Ahead of the Apple annual shareholder meeting scheduled for March 10, 2023 at 9am PT / 12pm ET, Deepwater Asset Management’s Gene Munster has taken an inventory of recent analyst and investor commentary. There are two things that Munster feels are missing. First, Apple’s strength of product demand and favorable economics despite the macro. Second, Apple’s wide diversity across product lines, sectors, geographies, and currencies, which affords investors the safety of a consumer staples company. Munster also has one question to ask management at the meeting: Will Apple Car see the light of day?
Gene Munster for Deepwater Asset Management:
Last December Bloomberg published a story detailing that Project Titan, Apple’s autonomous vehicle, will be delayed, again. The Bloomberg reporting — which I believe to be accurate — begs the question: Will the Apple Car see the light of day?
There are two reasons why I believe this is the biggest question investors should be asking. First, the concept of the car has fundamentally changed to be more computer-like. Tesla has proven the power of vertically-integrating software, hardware, and services in auto — a playbook that Apple wrote for devices.
Additionally, an Apple-made car will singlehandedly solve their growth challenge. In 2023, the company will hit $415B in revenue and, given the law of large numbers, revenue growth will hover in the mid-single digits if the company continues to pursue products targeted at its existing markets…
The auto market is massive enough to move up Apple’s growth rate. Each year, there are about 75m cars sold globally. Applying a global $32k average selling price (it’s about $46k in the US) suggests that the addressable market is about $2.5T. BMW and Mercedes each hold about 3% global delivery market share. If Apple were to capture 4% of vehicle sales (3m cars) at an average price of $50k per car, that would add $150B a year in revenue. Assuming Apple’s core business grows at 5% over the next 7 years and Apple sells 3m cars in 2030, Project Titan would add 27% to Apple’s overall business in 2030.
MacDailyNews Take: It would be silly for Apple not to take on the automotive market.
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Apple Car would be like Germany invading Russia in the winter. The electric car market is no where near the entire car market. The vast majority of car buyers want traditional internal combustion engines and have zero interest in buying an EV. So, we are nearing Peak EV which is only as big as its current small market share because of government mandates and rich liberals willing to pay an enormous premium to virtue signal. Apple would be entering a mature market that is going to get smaller as the rare earth minerals require to run these coal powered cars become prohibitively expensive and the human suffering of the “miners” becomes more well known. One more thing – where are almost all EVs currently made?
Apple has already wasted probably a trillion dollars on this and has nothing to show.
“Amazing. Every word of what you just said is wrong.”
Explain. The words and facts are all true.
The global electric vehicle market saw a 65% YoY growth in 2022 as EV sales climbed over 10.2 million units, .
EVs accounted for over 14% of the world’s passenger vehicle sales in 2022, compared to 9% in 2021.
Tesla market share was 12% in Q4 2022 according to our Passenger Electric Vehicle
Though Tesla remained the top-selling brand in the pure battery EV (BEV) segment.
EV sales are expected to reach nearly 17 million units by the end of 2023.
And that is from just one report and all the ones I could find show market share trending upwards.
All of the major car manufacturers are ramping up EV production and in most cases, commited to going completely electric. Audi, for example, in December said:
“Audi announces it will phase out all global production of vehicles powered by internal-combustion engines by 2033. The automaker says it only will launch new all-electric models from 2026 as part of its Vorsprung 2030 corporate strategy. It is preparing its global facilities for the production of all-electric cars.”
Parent company VW has said they will phase out internal combustion engines in Europe by 2035, with North America and the rest of the world later.
American manufacturers have made similar commitments with a major push to EVs.
So while it won’t happen overnight, like it or not the future is electric so your comment “The vast majority of car buyers want traditional internal combustion engines and have zero interest in buying an EV” is absolutely false. It’s price and range that are holding people back but the truth is, at least when it comes to range the current electric cars will work fine for the sort of driving most people do.
All so the people can drive coal powered cars.
Right. Manufacturers will spend billions developing coal fired cars. Great idea.
A “normie” who hasn’t woke up yet.
EVs are coal powered.
Ah, I see what you mean. Yes, that is true. However I read a study recently (I’ll link it later if I can find it again) that concluded that even in that case EVs are still better overall for the environment.
Anyway, my point simply was that there is demand for EVs. Where I live, Teslas are everywhere, and you see the others as well. Saw my first Rivian EV the other day. While I don’t have one yet. I have no doubt our next car will be electric.
Found it.
https://www.nature.com/articles/s41893-020-0488-7.epdf
@ kent: educate yourself.
https://www.eia.gov/energyexplained/electricity/electricity-in-the-us-generation-capacity-and-sales.php
The economics of coal today relegate its future use only in a small minority of regions and industries. Despite the short term war blip in Europe last year, global coal use is accelerating in its decline. Even your hated enemy China has finally turned the corner. Gas and renewables are the future, renewables being the strongest utility growth sector by far.
