Carl Icahn Thinks An Apple Car Represents A 'Change The World' Opportunity

Carl Icahn on Monday came out with his previously promised open letter to Apple Inc. (NASDAQ: AAPL) and its CEO Tim Cook.

Icahn Capital now believes Apple shares are worth $240.

“Apple is poised to enter and in our view dominate two new categories (the television next year and the automobile by 2020) with a combined addressable market of $2.2 trillion, a view investors don’t appear to factor into their valuation at all,” the letter explained.

Apple Car

Icahn said that, while his firm respects and admires “Apple’s predilection for secrecy, the company’s aggressive increases in R&D spending (and some of the more well-supported rumors) have bolstered our [the firm’s] confidence that Apple will enter two new product categories: television and cars. Combined, these two new markets represent $2.2 trillion, three times the size of Apple’s existing markets (if we exclude Apple Watch).”

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The car market is by far the largest. At $1.6 trillion, the addressable market for new cars is roughly three times larger than the smartphone market.

Icahn continued, “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.”

“While Apple currently addresses this market with CarPlay," Icahn wrote, "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."

A Few Factors

The investor highlights a few factors that represent a “change the world” opportunity for Apple, including increasing oil costs, global warming, “the geopolitical risks associated with oil dependency (especially as fuel for automobiles),” and the emergence of cost effective alternatives.

Icahn concluded, “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.”