Tesla Vs Apple iCar: Which Is Best?

Tesla stock was up an astounding 700 percent for 2020, and its market cap has increased from $70 billion to within striking distance of one trillion dollars in one short year.

Now, there is heated debate on whether to take profits or hold out for additional gains. After all, revenues are expected to come in at around $31 billion for the prior fiscal year, and that figure is projected to total a stunning $45.5 billion by the end of 2021. It looks like there are plenty of reasons to buy and hold Tesla in the coming months. 

However, a few industry experts aren’t quite ready to go all-in on Tesla. They have their eye on news from Apple insiders. It seems that the tech giant is developing its own car – a self-driving vehicle with next-generation battery power that could do to the electric car industry what the iPhone did to mobile phones. 

Creating a car company from the ground up is no easy task. Even Tesla didn’t turn a profit in its first 17 years. Of course, if Apple has proven nothing else in its history, it has shown it can deliver breakthrough technology that meets needs consumers didn’t realize they had. 

So, should Tesla investors be wary? Will Apple car kill Tesla, or is Tesla in a solid position to continue its growth trend?

The Apple iCar 101

Apple’s Project Titan has been top secret for more than five years, but some intriguing details have finally leaked out. The initiative launched in 2014 with a goal of building a brand-new type of passenger vehicle from the ground up. 

The iCar, as it has been unofficially nicknamed, is intended for individual ownership and use. This contrasts with some of the less secret projects announced by technology companies like Alphabet (GOOG), which aim to produce vehicles that offer public transportation. 

There are thought to be two components to the Apple Car that will set it apart from rivals like Tesla. First, it will have innovative software that makes autonomous driving a reality. Second, it appears that Apple is developing a new, more advanced type of battery – one that will transform the experience of owning an electric vehicle. This battery is said to have three times the range of batteries available today while costing far less than current options. 

Apple hasn’t offered any details on the iCar, but anonymous insiders told news outlets that the first Apple cars are expected to roll off the line in 2024. That debut may be delayed by a year due to the pandemic, but it seems iCars are on their way in the relatively near future. 

News of the Apple car sucked the wind out of Tesla’s sails – or maybe it was a coincidence that share prices dropped on the day the news was announced. In any case, Tesla stock dropped by 6.5 percent, while Apple increased by 1.24 percent when word of the coming iCar was made public. 

Apple Is A Serious Threat

Tesla relentlessly forged a path for electric cars, creating vehicles that are sleek, reliable, and prestigious.

Some fans of the brand find it hard to believe that Apple presents any sort of serious threat, but consider this: The only cars that could possibly compete with Tesla would have to bring cutting-edge hardware and highly advanced software to the table.

They would have to offer everything available from Tesla and then some, with features that Tesla (TSLA) simply can’t match. 

The cash required to develop such a vehicle – one able to take on Tesla’s skill and leadership position in the industry – is almost impossible to quantify. Only a company with nearly unlimited resources would have the capabilities necessary to challenge Tesla. 

Are there any companies that fit that description? Well, yes. Apple’s market cap is north of $2 trillion. Combined with its skill in developing hardware and software, Apple is the one company with potential to serious challenge Tesla. 

Tesla Has Competitive Advantages

That isn’t to say Tesla should fold its tent and go home if Apple enters the auto market. Tesla has critical competitive advantages that ensure it can compete with anything Apple produces.

The first is experience in building cars. That’s important, because car production is unlike any other area of manufacturing. 

It’s notoriously difficult to secure the materials and components necessary to operate an auto manufacturing plant efficiently. In most cases, it can’t be done at all unless the brand meets a certain threshold for volume. 

Tesla has already overcome these obstacles, thanks to a nearly-two-decade head start. While Apple is fumbling through the early stages of building a sustainable car manufacturing business, Tesla can focus on upgrading and expanding its product line. 

Apple Brand is Trusted

Then again, Apple has competitive advantages of its own. Perhaps the most important is that the brand is universally trusted – and not just in the United States.

Apple has an international reputation for excellence in hardware and software, and its share of the global smartphone market topped 13.5 percent at last count.

In the United States, Apple commands 46 percent of the smartphone market share, which means the brand is first choice for millions of consumers. 

Meanwhile, Tesla has had a number of embarrassing moments that made headlines, such as cars bursting into flames during a crash.

There have been instances in which the autonomous driver mode had serious issues, and other situations in which the Tesla network prevented users from accessing their cars. It’s hard to say how much these past concerns will impact consumers when it comes time to make a choice between Apple and Tesla.

Apple iCar Vs Tesla: The Bottom Line

In the battle between Apple iCar and Tesla, the bottom line is this: It’s too early to tell which will rise to the top spot once the Apple car is widely available.

Apple’s history gives investors good reason to believe that iCars will lead the market, but Tesla’s current dominance makes it the right choice for investors who want a piece of the electric vehicle pie today.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.