It’s no secret. Apple (NASDAQ:APPL) has been working on autonomous driving and electric vehicle technology in Cupertino for years, and will very likely launch its own self-driving electric car — dubbed the “Apple Car” — at some point in the early 2020s. Considering Apple’s huge success with the iPhone, Mac, iPad and Apple Watch, it’s very reasonable to assume that the Apple Car will be a huge hit, too. Instead, the million-dollar question is: What are the best stocks to buy to play the Apple Car launch?
You could, of course, buy Apple’s stock. But Apple is a $2.3 trillion company. It takes a lot to move the needle on AAPL. Even if you add Toyota‘s (NYSE:TM) entire $200 billion market cap to Apple, that would move the AAPL stock price by less than 10%. It’s a drop in the ocean.
Thus, while buying Apple’s stock is the most straight-forward way to play the Apple Car launch, it’s not the highest upside way. Far from it. So, what are the best stocks to buy to play the Apple Car launch?
To answer that, we have to look at potential Apple Car partners. Apple will not develop the Apple Car all by itself. The company has a long history of partnering with and outsourcing parts of the hardware production supply chain to other companies. The Apple Car will be no exception to this trend.
Those Apple Car partners are likely sub-$100 billion companies who could see a huge boost in their value thanks to Apple Car upside.
And so, the question of which stocks to buy to play the launch of the Apple Car is actually a question of which companies will help Tim Cook & Co. develop the long-awaited Apple vehicle.
To that extent, here’s a list of my top 5 stocks to buy as potential Apple Car partners:
- Canoo (NASDAQ:GOEV)
- Luminar Technologies (NASDAQ:LAZR)
- Aeva (NYSE:IPV)
- Foresight Autonomous (NASDAQ:FRSX)
- ChargePoint (NYSE:SBE)
Stocks to Buy for Apple Car Launch: Canoo (GOEV)
First up on this list of stocks to buy as potential Apple Car partners is a company that Apple has already discussed acquiring: Canoo.
Canoo is a novel EV maker that is, quite literally, reinventing the wheel when it comes to cars. The company has built a scalable, highly differentiated EV platform — dubbed a “skateboard”, by industry insiders — that has low floors, a wide base, and the market’s first steer-to-wheel architecture. This platform maximizes interior cabin space of the car, turning a car from a transportation medium, to a “loft on wheels”. To that extent, many folks — including myself — see Canoo’s proprietary EV skateboard representing the future of cars in a self-driving society.
Apple clearly agrees.
To be sure, these talks have reportedly died down over the past year. But that doesn’t mean they won’t ramp back up again, as Apple gets more serious about launching the Apple Car and as Canoo demonstrates continued viability of its EV skateboard.
I think it’s fairly likely that, at some point in 2021/22, these two link-up for Apple Car production. It may not be an outright Apple acquisition. But a production partnership is likely.
And that’s why GOEV stock is a great way to play the Apple Car launch.
Luminar Technologies (LAZR)
Next up on this list of stocks to buy as potential Apple Car partners is a company that’s already helping Volvo make autonomous vehicles: Luminar Technologies.
Luminar makes laser sensors — called “LiDAR” — that give a car the ability to “see” its surroundings by beaming out multiple lasers in a 360 frame-of-view, and measuring time-of-flight of those lasers to construct a dynamic 3D image of the surrounding area. Many industry insiders see these LiDAR sensors as being mission-critical to self-driving hardware stacks (meaning that cars won’t be able to safely drive themselves unless they have LiDAR sensors).
Luminar has differentiated itself as the best LiDAR maker in the game. Not only are the company’s sensors the highest-performance LiDAR with long-range visibility, second-to-none clarity, and near-zero interference, but Luminar has figured out a way to cost-effectively produce these LiDAR at industry-low prices below $1,000.
If Apple wants to make the Apple Car fully and safely autonomous, it will need LiDAR. Apple could develop its own LiDAR. But that’s a tricky science. Alternatively, the company could outsource LiDAR tech — and if so, why not outsource to the company who makes the industry’s best LiDAR sensors at the lowest costs?
To that end, LAZR stock looks like one of the top stocks to buy to play the Apple Car launch.
