NEW YORK (TheStreet) -- The big takeaway from Carl Icahn's letter to Apple (AAPL) CEO Tim Cook isn't just about buying back more stock -- it's that Icahn, like almost every other tech journalist and Apple watcher, believes Apple is going to build its own car.
A key passage from Icahn's letter:
At $1.6 trillion, the enormous addressable market for new cars is approximately four times the size of the smartphone market. It's estimated that people spend an average of 1 hour every day traveling, mostly in cars, but not everyone drives, implying that the average time that daily commuters spend in a car is much higher. We believe the rumors that Apple will introduce an Apple-branded car by 2020, and we believe it is no coincidence that many believe visibility on autonomous driving will gain material traction by then.
As autonomous driving would release drivers' attention from the activity of driving and navigating, and perhaps even increase the time people actually want to spend inside a car, both an automobile and the services provided therein become even more strategically compelling. While Apple currently addresses this market with CarPlay, it seems logical that Apple would view the car itself as a the ultimate mobile device to which it could bring its peerless track record of marrying superior industrial design with software and services, along with its globally admired brand, and offer consumers an overall automobile experience that not only changes the world but also adds a robust vertical to the Apple ecosystem. And for Apple, the car market is more than big enough to "move the needle" significantly, even as the world's largest company.
The rising cost of oil, its impact on global warming, the geopolitical risks associated with oil dependency (especially as fuel for automobiles), followed more recently by the rise of cost effective alternatives presents a "change the world" opportunity for Apple. It is widely believed that the electric battery will play a key role in this transition. The lithium-ion battery already represents a critical component across many of Apple's existing products (iPhone, iPad, Apple Watch, MacBook, Beats) and any further innovation could be a "game changer" in terms of both battery life and form factor across Apple's entire ecosystem. Since lithium-ion batteries represent a large percentage of the cost of today's electric vehicle, we believe Apple should be well positioned to leverage its existing knowledge domain and more robust R&D spending in this area, and in turn apply any energy density / battery life improvements for a car across all the other products in its ecosystem that will share the benefit from such battery innovation (iPhone, iPad, Apple Watch, MacBook, Beats).
As a mobile device that is differentiated by design, brand, and consumer experience where software and services are increasingly critical, an Apple car would seem to be uniquely positioned.