Apple Inc. (NASDAQ:AAPL) has dominated the hardware and software space for many years, and a shift of focus to the auto industry seems a possible reality according to a number of analysts. Talk of the iPhone maker developing electric cars continues to gain weight as the company pursues other avenues for future growth.
The size of the auto industry that has seen the likes of General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) generate impressive profits over the years could be the key driving force behind Apple developing electric cars. Sanford C Bernstein analyst Toni Sacconaghi affirms that few industries would be interesting and sizeable enough to have any substantial impact on Apple Inc. (NASDAQ:AAPL)’s revenue, which has mostly been driven by smartphone sales over the years.
25% of Apple revenues
The auto industry is valued at $1.1 trillion in annual revenues which the analyst believes could equal 25% of Apple Inc. (NASDAQ:AAPL)’s total revenues should it acquire a 5% market share. A diversification of business opportunities would make a lot of sense for Apple considering the smartphone penetration level in the US is about to reach its peak arousing concerns of tepid growth in the near future.
Sacconaghi believes the auto industry could provide the much-needed market opportunity for Apple Inc. (NASDAQ:AAPL) to be able to generate more revenues away from the smartphone business. Talk of an electric car from the Cupertino-based company have been swirling around for months in the wake of Bloomberg reporting that the company’s electric car team had ballooned to highs of 200 people.
Tesla meets Apple
There is belief in the industry that Apple Inc. (NASDAQ:AAPL) could start producing electric cars as early as 2020 as reports emerge of it hiring a number of experts with batteries and robotics experience. Tesla Motors Inc (NASDAQ:TSLA) CEO, Elon Musk, admission that he had held talks with Apple in the wake of rumors that the iPhone maker was considering making an offer only went to cement suggestions that the company had a keen eye for the auto industry.
Electric cars remain a foreseeable reality for Apple taking into consideration the big cash balance at its disposal that allows it to initiate any kind of project or acquire other companies, which it can use to pursue further growth. However, Sacconaghi is quick to point out that it will take some time before Apple Inc. (NASDAQ:AAPL) breaks into the auto industry, at least five to seven year before putting its first car on the road.