As Apple (AAPL) continues to slap autonomous driving test cars on the road and hire top-level talent for its initiatives, the rumor mill continues to churn.

Just what is Apple up to?

The iPhone-maker is a major secret-keeper when it comes to revealing what it's working on. But thanks to a string of information earlier this year, we're uncovering some its auto-related mysteries.

For instance, because companies have to register their autonomous vehicles with the California DMV, we know that Apple continues to increase both the number of its drivers and the number of its test cars. As of September, it had 70 autonomous driving vehicles on the road. To put that in comparison, Audi's autonomous driving subsidiary, Autonomous Intelligent Driving, has just 12 cars on public roads in Germany.

Thanks to filings from a criminal investigation against one of its former employees, we also learned that Apple has more than 5,000 employees who are working on or have knowledge of its autonomous driving project. Of that, almost 2,700 of them were considered "core employees" at the time in mid-2018.

While Apple's got the R&D budget to explore some vast opportunities, it clearly sees autonomous driving as one of them. Why else equip 70 vehicles with the necessary driving equipment for self-driving capabilities and hire more than 2,700 people to work on it. Given the resources that Apple's putting into it, it seems like one of the largest programs in the industry. Unlike most other parties though, Apple's doing its best to conceal its mission.

Which Direction Will Apple Go?

There are a few different directions Apple could go in. It's already approached (and been rebuffed) by automakers like BMW (BMWYY) and Daimler's (DDAIF) Mercedes-Benz. Ultimately it landed a partnership with Volkswagen (VLKAY) involving its T6 Transporter vans. Apple is retrofitting these vehicles and wants to use them around its campus as a shuttle. Its test vehicles on the road mostly consist of Lexus RH450 SUVs.

Apple toyed with the idea of building its own production facilities, before realizing what a massive headache that would be. If they really want to get into the auto-production game and build their own autonomous driving systems, they may as well consider M&A. While the price tag may be high and the businesses have low margins and high costs -- so really, not at all like Apple's current business -- the valuation for most of these automakers are pretty low.

That said, the most Apple has dropped on a single acquisition was about $3 billion for Beats. So short of buying one brand from an automaker -- like Cadillac from General Motors (GM) or Audi or Porsche from Volkswagen -- an acquisition is likely out.

If Apple has viable technology, then owning a well-known but approachable luxury brand may be one avenue worth pursuing. But the concern to me would be competition. Even if Apple is first to the consumer market with its technology, who's to say it will make a difference in 10 years when most other automakers have the same thing to offer? That doesn't even get into possible litigation, a hurdle every other automaker will have to face in the future. Does Apple really want to risk its brand over a few ill-fated accidents?

If production is out of the question then that leaves partnering, but again, most every company in the field is working on this technology. Alphabet's (GOOGL) (GOOG) Waymo is considered the leader and Apple would have a lot of catching up to do.

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So What's Left?

It's not a race that Apple can't win, so it's worth the company's time to pursue possible future revenue streams in what's sure to be a massive market. However, I wonder if Apple is taking on a different version of the autonomous driving experience rather than simply working on a system itself.

An autonomous driving system may just be part of a larger drive for future products and platforms. Apple is obviously a massive player in consumer entertainment and hardware, so working on applications for inside the car would be a reasonable step. To do so, it would need to develop an autonomous driving system for testing purposes, which it is doing or seemingly has done. 

For instance, we know Apple has applied for patents regarding in-car virtual reality, and we know that it's been involved in AR/VR M&A as well. Could there be some overlap? Possibly. We also know Apple filed for a patent regarding an application that can read passengers' emotions. It also has a project for an augmented reality windshield display. These are just a few of the things we actually know, let alone everything we don't know about. 

So while many are assuming Apple is hitting the drawing board to compete with Waymo and others, it may be working on other autonomous driving-related projects as well. What we know for certain is that we can expect plenty of rumors in 2019.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.

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