If the Apple Car actually rolls out onto the roads, the company will only need to capture two percent of the mobility market to match the revenue it currently gets from the iPhone. That’s according to analysts at Morgan Stanley.
Two Percent of Mobility Market Means Apple Car Matches iPhone Revenue
In a conference call, the transcript of which was seen by Cult of Mac, analysts said:
Most cite Apple’s strong brand and an impressive balance sheet [as a reason to build an Apple Car]. But we see several other reasons why it is quite likely that Apple does a car. One is the size of the market. Smartphones are a $500 billion annual [total addressable market]. Apple has about one-third of this market. The mobility market is $10 trillion. So Apple would only need a 2 percent share of this market to be the size of their iPhone business.
Those on the call reportedly included Apple analyst Katy Huberty as well as Chinese and European battery experts. They also noted that while Apple will be a newcomer to the car/mobility market “a noticeable percentage” of the company’s revenue every year actually is generated by products or services that didn’t exist some three to five years before.
The analysts also appear positive about the margin Apple can generate on a car. They said:
When Apple entered the PC, handset and wearables market, the margins of competitors were [also] razor thin. And through vertical integration, as well as driving significant scale on a small number of SKUs, Apple has been able to enter industries with low profitability and earn very strong margins. I don’t see why autos would be any different…. The auto market looks very similar to the industry structure and profitability of many other markets Apple has entered in the past.
They felt that a “timeline of four to five years out makes sense” for an Apple Car, although that could be a couple of years.