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Apple Looks All Set To Enter The Automotive Space

February 16, 2015 | About:

Cupertino, California-based technology giant Apple (AAPL) is about to pursue a new mission of making autonomous cars and rumors in the tech world are saying tons on this matter. Finally it looks like the tech king who revolutionized the music and the mobile world is about to diversify into building vehicles, something which is a huge challenge for the tech giant and which can change the outlook of investors and analysts who are eager to know about the new Apple offerings and in checking them out when they are released to the market. Let’s dive in and find out what is being echoed from the news sources, though Apple management are currently mumb on such a future plan.

It’s all in the grapevine being shared

On February 7, a senior auto industry expert shared the news that the tech king Apple was learning from auto companies how to make its own self-driven electric car. To date, we have heard about Google’s (GOOG) prototype of the self-driven car which was being tested in the U.S. Now with Apple trying to build its own electric car which could be self-driven, it’s obviously thinking of denting the reputation of Tesla (NASDAQ:TSLA) which has been a market leader in this segment.

Sources have confirmed that Apple is busy gathering advice on car production technology, laying chief focus on electric and connected cars while also studying the potential of autonomous driving. Perhaps by initiating the production of such a vehicle, Apple’s CEO, Tim Cook urges to leverage the brand name which is already taken to the costliest and the best brand in the tech world. And now this diversification will serve as a blessing in disguise though Apple will have to invest billions for establishment of factory outlet and for full-production of such a vehicle.

Apple looks interested in the evolution of cars, but nothing is still clear on whether Apple would incur all the costs required to build and release an EV in the market But surely its ambitions are large, and now it intends to raise a toast in the automotive industry.

The Wall Street Journal just confirmed a few days back that Apple looks all set to manufacture its first electric car and has thus set up a secret lab close to its headquarters where it’s going to complete the testing process. The Journal further noted that the secret project, dubbed the “Titan,” employs hundreds of people working a few miles away from Apple’s Cupertino headquarters.

A huge challenge to Tesla down the road

During the Detroit Auto Show, Tesla’s CEO Elon Musk encouraged automakers to accelerate their electric car programs as he emphasized on the growing need for sustainable transport in the long run in his speech. Even analysts at Exane BNP Paribas have stated that they foresee a $25 billion market for automated car technology within 2020 and have laid special emphasis on “car intelligence” which would become a differentiating factor when autonomous technology becomes the ultimate ruler by 2025 or 2030.

While Tesla’s CEO has hopefully pushed the other automakers to rethink on building electric cars, Apple looks to have revved up its plan for making its first debut electric vehicle. However, production of such a car would be a difficult exercise for Apple as it would need a proper setup in place first of all, which would mean incurring heavy capex in the first place. But as Apple’s financial playbook looks sound and the company has sufficient cash to invest in newer projects, it might be able to diversify into such a domain which is already crowded with several players. But whether it will be able to create a long-term effect and when it would be able to release such an electric car in the market is truly unclear at this juncture, as Apple is new to this segment.

Apple’s entry in the electric car segment might hurt Tesla’s EV hopes a bit, but the latter is smarter to survive in the industry where it has dominated to date. So, analysts are holding the opinion that Apple’s challenge to Tesla would not be worthwhile since by the time Apple releases the first electric car, Tesla’s Model 3 might as well already be in production and the latter might beat Apple easily in the EV price-war to emerge the winner.

Final word

With all information on Apple’s electric car making venture flying in the air, it remains to be seen when the management confirms such an event after which the analysts’ speculation on this matter will obviously peak. If Apple really enters into such new course of action, it will have to face tough competition and huge hurdles down the lane. But with its well-known tech expertise, it might be worth watching how Apple carves its niche in the EV segment if it jumps into such a diversification exercise.

About the author:

We are a group of analysts exploring and analyzing different domains of business and writing reviews based on information available in public domain web portals. We do not hold any stock or investment position in any of the companies that we write for.

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