What an Apple Car Would Need to Compete With Tesla

The world's most valuable company is rumored to be building an automotive team.

ByABC News
February 20, 2015, 10:59 AM

— -- Apple's nearly four decades as a company have been filled with repeated disruption of otherwise settled industries, leaving many to wonder if the world's most valuable company may be preparing to upend the auto industry with an Apple car.

"Apple is very good at disrupting things at a grand scale, from the music industry to music players and smartphones," Patrick Moorhead, an analyst at Moor Insights and Strategy told ABC News. "And here you have a company with more money than anyone else. With that said, they can do anything they want to."

The iPhone maker reported in January its biggest quarter yet as it sold more than 74 million iPhones. Apple's $18 billion earnings were also the best quarter in terms of profit any public company has ever reported.

A lawsuit filed in Massachusetts federal court this week by A123 Systems alleges Apple poached five of the lithium-ion battery maker's employees, fueling more speculation the iPhone maker may be quietly working on an electric car.

Apple declined to comment on the lawsuit and reports it is building an automotive team.

With Tesla on the cutting edge of the electric car market, Moorhead said Apple will need to develop some strategic partnerships to bring a hypothetical Apple car to the market.

"They need to focus on what they're really good at and partner with companies and acquire companies who know how to do everything else," he said. "For instance, I don't see a core competency in braking systems that Apple would bring to the table or a new way to do tires."

Not only will Apple's worth give it a competitive edge, but the company also has the advantage of employing a brain trust of some of the best designers and user experience experts in the world, Moorhead said.

"The technology to make a self-driving or near self-driving car would absolutely be on the table," he said.

Tesla currently does not sell a completely autonomous driving car. However, last October Elon Musk's company unveiled a new Model S that is smart enough to safely navigate between lanes with a simple press of a turn signal, sense pedestrians, adhere to speed limit signs and even pull into a spot in a parking garage.

Richard Wallace, director of the transportation systems analysis group at the Center for Automotive Research, said he expects a hypothetical Apple car would have some of the semi-autonomous features of the Model S.

"If they enter into the car market, they will by default enter into the autonomous driving vehicle race, but that doesn't mean it has to be fully self-driving on day one," Wallace said.

With Tesla's Giga factory in Nevada set to produce enough batteries for 500,000 vehicles in 2020, Wallace said he believes Apple could even potentially partner with the company.

"It has been said Tesla will have to find other customers because their production capacity will be astonishing [at the factory]," Wallace said, referencing reports from analysts who believe the electric car maker may be able to produce more than it needs at its factory.

Apple officially veered into the automotive world last year when it released CarPlay, a system that lets users link their iPhones to infotainment systems in some cars, allowing them to safely enjoy an iOS experience while driving.

"You should never underestimate Apple," Moorhead said. "When you have more cash than many countries do, you can never underestimate what they could do."