Ming-Chi Kuo of TF Asset Management sees the Apple Car using a Hyundai design for the chassis. Kia will provide the U.S. production line, Kuo writes.
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The Apple Car chatter got a little louder on Tuesday, after the closely followed analyst Ming-Chi Kuo wrote in a research note that he believes the company will collaborate with the Hyundai Group to build an Apple Car.
Kuo, an analyst with Taiwan-based TF Asset Management, writes that the Apple Car chassis will use Hyundai’s E-GMP design (the acronym stands for Electric-Global Modular Platform) and that Hyundai Mobis, an automotive systems supplier, is in charge of design and production for some components. He also says that Kia will provide the U.S. production line for the car. Kia’s only U.S. manufacturing plant is in West Point, Ga.
Kuo also writes that if the partnership with Hyundai goes well, he predicts that Apple (ticker: AAPL) will work with General Motors (GM) and Group PSA (parent of Peugeot and other brands) for other cars or other markets.
Kuo predicts that the Apple Car will launch in 2025 at the earliest. He notes that new iPhones take 18—24 months from initial specification to mass production. Given the longer development time, higher validation requirements, more-complicated supply-chain management, and very different sales/after-sales service channels for the automobiles, we believe that Apple, which lacks car-building experience, is already on a tight schedule if it wants to launch the Apple Car in 2025, he writes.
He adds that the later the car is launched, the harder it will be for Apple to establish a competitive advantage. Ergo, he thinks Apple will leverage existing auto-maker resources and focus on self-driving hardware and software, semiconductors, battery-related technologies, form factor and internal space designs, innovative user experience, and integration with Apple’s existing ecosystem.
Kuo notes that electric cars have 40 or 50 times as many parts than a smartphone — if Apple wants to build the complete supply chain on its own, he says, the Apple Car will be released significantly later than 2025. The analyst thinks an Apple Car would be positioned as a very high-end model, with pricing above the average electric vehicle.
Kuos adds that it is simply too risky to be buying any stocks based on the potential for an Apple Car, but he adds that investors could focus on two major long-term investment opportunities regarding [an] Apple Car, namely the existing supply chain of auto makers who will cooperate with Apple and Apple’s current optical and semiconductor supply chain.
Apple shares on Tuesday are up 1% at $135.48.
Write to Eric J. Savitz at [email protected]
