Apple Car Hype Revs Up … But Is the Self-Driving iCar Real?

The Apple Car hype machine (or is iCar the preferred term?) is once again in full swing after the recent hiring of a former Detroit auto exec. According to reportsApple (AAPL) just nabbed former Chrysler vice president Doug Betts, adding to the rumor that some kind of vehicle is in the works.

apple stock aapl watch tv car
Source: Apple

But is the Apple Car actually real? Or is it all a lot of hot air?

I joked a few months ago that activist investor Carl Icahn wants AAPL stock to get into cars, TVs, ice cream scoops and anything else that can be sold for a premium price with an Apple logo on it. But I was serious in my assessment that AAPL stock will remain driven (pardon the pun) almost wholly by the iPhone for the foreseeable future.

Increasingly, it indeed appears that the company is looking to the long-term with its auto efforts. But I am not entirely convinced that the Apple Car project is about a competitor to Tesla Motors (TSLA) with its dominance in electric vehicles, or even Google (GOOG) self-driving cars.

To me, it makes more sense for Apple to focus on entertainment and software integration instead of the cars themselves — something it not only has great brand power with, but also plenty of brain power to boot.

Apple Car as a Platform, Not a Vehicle

Earlier this year, Apple’s senior VP of operations said “the car is the ultimate mobile device” and that helped spark a frenzy of speculation over Apple’s intentions. A lawsuit by former electric battery company A123 filed this year, alleging Apple poached its employees, was also fodder for tech blogs and pundits.

But given previous supply chain problems at Apple — most recently on display with Apple Watch delays — can you imagine the dumpster fire that would be created if AAPL decided to get into vehicle manufacturing?

If you think that there’s a plug-and-play option like Foxconn for cars, you’re being naive. Similarly, if you’re thinking Apple will just up and buy Tesla here, you’re also off you’re rocker.

The bottom line is that the logistics of such an effort are a mammoth undertaking and full of much risk — not just in execution, but from entrenched competitors with much more knowledge of the auto space.

Why not simply look at what’s in front of you — namely, the emerging potential of onboard software in cars that can be licensed through the manufacturers themselves? That’s what Microsoft (MSFT) is doing with its automobile-specific version of Windows.

Heck, even BlackBerry (BBRY) is getting in on that act — in fact, it’s BBRY that has shouldered by Microsoft to get in on the action at Ford (F) going forward.

This is completely logical, given that Apple has plenty of things to offer drivers out of the gate, from integration of iTunes to messaging capabilities to Siri, and plenty of potential for native-to-car apps. After all, what was the Apple Watch but an exercise in taking the existing Apple ecosystem and deploying it on your wrist? The same could easily be imagined for the driving experience.

It’s my assessment, then, that the Apple Car is not a physical object but an experience. That may be disappointing to some consumers who dream of driving a slick-looking iCar around to impress their friends, but the good news for AAPL investors is that it seems this effort is well under way behind the scenes.

That could result in material benefits for AAPL stock in the next few years, vs. a multiyear manufacturing plan that bleeds cash for some time.

Of course, this is just more Apple Car speculation and could be way off. The only folks who know what’s really going on with the rumored iCar are in Cupertino … and they aren’t talking.

Yet.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/07/apple-car-icar-aapl-stock/.

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