CNBC has reported that Apple is in talks with Hyundai-Kia on a deal to partner on manufacturing a self-driving, electric vehicle.
[Update: Hyundai Motor Group confirmed several days after this post that talks with Apple has ceased.]
Last month, when I established the taGMan list of companies that will thrive in a future of electric and autonomous vehicles, I listed Apple as a key player in this future.
Why would Apple enter the electric vehicle and autonomous vehicle space?
The market is destined to be very large. In the CNBC article, Morgan Stanley analyst Katie Huberty, valued the global automotive and mobility business as a $10 trillion market.
Apple believes the technology to succeed in this market is core to the company’s future. In 2017 Tim Cook hinted that Apple was working on autonomous systems for driverless vehicles. He called the effort “the mother of all AI projects,” and described autonomous technology as “core technology” for the company.
Some of that “core technology” is already showing up in other Apple products. Today’s iPhone 12 Pro uses a lidar sensor to measure long range depth for the camera. Lidar is a key technology used for many autonomous driving applications.
The company even wrote a White Paper in 2019 describing its point of view on self-driving. “…we believe that automated driving systems (ADS) have the promise to greatly enhance the human experience in three key areas: improving road safety, increasing mobility, and realizing broader societal benefits.”
As the CNBC report established, Apple has poached several key Tesla engineering personnel, like two of Tesla’s former VPs of engineering.
The partnership with Hyundai-Kia is classic Apple business strategy. As CNBC reported, the company is interested in controlling the software and hardware that will go into the vehicle. This is similar to the production process for the iPhone and other Apple products. Apple does not manufacture iPhones. But the hardware and software are controlled by Apple.
From an Apple investor perspective, confirmation that the company will enter the TaaS space is great news. Katie Huberty described the total addressable market of the smartphone space as $500 billion. Apple has one-third of this market today. The company would only need to capture 2% of a $10 trillion TaaS market to equal the revenue it generates from its iPhone business. Thus, the scale of the TaaS business opportunity is too great to ignore for a company like Apple. This is why all of the taGMan companies are racing to be players in this future TaaS space.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.