3 Ways Apple Can Enter The Auto Industry

Apple Inc. AAPL could be working behind the scenes to develop its first automobile. This might sound unlikely, but that's probably what people thought about Apple and cell phones before the iPhone was unveiled.

"If you look at Tesla in particular, Tesla and Apple trade a lot of employees," Rob Enderle, principal analyst at Enderle Group, told Benzinga. "That means there's a lot of commonality between the two companies."

Tesla's stores and delivery models are also in line with the Apple strategy, but are commonalities enough for Apple to make a move?

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"They've emulated a lot of what Apple does as best as possible to create a very different and much better car experience," Enderle added. "They also enjoy the highest customer loyalty of any car manufacturer, much like Apple enjoys the highest customer loyalty of any consumer electronics manufacturer. That makes the two companies very similar even though they're in different industries."

Enderle listed three ways Apple could enter the auto industry:

1. Follow The Leader

"Tesla showcased that Apple could be very successful in cars without having to enter the market yet," said Enderle. "They showcased that the model works very well here, at least on the luxury car side. I'm not convinced that Apple could do an economy car."

On the luxury car side, Enderle believes that Tesla has "demonstrated that not only can they provide a similar overall experience, but [potentially] generate similar margins."

"And Apple needs to expand," he continued. "[Apple CEO] Tim Cook has been outspoken on his belief that a company doesn't have to have slowing profits and slowing revenue growth as it grows. It can expand into adjacent or other markets using its successful model to basically take over the world."

Best of all, Tesla Motors Inc TSLA CEO has paved the way for Apple's entry.

"Basically, the test has been done on Elon Musk's nickel," said Enderle. "Apple doesn't have to do a lot of the test work themselves because, effectively, Tesla is a tested scale. This makes this segment much more attractive than others because in other segments, you don't have this test."

2. Merge Or Partner With Tesla

Apple didn't enter the premium headphone space on its own -- it acquired Beats and bought into the industry's leading player. It also picked up a music service in the process, but the accompanying licensing deals might be just what Apple needs to launch a top-tier streaming service. Apple could tackle the auto industry in a similar fashion.

"They could either buy in or partner in," said Enderle. "There's certainly the possibility that they could merge with Tesla."

Enderle said that there are some "real advantages" to that particular step, mainly because Tesla is already a prominent luxury car manufacturer.

"Elon Musk is managing a lot of companies," Enderle explained. "He needs a lot of help with management, and that's Tim Cook's area of expertise. Musk is much more like [Steve] Jobs in terms of being creative and out there. The partnership between Cook and Musk, if it could be worked out, would probably be the most interesting."

Apple also has numerous financial advantages not enjoyed by Tesla or anyone else.

"Tesla was able to do this reasonably quickly with a lot less money," Enderle added. "Apple's got massive reserves. They [could afford to] buy one of the European automakers. They can do a number of things that Tesla didn't have the option to do because they didn't have the money."

3. Go The Cheap Route And Buy Fisker

Finally, Enderle said that there are "other moves that Apple could make that would get them into the market very quickly."

One such move would be to acquire Fisker Automotive from its new owner, Wanxiang Group. Though it seems even less likely than the Beats acquisition (which did come true), Fisker would be much cheaper than Tesla.

"[Wanxiang] picked up Fisker for pennies," said Enderle. "I'm sure they'd sell it for 100 or 200 percent profit, and it would still be really cheap."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.