Gene Munster: Will Apple Car see the light of day?

Ahead of the Apple annual shareholder meeting scheduled for March 10, 2023 at 9am PT / 12pm ET, Deepwater Asset Management’s Gene Munster has taken an inventory of recent analyst and investor commentary. There are two things that Munster feels are missing. First, Apple’s strength of product demand and favorable economics despite the macro. Second, Apple’s wide diversity across product lines, sectors, geographies, and currencies, which affords investors the safety of a consumer staples company. Munster also has one question to ask management at the meeting: Will Apple Car see the light of day?

Gene Munster for Deepwater Asset Management:

Last December Bloomberg published a story detailing that Project Titan, Apple’s autonomous vehicle, will be delayed, again. The Bloomberg reporting — which I believe to be accurate — begs the question: Will the Apple Car see the light of day?
There are two reasons why I believe this is the biggest question investors should be asking. First, the concept of the car has fundamentally changed to be more computer-like. Tesla has proven the power of vertically-integrating software, hardware, and services in auto — a playbook that Apple wrote for devices.
Additionally, an Apple-made car will singlehandedly solve their growth challenge. In 2023, the company will hit $415B in revenue and, given the law of large numbers, revenue growth will hover in the mid-single digits if the company continues to pursue products targeted at its existing markets…
The auto market is massive enough to move up Apple’s growth rate. Each year, there are about 75m cars sold globally. Applying a global $32k average selling price (it’s about $46k in the US) suggests that the addressable market is about $2.5T. BMW and Mercedes each hold about 3% global delivery market share. If Apple were to capture 4% of vehicle sales (3m cars) at an average price of $50k per car, that would add $150B a year in revenue. Assuming Apple’s core business grows at 5% over the next 7 years and Apple sells 3m cars in 2030, Project Titan would add 27% to Apple’s overall business in 2030.

MacDailyNews Take: It would be silly for Apple not to take on the automotive market.
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