Certain media outlets have reported that Apple is actively engaging in the R&D of the Apple Car and aiming to release a fully autonomous EV by 2025. Citi indicates that Apple’s potential outsourcing of Apple Car production may drive its market cap above US$3 trillion and as a result benefit 11 other companies.
Citi claims that, by 2025, the EV hardware market will surpass the combined total markets of smartphones, PCs, tablets, and wearables. Citi believes that Apple may either outsource the production of the Apple Car or focus on developing its iOS-based automotive ecosystem named CarPlay. The two activities are expected to increase Apple’s annual revenue by about 10-15% YoY, though the latter is the likelier of the two.
Citi indicates that the CAGR at which EV sales grow will increase from 25% in 2020 to 35% in 2030. In addition, by 2025, the global TAM of EV hardware will reach a revenue of over US$800 billion.
Citi expects that Apple will mass produce one million Apple Cars per year. Although conventional ICE vehicles and EVs differ in their method of production, Apple is extremely well-versed at outsourcing its mass production needs, with iPhone being the perfect case in point.
Apple has placed several conditions on potential partners for manufacturing the Apple Car. Citi believes that a prerequisite for becoming a manufacturing partner is the possession a strong supply network for batteries, display panels, and semiconductors. Hence, the US and Mexico will be the likeliest locations for production bases. While Apple’s partners aggressively pursue the development of EV platforms and possess the potential to reach economies of scale in production, Apple is nonetheless able to preserve rights over IP designs and some degree of autonomy.
Taking the aforementioned factors into account, companies in the Asian supply chain, including Foxconn, Hyundai, Kia, LG, CATL, Panasonic, Nidec, Murata, TDK, Taiyo Yuden, and Mabuchi Motor, are all likely to benefit from the Apple Car.