Then there is the health benefit, which shallow thinking will of course ignore. Equivalent fuel economy of EVs is double or triple the equivalent gasoline burner (which today primarily relies on imported fuel, as you know) so the air quality of car-choked cities full of trucks idling their engines at stoplights has the potential of getting clean again while oil trucks spewing highway pollution and oil spills become at thing of the past.
There are no downsides to embracing profitable and clean new technologies. Except you don’t want that, change is too hard for you. It’s hard to understand why you bother coming to an Apple website with such backward thinking. Apple may or may not ever put their name on the outside of an EV, but they’re not so stupid as to miss out being a player in the OS that will operate future vehicles, the next industrial wave for which the USA is ready to take back. Maybe you should remain silent instead of daily posting proof of your lack of thinking.
The Apple TV (that “we cracked”)…will it ever see the light of day? This question needs to be answered first, please.
Tesla is a generation ahead of legacy automakers in scaling production and technology, Apple isn’t even on the playing field yet. I hadn’t followed Tesla until I bought some stock at a discount recently, and even in terms of vertical integration Tesla is far ahead of Apple. They own, run and constantly improve the very factories themselves and ever-increasing proportions of all of the technology in their cars. Can you imagine Tim Cook ever pulling all-nighters at FoxCon to make things run like clockwork? I’m not a global warming acolyte but I could see a Tesla as my next car. I don’t want a noisy, failure-prone, traditional vehicle when I could have something very cool that has the most advanced self-driving tech and which I can “fill up” at home for less than the price of gas. Tesla will have a ~$25k model soon.
The EV market continues to expand and Apple could enter it, but for such a conservative organization that is very, very cautious about introducing new product categories, releasing a car would essentially be like creating a whole new company. Whatever of their own tech they could incorporate into the vehicle, the most important engineering at the heart of Teslas is totally different (there are of course other EVs but that’s the platinum standard, the Model Y was called a “work of art” by Toyota engineers after a recent tear-down). Check out Sandy Munro’s vids on YouTube for some great insights. The original Tesla roadster was released 15 years ago, we’ve been hearing about an Apple car for at least half that time.
Unfortunately the Tesla build quality is terrible. Cheap interior materials, ill fitting exterior panels and a Jony Ive inspired control minimalism focused around their ridiculously large centre screen and an over-reliance on touch screen controls for everything. Want to open the glove box? You have to find it hidden in a menu. I’m sure one day I’ll own an electric car but doubt it will be a Tesla.
Not as long as Tim Cook is at the helm. He has not innovated a damn thing since Steve Jobs passed away !!!
Uh huh. The Apple Watch and Apple Silicon have been utter failures under Tim Cook. So too has Apple Music, Apple TV+. Yeah, total failure.
I believe the Apple Watch and the move to Apple Silicon was developed and the brainchild under Steve before he died.
The development of these was not under Tim Cook.
But Tim Cook did execute these.
Tim Cook now has to move the ball forward to new products and whether he has skill is yet to be determined.
Based on what I’ve been reading, he was aware of both and of course he certainly he was involved in the development of the A4 chip which was Apple’s first in house designed processor back in the iPhone 4 days. But to claim that Tim Cook “has not innovated a damn thing” is a bit disingenuous. I think the current, and generally excellent, Apple lineup is proof of that.
“has not innovated a damn thing” is a bit disingenuous.
How big is a bit, ridiculous fanboy comment. Steve Jobs had more to do with forward planning and what Apple is releasing under Cook.
Creatively, he has not innovated a damn thing is 100% accurate.
Cook’s genius is making money hand over fist, at the expense of customers. For example removing valuable ports, lock downs of computers not allowing upgrades and third party upgrades, iPhones in a box about half the size of original, minus charging block and headphones.
When you take away products, slim products and packaging to save on shipping costs, obsolete products on shorter cycles, you make more money, period.
The only questionable compliment Woke Cook earned at Apple…
Apple put a new software setting on iPhone recently. Something like “Green Energy Virtuous Charging”. This new feature, which automatically was turned on without my doing so, reduced the charging of the watch to some strange trickle of electricity that Apple determined to be optimal for saving the planet. So, charging cycles instantly increase significantly, with no prior explanation to the user.
Now, if Apple comes out with a car it could do the same and make charging a car a daylong or weeklong process, depending how important saving the planet is on that given day. The feature could become an automatic feature that the user cannot opt out of, after all, how is the planet going to be saved if everybody jumps to the front of the line for energy even when the wind is not blowing and its dark outside. In this way, Apple could really lead the way to energy utopia, by slowly reducing all their AppleCar owners use of cars, which are obviously not good for the environment even as a green car. Apple could become the “nanny” who makes us all good global citizens and shows us how walking is better, while we wait another few days for the car to charge. It’s the least we can do to save the planet.