Road to Apple's electric car future may be long and winding, analysts say

The Cupertino-based iPhone maker is said to be targeting a 2024 launch

Apple is aiming to build electric cars for the customers’ personal use, competing with the likes of Tesla, Audi and General Motors. Getty

Apple's plans to develop an electric car could take longer to spark into life than the company is anticipating, but the consumer electronics giant could acquire niche technology firms to speed up its arrival, analysts said.

Reports emerged last week that Apple, one of the world's most valuable companies, is planning to produce its first electric vehicle by 2024.

"Apple car specifications have yet to be finalised … it won't be surprising if the vehicle's launch timeframe is pushed out to 2028 or later," Neil Campling, co-head of Mirabaud Securities' Global Thematic Group, told The National.

“There is a lot of uncertainty about the suppliers, specifications and also around Apple's own competitiveness in the EV and self-driving market … even if development starts this year and goes as per the plan, it would take years to get all the requirements in place,” he added.

Apple secretly began its automated and electric vehicles development – known as Project Titan – in 2014. The company has yet to publicly discuss any of its automobile goals, but nearly 5,000 engineers and scientists were reported to be working on the project as of 2018.

"There were rumours that Apple was working on a car a few years ago ... rumours are circulating again, it probably means that they have achieved some breakthrough. That's good news and points in the direction that the car is something that has been actively worked on," Abbas Ali, managing editor of TechRadar Middle East, told The National.

The Covid-19 pandemic has increased the focus on making the car industry greener. With Tesla joining the S&P 500 index this month, some industry analysts say EVs are set to dominate the global auto market. President-elect Joe Biden’s triumph in the US elections and China announcing plans to boost the sector bode well for the industry, as does the European Union's roll out of a new Sustainable and Smart Mobility Strategy that envisages 30 million zero energy cars on its roads by 2030.

The EV share of global car sales is forecast to rise to 2.5 per cent by 2020, from 1 per cent in 2017, according to Bank of America Merrill Lynch, which predicts that EVs will constitute 90 per cent of sales by 2050.

Apple’s modus operandi  suggests it will acquire small technology players to help accelerate its EV development but the core of its platform is likely to be “home-grown”, analysts said.

“It won’t be a surprise if they [Apple] have already acquired some companies to speed up the manufacturing process … but it’s anybody’s guess when they will actually have something to show,” said Mr Ali.

Ming-Chi Kuo, an analyst at Hong Kong’s TF International Securities, believes the market is “too bullish” on the Apple car, indicating that its rollout could take until 2028 or later.

“We believe that the current so-called Apple car concept stocks are only speculations by the market and do not involve actual Apple car suppliers,” Mr Kuo, who keenly follows Apple, wrote in a research note to clients.

“We also think that because EV/self-driving car technical specs are still evolving, it is too early to talk about the final specs of the Apple car,” he added. He also said Apple may already be too far behind in artificial intelligence to launch a competitive self-driving car.

“We are very sceptical that Apple will actually produce a car, as auto sector profitability is much lower,” Citi analyst Jim Suva wrote in a note last week.

Apple is facing stiff competition in the electric car market not only from dedicated EV maker Tesla but also from automotive giants like Audi, BMW, Volkswagen and General Motors.

Germany's Volkswagen plans to roll out 22 million EVs within 10 years and almost 70 new electric models by 2028.

BMW this week said it is aiming for 20 per cent of its vehicles to be electric by 2023.

Other tech giants, such as Amazon and Google owner Alphabet, are also backing autonomous-electric initiatives but are more focused on mass transport.

Alphabet's Waymo is operating a commercial self-driving taxi service, whereas Amazon-backed Zoox is working to create an autonomous ride-hailing fleet. Industry analysts said Amazon could also use automated cars to deliver goods to customers.

Tesla, which is aiming to sell 500,000 EVs in 2020 – a 36 per cent increase from last year, may have acted as the “poster child of EV technology but is likely to remain a niche player” in the industry, analysts said.

Often the first mover in a market is not the eventual winner, Mr Campling said.

“We have seen this before in other technologies, such as Kodak cameras, Blackberry smartphones, Excite and Lycos for web search and Netscape web browsers,” he added.

In the past couple of years, Apple has hired key executives from Tesla to propel its autonomous and electric vehicle initiatives.

Doug Field, who worked with Apple between 2011 and 2013 before moving to Tesla, returned in 2018 as vice president of special projects. Steve MacManus, another Tesla veteran, joined Apple as a senior director in July 2019.

Earlier this month, Bloomberg reported that Apple shifted the leadership of its self-driving car project to John Giannandrea, its senior vice president of machine learning and artificial intelligence strategy.

EVs will be a “completely different territory” and “not at a big enough” market for Apple, Naeem Aslam, chief market analyst at brokerage Avatrade, said.

"On average, a person travels 30 miles a day in a car whereas a person uses a phone for over four hours in a day. The phone industry is huge for Apple to continue to innovate and be on the forefront," Mr Aslam told The National.

"To some extent, diversification could be very successful but margins [in the auto industry] are not that great.”

Mr Aslam believes Apple is more likely to partner with an established EV company than develop its own vehicle.

“It’s likely that it will partner with a company such as BMW or Tesla and create market dominance by merging operations. A second option will be outright buying a company leading on the EV front.”