Apple (AAPL) has revealed that it’s working on self-driving car technology, but to succeed in the sector it might have to build its own car, Morgan Stanley said in a report Wednesday.
“From the Apple perspective, core self-driving software is likely the first step in its autonomous pursuits, and we believe Apple will eventually move beyond just software into designing a full car and/or launching a platform for third-party services and content over time,” Morgan Stanley analysts Katy Huberty and Adam Jonas said in a report.
They noted that Apple is most successful when it controls the entire experience of a product, making the hardware, software and supporting services.
Apple Chief Executive Tim Cook told Bloomberg in an interview published Tuesday that Apple is developing autonomous-driving technology, but he declined to say whether the company will make its own car or just produce technology for automakers.
The road ahead for Apple in autonomous driving won’t be easy, Morgan Stanley said.
“These pursuits will take time and investment dollars and competition will be fierce,” they said. In particular, Apple is likely to butt heads with luxury electric-car maker Tesla (TSLA). Apple is likely to compete with Tesla for engineering talent and in capital investments.
But it’s also possible that Apple and Tesla could partner, Huberty and Jonas said.
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“If Apple is serious about pursuing autonomous driving systems as a ‘core technology,’ it will have to harvest real-world miles on public roads in very large quantities, perhaps in the not-too-distant future,” the analysts said.
To do this, it could partner with established ride-sharing firms, car-rental firms or car manufacturers, they said. It also could do it on its own.
Apple stock was down 0.3%, near 146.20, in midday trading on the stock market today. Tesla stock was up 1.4%, near 381.30, on Wednesday.
The self-driving car technology field has many players. It includes technology providers like chipmaker Nvidia (NVDA), advanced driver-assistance systems maker Mobileye (MBLY), and Alphabet (GOOGL) unit Waymo. Ride-hailing services Uber and Lyft are investing in the technology, as are the major automakers.