Deepwater Asset Management managing partner Gene Munster on Tuesday expressed shock and disappointment that tech giant Apple Inc AAPL killed its project focused on developing an electric car.
What Happened: “I’m shocked. This ends almost a decade of investment into finding a way into a massive addressable market,” Munster wrote on X, formerly Twitter. He mused that the project would have added about $250 billion to Apple’s revenue in a year even if it had captured just 10% of the auto market and increased its overall business by 60%.
Munster was more positive than many investors who thought the Apple Car would never materialize. “I was wrong on the Apple Car, and even more wrong on the Apple Television (killed in 2017),” Munster added that an Apple Car would have been epic.
However, Munster also noted the possible upsides of the decision, such as increasing the tech company’s urgency to do something in generative AI. He said it would likely be in the form of personalized AI, capitalizing on Apple’s existing knowledge of privacy and security.
Why It Matters: Munster believes Apple’s decision to pull back on a car is a positive for EV giant Tesla Inc given that he has long believed the two players will compete against one another in the U.S. in the long term.
Bloomberg reported on Tuesday that many of the Apple employees working on developing the electric vehicle will now move to the company's generative AI division. Layoffs are still expected, but it’s unclear how many workers will be released.
The report said that Apple finalized the decision internally among top executives in recent weeks following continued pressure from the company’s board. Apple was spending hundreds of millions of dollars a year on R&D for the project. Given the recent strategy adjustments to speed up time to market, some of the company’s top executives were concerned about the car’s profit margin potential, it added.
Price Action: Apple shares closed up 0.8% at $182.63 on Tuesday, according to data from Benzinga Pro.
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