Since December 2020, speculations have grown louder that the Cupertino company will launch an Apple Car in the foreseeable future. A bank analyst has just reinforced the idea.
UBS revealed, on March 25, that Apple has been awarded a particular patent on LiDAR – a remote sensing technology that helps to map one’s surroundings. According to the analyst, this is a telltale sign that the Apple Car could be just around the corner.
What the patent suggests
The patent in question pertains to “an optical device comprised of a light source, at least one scanning mirror, a detection sensor, as well as other characteristics to collect the light”. In the patent file, there are references that “distance to the target scene may range from tens of centimeters to hundreds of meters” – which is consistent with fully autonomous vehicle (AV) applications.
The UBS analyst makes a good point that “the patent serves as a reminder that Apple is allocating resources to projects that have yet to be commercially introduced and are likely not being valued by the market”.
What we know and what we speculate
Little is known for sure about the Apple Car project, since the Silicon Valley company tends to be very secretive about its high-profile efforts. MacRumors believes that Project Titan, as the Apple Car program used to be known, had been discussed since the Steve Jobs days.
At one point, it was believed that 1,000 employees were allocated to Project Titan. The team became progressively smaller through 2019. However, that same year, Apple acquired self-driving vehicle startup Drive.ai for an alleged $77 million, possibly returning to the EV and AV arena once again.
Research around LiDAR seems to be a leading indicator of what’s to come. At a high level, this makes sense to me, since driverless technology relies first and foremost on the gathering of sufficient and reliable data about the road and surrounding terrain. Last month, Bloomberg reported that Apple has been in talks with multiple LiDAR sensor suppliers.
What investors should do about the Apple Car
The more we hear about Apple’s efforts to develop autonomous vehicle technology (or a complete car, from top to bottom), the more relevant the Apple Car becomes to the investment thesis. JPMorgan’s Samit Chatterjee has even put numbers around the autonomous electric vehicle opportunity for Apple: first-year production could reach about 1% to 3% of the global luxury vehicle market around 2025.
My initial stance on the Apple Car remains unchanged, for now: those considering investing in Apple stock should do so for the opportunities in iPhone and the 5G supercycle, wearable devices, and service cross selling, first and foremost. The Apple Car should be deeply discounted in the investment analysis, in my view, since so much is still unknown about it today: timing, production volume, margin profile, or if it will happen at all.
Of course, as time passes and more data becomes available on the launch of the new vehicle, I will probably start bringing the Apple Car closer to the core of the investment thesis.
Call me crazy, but there have been signs lately that Apple could be working on something big – and “that something” could very well be the Apple Car. I asked Twitter for a second opinion:
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)