Apple's Car Project Could Be A $50 Billion Opportunity In The U.S., Says Analyst

Apple currently has a few hundred employees that are working on an electric vehicle project code-named " Titan ," according to several reports. The prototypes of the automotive project appear to be in the form of minivans, which have been spotted throughout New York and California. It may be several years until Apple has a vehicle on the road, but there is speculation about the impact that the Cupertino giant could make on the automotive sector.

Gene Munster, a managing director and senior research analyst at Piper Jaffray, said that the U.S. car market may represent a $50 billion revenue opportunity for Apple. Munster cited data from Edmunds that revealed 16.4 million new vehicles were sold in America last year. And TrueCar reported that the average selling price of a vehicle in the U.S. was slightly over $31,000 in the month of August. This means that the U.S. car market is valued at over $500 billion. Apple’s vehicles could generate $50 billion in new revenue if it achieves “moderate success” — which he defined as about 10% of the U.S. car market, a 23% increase of Munster’s current estimates for Apple’s fiscal year 2015.

"We believe the potential for a car gives investors something, along with the Watch and TV, to look at as the next big thing for Apple," said Munster via AppleInsider. "We believe this hope should be positive for the multiple on shares of AAPL and help support the stock over the next six months." Before Apple announced the Apple Watch wearable, many investors were concerned about the lack of new product categories, but Munster said that Wall Street has been receptive to an Apple vehicle.

When will be able to buy an Apple car? Keep in mind that Apple's "Titan" project may not result in a final product. Apple is known for building dozens of projects, but only releases the ones that have the most potential.

However, there are hundreds of employees assigned to the "Titan" automotive project so Apple must be serious about it. Apple CEO Tim Cook approved the car project around a year ago and placed Steve Zadesky in charge. Zadesky is a former engineer at Ford that led teams at Apple involved in the iPhone and iPod. Zadesky was given the authority to set up a 1,000 person team and pull in employees from other divisions. Last year, Apple hired the former president and chief executive of Mercedes-Benz R&D North America Johann Jungwirth and industrial designer Marc Newson, who created a concept car for Ford. The WSJ reported that several Apple executives also flew to Austria recently to meet with contract manufacturers working on high-end vehicles, including Magna International’s Magna Steyr unit.

Regardless of whether Apple builds a car, its software will still have a major presence inside the vehicles of the largest auto manufacturers. Apple launched CarPlay to offer iOS device functionality on top of in-car control systems last year. There are over two dozen auto companies that are planning to install CarPlay in their vehicles.

The Next 5 Years

In Walter Isaacson’s biography of late Apple co-founder Steve Jobs, it was revealed that the company is also working on a television. According to Fortune, Munster sent out a note to his clients on Saturday saying: “While we believe Apple can do both a TV and a car, it seems far more likely that we get a TV from Apple in the next five years than a car.” In the note, Munster said that the profit margins on cars are even thinner than on televisions. And TVs fit better into Apple’s hardware, software and services framework than cars do.

What are your thoughts about an Apple-branded car? Let us know in the comments section below!