services.
MacDailyNews Note: J.P. Morgan believes it will be awhile before Apple Car disrupts the auto industry as Apple won’t offer cars until full self-driving technology is mature, which could take another five to 10 years.