Apple Car Makes Tesla Fans Worried

By Douglas A. McIntyre Published Feb 7, 8:43AM EST

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Apple Car Makes Tesla Fans Worried — © Jag_cz / iStock Editorial via Getty Images

Apple Inc (NASDAQ: AAPL | AAPL Price Prediction) may have a car by 2024. Or, it might not. It depends on which rumors people believe. The latest media report is that a deal is pending with either South Korea’s Kia or the same nation’s Hyundai brand. The company that should be most worried about Apple’s move is Tesla.

Tesla Inc. (NASDAQ: TSLA) leads the global market in electric vehicle (EV) sales. It shipped 500,000 cars last year. Every major manufacturer has pledged it will catch Tesla. Volkswagen, General Motors Corporation, and The Ford Motor Company each plan to invest over $20 billion in EV models and autonomous cars. Their legacy reputations as fossil fuel-driven car manufacturers have triggered a good deal of skepticism about whether their brands can make the jump to EV. Even with good electric cars, consumers may be more likely to stay with Tesla. That, in turn, could lead to some odd alliances. A 24/7 Wall St. article pointed out, some car companies need Apple more than Apple needs them:

As with Ford, there would be nothing like an Apple partnership to jumpstart efforts. Along with the Apple brand, there is its balance sheet that has over $100 billion in cash, which it has not used much for M&A and which grows by the quarter.

The Apple brand has a number of advantages. Its hardware, particularly the iPhone, has been bought by hundreds of millions, if not over a billion people. The brand is known and highly regarded worldwide. It is often listed as the world’s most valuable brands. Tesla also does well on these brand valuation lists. Legacy car companies do horribly.

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Apple’s jump to EV will not be easy, which should give Tesla supporters some comfort. It will have to put its electronics into vehicles which, for the most part, need to be made by another manufacturer. And the marriage will need to be perfect. Apple cannot risk its brand value with a product launch disaster.

If Apple does come to market with an EV, Tesla may have the first challenger with a brand more visible and more valuable than it is.

Click here to see Will Apple Turn To GM Or Ford In Electric Car Race?

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.