5 Reasons Why Apple Will Build An Electric Car

What you may have heard before is that Apple is going to build an electric car. You may have also heard they won’t build one. You also may have heard they are just working on a project that makes it look like they are building an electric car. You may have seen their mysterious vans in videos posted all over the web. However, with the hubbub about this subject during the start of 2015, what has happened lately?

A recent report by Sanford C. Bernstein analysts Toni Sacconaghi and Max Warburton have reignited what had become dying talk of an Apple electric car. The two analysts published a report, which gave five reasons why Apple will build an electric car. The first reason is the target market of automotive has over one trillion in annual sales. Part of their report on this reason reads in part, “The auto market provides a huge, incremental market opportunity that could move the needle for Apple going forward.”

The second reason in their report is that Apple is apparently unafraid to enter established markets. Speaking about what Apple has done previously, the analysts wrote, “Historically, the company has not looked to create or invent markets, but has aspired to reinvent markets through differentiated offerings and complete ecosystems.”

The third reason noted that Tesla Motors jumped into automotive on what was called a “shoestring” budget. They have emerged not as competitors to luxury brands, but as the brand that is forcing other established automakers to evolve. According to the report, if Tesla can do what they’ve managed to accomplish with a federal loan and billionaire founder certainly Apple can do better. Apple after all, has a market capitalization of $740 billion to go with $188 billion in cash.

The fourth reason given is despite the low margins from the automotive industry, Apple may see a reason to get involved. Apple is likely aiming for the luxury sector, which the report sees as likely to grow at a faster rate than the mass-market sector of automotive. The perception is Apple would work some of their magic in this arena and create a product that consumers are willing to pay a premium for.

Finally, the last reason given why Apple will make a car is China. Specifically, with significant vehicle manufacturing likely to occur in that nation it benefits Apple as they have strong ties. China is certainly booming, however their auto market is full of competition with a reported 120 brands to choose from.

The report also included a potential description of the vehicle that Apple could make. Those analysts who put together the report feel that it will be fully electric, however they ended up noting they aren’t convinced that Apple will make a car, however they are more optimistic about it than they once were.

Were the reasons given good ones for Apple to enter the electric car market? Do you think Apple will do it? Will they brave the high costs and lower margins of automotive?