Exclusive: Top Apple Analyst Gene Munster Remains Bullish on Coming Apple Car

Gene Munster is one of the world’s most recognized and respected Apple financial analysts with a long track record of successful focus on Apple and its products.

Apple Car Fans had the exclusive chance to sit down with Gene and get his latest insights on the Apple car.

Munster pointed out a previous white paper he and his company Piper Jaffray released about the Apple car last October. The analysis was positive, but since then we learned of possible members leaving the Apple Titan team.

Fortunately Munster does not think this is significant, though he noted the report is a little “dated”. “Substance is unchanged,” he said. Of the Apple Car he said “we’re still in the camp that this is real.”

“Our take is there is still a sizable team,” he says about the Apple Titan car team.

Munster believes Apple wants to build a car because “Apple’s biggest concern is growth”, and the automotive market offers a potentially generous amount of it.

He does suspect it will take Apple a considerable time to bring the car to market, and may reach that point with a break from its usual marketing approach.

“There will be a car that you can see and order in 2019-2020”, said Munster. “We don’t think it will probably be delivered until after that…maybe 2021.” He added “an advantage of showing it early” will be “to hold up the market in anticipation.”

Munster feels confident Apple will not build the car itself, instead relying on the approach it uses for other products such as the iPhone. “High probability of about 80% they outsource it,” he said.

“They can still design the car themselves, the phone they don’t build, they fund their supply chain,” Munster said. He does not believe this approach will affect the typically superb quality of Apple products. “From our perspective it would be a similar model that in they are involved in the quality of the product.”

Fortunately for us here at Apple Car Fans, Munster believes it will be hard for Apple to hide something so big and complex as automotive production.

“I think there is going to be a long steady flow of information,” he said. “Hard to keep that under wraps.”

“First thing we’ll see is hiring,” he  predicted. “Second phase (will be) tooling and early (part) orders. Third thing will be the plan.”

Despite the publicized reports of division chief Steve Zadesky leaving the company since his last report, Munster still holds to a greater than 50% chance Apple will build a car, a position he considers very optimistic.

“We still hold to a greater than fifty percent likelihood the project is alive and funded and a greater than 50 percent chance it is unchanged,” said Munster.  “The reason why our number isn’t higher is that we were wrong on the (Apple) television and I learned some lessons about things we hear internally and how that resulted in a lack of a project.”

“The idea they’re working on a car doesn’t mean it’s necessarily going to make it to market,“ he added. “Fifty to sixty percent is still pretty optimistic.” Further he noted this is “a big step forwards and sideways (for the company).”

Munster is also confident Apple will release a single product with an iconic name. “For the most part they’ve been pretty religious at keeping their product lines narrow,” he said. “In the car line they’d have several years of a single car.”

“Apple thinks about how they are going to be in business the next 200 years,” he added. “We think they will call it the Apple car.”

In terms of the most likely go to market price, Munster also has a strong opinion.

“If you look at the overall automotive industry Apple historically plays toward the high-end.” The price when Apple starts selling it in 2020 or 2021 will be “around $75,000.”

10 Comments on Exclusive: Top Apple Analyst Gene Munster Remains Bullish on Coming Apple Car

  1. From OP Lyle’s referneced PiperJaffray white paper:
    “…In 15 years as an automaker (around 2035), we believe selling 1.8M cars a year for Apple would be a considered a huge success…at a $75K ASP would yield $135B in revenue to Apple and ~2.5% global car market share…”

    Apple’s FY1015 was $234B with an EBITD margin of 35%. So a ~2.5% automotive market share (using the above white paper assumptions) would increase Apple’s today revenue by ~50% but would likely bring down Apple’s operating margin considering the auto industry EBITDA average is 8% with Toyota at the high end of 14%. The ~2.5% market share is what has me hung up because I doubt Apple has any interest in entering a new market category that it can’t dominate a 30+% market share. I’m thinking that where PiperJaffray may be off target is that they are using traditional automotive metrics to guess when/how Apple will likely enter the automotive market…the “Apple Car” may be more radical than anticipated by PipperJaffray…the Apple Car may be a pay for use mobility service…not a car you can buy…

  2. It makes no sense for Apple to make a car – just like it made no sense for them to make a phone. But a phone is not a life and death device like a car.

    Having said that – it is clear that most car companies will not exist in 2030 unless they go fully electric. It won’t make sense to keep burning gasoline for passenger cars and small trucks. The price of oil will have to stay historically low just to slow down the conversion.

    It is not in Apples DNA to just do the software – they want to do it all – but it would be so much simpler if they bought any car company outright and went from there.

  3. I love the margin argument. Let’s do a little math.

    35% of $1 is $.35.

    8% of $100 is $8.

    Which would you choose?

    Margin is very important. Lower margin at much higher revenue is more important.

    • @Tim,
      Go back and read my comment…I don’t see where (as you suggest) I say that a lower % margin at higher revenue would be a bad thing for Apple. Also, your conflating % (ratio) vs $ (absolute) margin. Lastly, a lower margin % at a higher revenue can indeed result in higher net $ margin (as your math demonstrates) but not necessarily:

      35% of 1$ is $.35
      14% of 2$ is $.28

      So Apple doubling its revenue by entering the automotive space is no garantee to higher $ margin.

  4. At $75,000, that’s a Tesla Model S competitor. That surprised me when I first read it because I thought Apple would try and go more mainstream with a lower priced car. Say maybe $35 – $40,000 car to compete with the Tesla Model 3, the Chevy Bolt, etc.

    • John,GM Bankruptcy is just a boomdoogle for lawyers, it is a very bad and stupid choice.How do they get from under the weight of their pension and labor agreement obligations? BK the only way. US automakers can not continue as they are currently structured.

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