"Apple CEO Tim Cook views autonomous cars as the 'mother of all AI projects' and 'a core technology,'" Jonas wrote, citing a Bloomberg interview about the iPhone maker's ambitions in self-driving cars. "We think Tesla investors must prepare for serious competition for talent and investment capital in this market."
Both Tesla and Apple have big product debuts in the works.
Musk will shortly roll out the mass-market Model 3 electric car, with plans to make 5,000 of the vehicles next year. Research firm Berenberg recent upgraded the company's shares from hold to buy, citing Tesla's "near monopolistic opportunity" in electric cars.
Apple's next big release is the tenth-anniversary iPhone. While media speculation has driven anticipation of the iPhone 8 and new features, it will not come with wheels and a driver's seat.
Still, Morgan Stanley's suggests that Apple can surmount Tesla's lead.
Apple obtained approval to test self-driving cars on California roads in April. Jonas suggested that Apple could partner up with ride-sharing companies or car rental companies, partner with the original equipment manufacturers that produce auto components for the car makers, or find another means to speed up its automotive efforts.
Tim Cook won't be satisfied to just develop software for smart cars, Jonas suggests. "This is because Apple argues it is most successful when it vertically integrates in a market, controlling the hardware and software and creating a platform (e.g. iOS + App Store + iTunes)," the analyst wrote.
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Editor's Pick: Originally published Jun. 14.