Aeva (IPV)
Third on this list of stocks to buy as potential Apple Car partners is a company which could steal Luminar’s thunder: Aeva.
Like Luminar, Aeva is a LiDAR maker. Unlike Luminar, Aeva doesn’t use time-of-flight techniques for its LiDAR. Instead, the company is pioneering a new type of LiDAR sensors built on something called Frequency Modulated Continuous Wave (or FMCW) techniques. These sensors transmit and receive a continuous laser beam, and measure differences in the frequencies of the outgoing laser beam from the incoming one to measure the distance of objects.
The critical difference here is that ToF sends out laser pulses, while FMCW deploys one continuous laser beam. Pulses provide choppy signal subject to noise. Continuous beams provide fluid signal with significantly less noise. That’s why many folks see FMCW — not ToF — as potentially being the future of LiDAR technology.
If so, then Aeva will turn into Luminar: The best LiDAR maker in the game, since Aeva is the unrivaled leader in FMCW LiDAR sensors.
Relative to ToF technology, FMCW technology is much less proven today. But if Apple sees the potential upside in FMCW and does outsource LiDAR tech, then the company could end up partnering with Aeva for its Apple Car LiDAR sensors.
That’s why IPV stock is a compelling albeit speculative play on the Apple Car.
Foresight Autonomous (FRSX)
Fourth on this list is another company that could help Apple build out self-driving capabilities for the Apple Car: Foresight Autonomous.
Self-driving cars of the future will be outfitted with tons of sensors, to simply ensure the 100% safety of the riders. Visual cameras will be one such sensor. So will LiDAR sensors and RADAR sensors. But one common shortcoming of all three of those sensors is that they do not perform all that great in adverse weather conditions. Rain, fog, sun glare, and snow can all cause these sensors to have “blurry vision” and make mistakes.
To address this common shortcoming, the industry has developed thermal cameras. Thermal cameras cut through the weather noise and provide uninterrupted thermal data. That’s important, because the two most important objects on the road that you don’t want to hit – cars and humans – emit a ton of heat, regardless if it’s a sunny, rainy, or snowy day. To that extent, many industry insiders see thermal cameras being as commonplace in self-driving hardware stacks as LiDAR.
Foresight Autonomous plays a critical role in developing these thermal cameras. Specifically, the company has developed a proprietary AV tech platform – dubbed QuadSight – which blends visible-light camera data with thermal camera data to create a complete, uninterrupted picture of a car’s surroundings.
Apple — as one of the smartest companies in the world with unmatched reputation — is likely hyperfocused on making Apple Car the safest AV in the market. To that end, the company will have to put thermal cameras on the Apple Car. In order to maximize the utility of the data produced by those thermal cameras, Apple may use Foresight Autonomous’ QuadSight platform.
Accordingly, FRSX stock could end up being a huge winner thanks to the Apple Car launch.
ChargePoint (SBE)
Last, but not least, on this list of stocks to buy as potential Apple Car partners is a company Apple might want to acquire to compete with Tesla (NASDAQ:TSLA), and that is ChargePoint.
ChargePoint is the largest EV charging station operator in North America. The company operates over 100,000 EV charging stations and commands 73% market share in the continent. Its size is unrivaled. In terms of number of charging stations, ChargePoint is 7X larger than its next biggest competitor.
Apple is all about building ecosystems around its hardware products. The company doesn’t just sell the iPhone. It sells headphones for the iPhone, charging devices for the iPhone, cases for the iPhone, so on and so forth. Extrapolating that out, it’s likely that Apple won’t just sell the Apple Car. It will likely sell accessories and devices for the Apple Car, too, to create an ecosystem surrounding the vehicle.
The most critical component of that ecosystem are charging stations. Without charge, an EV is no good. That’s why Tesla has created an expansive network of Tesla-branded charging stations across the United States — to helps its EV drivers, well, drive.
Apple will likely build out an equally expansive network of charging stations, both to build-out the Apple Car ecosystem and to better compete with Tesla. But why build out your own network when you could just acquire someone else’s network? Especially when their network is the biggest in North America by a wide margin?
As such, I wouldn’t be surprised to see Apple acquire ChargePoint at some point in 2021/22.
And, to that end, SBE stock has attractive Apple Car-related upside potential.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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