Chat With Wedbush’s Dan Ives: The Apple Car Is Coming

Could the Apple Car be launched in the foreseeable future? Here is what Wedbush’s Dan Ives had to say about the new product, and what it might mean for Apple stock.
Author:
Publish date:

When I chatted with Wedbush’s Dan Ives about all things Apple stock (AAPL), a couple of weeks ago, one topic of conversation stood out. The analyst has been keeping an eye on the company’s strategic moves in the autonomous and electric vehicle space – one of Apple’s long-term growth opportunities.

Today, the Apple Maven recaps the conversation, and revisits Dan Ives’ estimate of when the Apple Car will likely be brought to market at last.

Figure 1: Apple Car?

Figure 1: Apple Car?

(Read more from the Apple Maven: 3 Reasons Why Apple Is Raising More Cash)

Apple Car: what to expect

When it comes to Apple’s “next big thing”, Dan’s first point was that a mixed reality device is likely next in the pipeline. However, look forward a few more years, and the Apple Car will inevitably be added to the Cupertino company’s product portfolio.

“When I look at the Apple Car, it’s not a matter of if, it’s a matter of when. I believe they are continuing to build a vision, the infrastructure, they are looking for partnerships on the battery side. […] They are not going to miss out on the $5 trillion green tidal wave.”

The next question then becomes: when? The Wedbush analyst knows that it is hard to pin down a specific date, but offers a ballpark estimate:

“There has been one step forward, two steps back. Now it’s at a point where it’s coming: we believe 2024 or 2025 is when you see the Apple Car. But first they lay the groundwork over the next three, six, nine months to get there.”

This preparation may already be taking shape. I have recently written about how Apple has been aggressively issuing debt lately and raising cash at low interest rates – even though the company is already a cash-generating machine. Many on Twitter believe that the extra dry powder may be used to launch a new product. See the poll below:

Lastly, I brought up one concern that I have had about the Apple Car. Considering how high Apple’s margins have been, could the introduction of the electric vehicle put a dent on the financial model – in other words, might it consume too much of Apple’s resources to produce higher revenues, without the benefit dropping substantially to the bottom line? And could it end up destroying value, rather than creating it?

Below is what Dan had to say about this subject:

“[Apple is] going to partner. This is not going to be a margin dilutive story, in terms of how they attack that area of the market. I view mixed reality, Apple Car and other innovations additive to the overall valuation.”

This is an important differentiation in how Dan values Apple, as a sum-of-the-parts story, vs. how many on Wall Street think about the stock’s valuation multiples. In this sense, if the Apple Car is value accretive, then any potential margin dilution at the total company level should be largely irrelevant.

Twitter speaks

Wedbush’s Dan Ives believes that the Apple Car is coming – it’s not a matter of if, but when. How would the EV opportunity change your stance on Apple stock?

Explore more data and graphs

I have been impressed with the breadth and depth of information on markets, stocks and ETFs provided by Stock Rover. Stock Rover helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.

To learn more, check out stockrover.com and get started for as low as $7.99 a month. The premium plus plan that I have will give you access to all the information that goes into my analysis and much more.

(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 Amazon Maven)