Apple Car Can Single-Handedly Solve Growth Challenges And Make Up For 25% Of Tech Giant's Business, Says Munster

The launch of the Apple Inc.’s (NASDAQ: AAPL) self-driving car could be delayed yet again, according to a Bloomberg report on Tuesday.

What Happened: Loup Funds’ co-founder Gene Munster offered his take on the report and the likelihood of Apple rolling out an electric vehicle off its stable.

The odds of an Apple Car being on the market by 2026 is 50/50, Munster said. With Apple’s stock currently pricing in all of “Project Titan”-related expenses and a little revenue upside, terminating the project could lift earnings by about 2%, the analyst said. A release of the car, the analyst said, could be earnings accretive in the long run.

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As opposed to the iPad, iPhone and iPod, which took six years, three years and one-and-half years, respectively, for development, Apple Car has been in the works for nine years now, the analyst said. The mixed reality headset has been in development for about six years, Munster added.

Although Apple Car has the longest investment period of any Cupertino product to date, it has consumed only 4% of the company’s total R&D spend in 2022, Munster noted. He added that the company could be working with the prudent strategy of spending just enough to move the project forward without impacting profit margins.

Apple Car Makes Sense: An Apple Car, according to the analyst, makes sense for the company, as the concept of a car is fundamentally changing. The company can replicate the playbook of vertical integration it has written for its devices, the analyst said.

Also, Apple Car will be able to single-handedly solve the company’s growth challenges, Munster said. The venture capitalist noted that the company will find it difficult to grow if it proceeds only with products geared toward mid-sized addressable markets.

The auto market is massive enough to move up Apple’s growth, the analyst said. Even if Apple captures 2% of the global auto market, it could be selling 1.5 million cars, and with an average selling price of $100,000 per car, he added that a $150 billion a year accretion to topline is likely.

The analyst expects the self-driving car to account for 25% of Apple’s overall business in 2030, assuming the company's core business grows at 5% over the next seven years.

Price Action: Apple closed Wednesday's session down 1.38%, at $140.94, according to Benzinga Pro data.

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