Apple Card partner bank Goldman Sachs has issued an investor’s note in which it argues that any Apple Car ambitions are likely focused on the in-car experience …
Some analyst notes tend toward statements of the obvious, and the one seen by Business Insider falls into that category.
It starts by making the point that the automotive industry is historically a low-margin one. That is true, but not particularly relevant: without the iPhone, the smartphone industry is also a low-margin (or even loss-making) business, but Apple makes plenty of money from it. This is not a company that has problems figuring out how to achieve large margins from the things it sells.
The note goes on to say that the reason Apple is so interested in self-driving cars is because it leaves people free to spend more time using their iPhones.
The bank goes on to argue that a car makes sense for Apple as a platform, but not as a product.
“The main reason Apple and other tech companies want to be in this business is due to the large amount of time future consumers are likely to spend in self driving vehicles using information services as they make their way from point A to point B,” Goldman said.
Not all banks agree. Morgan Stanley believes an Apple Car could provide more formidable competition to Tesla than any existing car maker.
“We believe that a car makes sense for Apple as a hardware platform supporting its services but the lower profitability of the auto business likely means that investors would see limited earnings impact from such a move,” Goldman explained.
Instead, Goldman ultimately sees Apple following a similar path it took in the TV industry and becoming a service provider in the electric vehicle market rather than manufacturing a low-margin vehicle from scratch, according to the note.
“[Apple] may have alternative means to provide almost as good a [car] experience without the need to develop and sell a full EV platform,” Goldman said.
Concept image: Alex Baldini
