Apple Inc. (AAPL) Can Take The Auto Industry By Storm By Outspending Its Competitors


What are the chances Apple Inc. (NASDAQ:AAPL) could succeed in the competitive car business? According to Morgan Stanley (NYSE:MS)’s auto analyst Adam Jonas, there is a strong chance Apple would wage a successful war in the auto industry. Apple hasn’t openly discussed its car business agenda, but there have been hints that the company is considering a plunge in car business.

If Apple chooses to enter the auto industry, it is highly likely the company would develop electric engines as opposed to fossil fuel propulsion systems. The reason electric cars would be attractive to Apple is that the company knows all too well that the future of automobile is in autonomous cars powered by green fuel.

Enough resources

The major barrier to entry in the auto industry is high capital need. However, that is not a major problem for Apple Inc. (NASDAQ:AAPL). The company’s cash stockpile is reported to be nearly $200 billion. Beyond that, the company’s quarterly profits of about $15 billion equal the quarterly R&D spending of all the world automakers combined. For that reason, Apple is well-positioned to outspend competitors in the auto industry if it chooses to plunge in the business.

Hints about Apple’s car agenda

Hints that Apple Inc. (NASDAQ:AAPL) could be going into car business have been given away by some lawsuits filed against the company. Earlier this year, A123 Systems filed a suit against Apple claiming the iPhone maker was poaching its battery engineers. A123 Systems is a maker of electric car batteries.

In addition to poaching car battery experts, Apple has also been said to be hiring automobile specialists from carmakers such as Mercedes-Benz and trying to lure employees from Tesla. Hiring of battery and auto experts point to a company with a car agenda, although it remains unclear at this juncture what Apple really want to do or achieve. Some have cited that the company could be developing some more advanced solutions for the auto industry without itself becoming a manufacturer.

According to Jonas, autonomous cars, which Apple Inc. (NASDAQ:AAPL) seems to be interested in, would accelerate ride-sharing practice.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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