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Why Apple Could Emerge As Tesla's 'First True Competitor'

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Why Apple Could Emerge As Tesla's 'First True Competitor'

Apple Inc's (NASDAQ: AAPL) ambitions in the transportation space mean the iPhone maker could emerge as Tesla Inc’s (NASDAQ: TSLA) “first true competitor,” Loup Ventures analyst Gene Munster said Monday.

Regardless of the approach the Tim Cook-led company takes, it has transportation industry ambitions that could result in “meaningful revenue” and pitch the tech giant head-on with Tesla, wrote Munster.

A Marriage Of Titans: “Apple building a car is not news,” the analyst noted — mentioning the company's self-driving car project, Project Titan, that started in 2014.

In that era, Munster says, the company had three avenues, “First, build an Apple-branded car. Second, build software and license it to other automakers. Third, acquire Tesla.”

The analyst dismissed all likely Project Titan outcomes, noting that the Apple-Tesla marriage, on the table five years ago, did not occur because both the firms felt strongly about design.

“While this combination would have been powerful, it unfortunately was a fairy tale,” the analyst wrote, referring to the never-materialized union.

A Car In The Works: This month, Munster had said that he only considers Apple as a potential competitor to the Elon Musk-led company. Munster’s latest musings on a potential Apple vehicle came after Reuters published a report that said Apple is working on a self-driving EV slated for release in 2024.

Apple's Wheelhouse: The analyst suggests that Apple will likely invest in building a car in the next decade as the Cupertino-based company has invested in mobility for the last seven years and the auto market is “at the cusp of a transformation.”

“This is Apple’s wheelhouse: find a big market that a competitor has already made progress in, enter the market a few years later, and revolutionize it,” theorized Munster.

Driving Forces: A factor that might drive the iPhone maker to manufacture cars is the size of the auto market, which is worth $2 trillion. Munster pointed to Apple’s $315 billion revenue as a means of gauging perspective.

Other factors that might drive Apple to autos is its emphasis on design and its knowledge of the anatomy of a car, as per the Loup Ventures analyst.

Potential Roadblocks:  An impediment against Apple's automotive foray include issues related to safety and the negative publicity related to fatalities as experienced in the past by both Tesla and Uber Technologies Inc (NYSE: UBER).

See Also: Apple Engineer Who Died In 2018 Tesla Crash Previously Complained Of Autopilot Malfunction

Munster also said his past experience with Apple-branded television has shown him that just because the tech giant is working on a product does not mean “it will see the light of day.”

Price Action: Apple shares traded almost 1.9% higher at $130.62 on Monday in the after-hours session after closing 1.24% higher at $128.23. On the same day, Tesla shares closed nearly 6.5% lower at $649.86.

Click here to check out Benzinga’s EV Hub for the latest electric vehicles news. 

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