Why This Apple Analyst Thinks Future Of CarPlay Is In Payments

Zinger Key Points
  • Mobile commerce will be a new future CarPlay feature
  • Integration of payments removes some friction around gas purchases
  • New-gen CarPlay shifts in-car experience from the hands of the carmaker over to Apple

Apple, Inc. AAPL announced at its Worldwide Developers Conference in June an improved version of its CarPlay. An analyst at Loup Funds is of the view the future of CarPlay is in payments.

Mobile Commerce Is Future Feature: Mobile commerce is likely to be a future feature on CarPlay's roadmap, analyst Gene Munster said in a note. The new user interface, the analyst said, will allow developers to add payments into CarPlay for purchasing fuel at gas stations.

Explaining how this would help Apple earn money, the analyst noted that the current App Store terms of service allow the company a 15-30% take rate for in-app purchases of digital goods. Physical goods are monetized through Apple Pay, which has a take rate of less than 0.5%, he noted.

In the future, Apple could integrate P97 Networks, a cloud-based platform that enables mobile payments at gas pumps, to its CarPlay, Munster said. When a user drives to an eligible gas station and types the pump number into his/her phone, the pump is activated, the analyst noted.
With this, one can avoid swiping a credit card and entering a zip code, the analyst said. Another added advantage is the loyalty benefits, including savings on gas prices, he added.

"It remains to be seen whether these benefits are material, but it is clear that the integration of payments inside the car would remove some friction around purchasing gas," Munster said.

Related Link: A Forgettable First-Half: Here's How Apple And Other FAANGs Performed Amid Market Turbulence

Automakers Ready to Cede Control to Apple: CarPlay, introduced in 2014, has gradually gained traction, with consumers demanding the feature and consequently the number of compatible cars increasing, Munster noted. By 2018, more than 75% of cars in the U.S. began offering CarPlay, with the use cases mainly being music and navigation, the analyst said.

The company then went about establishing a simple and easy connection between the phone and the car, Munster said. In 2020, CarPlay began to allow OEMs to optimize the experience with customization of the display and color palette, he added.

"With the next generation of CarPlay, Apple will fully control the dashboard, essentially tripling its in-car real estate," Munster said.

The new UI, the analyst noted, will allow Apple to control and monitor root functions of the car such as speed, engine temp, windows, blind-spot monitoring, HVAC, tire pressure, etc.

"Gaining control of these root functions is notable because it effectively shifts the in-car experience from the hands of the carmaker over to Apple," the analyst said.

Apple closed Friday's session up 0.47% at $147.04, according to Benzinga Pro data.

Market News and Data brought to you by Benzinga APIs
Price Target
Posted In: Analyst ColorAnalyst RatingsTechGene MunsterLoup Funds
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!