Akin to the mythical hydra that is supposed to be notoriously difficult to kill, the speculation related to Apple's possible tie-ups in the EV arena refuses to die, all thanks to the speculative reverie of Wedbush's Dan Ives back in 2020, which pointed toward NIO as one of the possible vectors that the iPhone manufacturer could pursue in its quest to launch a consumer-oriented electric vehicle. Although recent developments have again given a nudge to this speculative fervor, the probability of anything solid emerging from this murky, chimeric solution of half-baked truths and poignant hopes remains quite slim.
In late 2020, Wedbush's star analyst, Dan Ives, set the proverbial tongues wagging across the global financial community when he suggested in an epiphanous investment note that Apple could pursue a strategic partnership with an established EV player, pointing toward Tesla, Volkswagen, NIO, and XPeng as possible vectors for this endeavor. The analyst noted:
“We believe based on our investor conversations over the last few days that many on the Street would rather see Apple partner on the EV path, than start building its own vehicles or factories given the margin and financial model implications down the road, coupled with the strategic product risk around such a gargantuan endeavor.”
Ever since, occasional rumors and speculations have alternatively focused on Magna Steyr, Kia/Hyundai, and NIO as possible partners for the Apple Car.
The development of the Apple Car seems to have lost all visibility at the moment. If Apple doesn't adopt an acquisition strategy to enter the automotive market, I doubt that the Apple Car can go into mass production within the next years.
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Apple…— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) September 27, 2023
Two recent developments have played an important role in reviving talks of a possible tie-up between Apple and NIO. First, the famous Apple analyst Ming-Chi Kuo recently posted on X that the "development of the Apple Car seems to have lost all visibility at the moment," and that the only viable way forward for the Apple Car is via an "acquisition strategy."
Kuo: Development of Apple Car Has 'Lost All Visibility' - MacRumors
Apple should just buy NIO already. $AAPL $NIO https://t.co/GhxjUyTNUU
— Nenad Markovic (@NIONenad) September 28, 2023
Second, NIO recently launched a dedicated smartphone for the users of its electric vehicles, which also acts as the car key and allows for seamless connectivity with NIO EVs.
BREAKING: China EV maker $NIO reportedly held talks on investment & technology tie-ups with Mercedes Benz -- NIO denies this report without elaborating and Mercedes says there are no plans for collaboration "at this time"
— Stock Talk Weekly (@stocktalkweekly) September 28, 2023
Third, reports emerged earlier today that NIO was pursuing partnership talks with Mercedes Benz. The underlying reports, however, were promptly denied by both NIO and Mercedes.
NIO bulls have pegged their hopes on a potential tie-up or even an outright acquisition by Apple. They point to NIO's strategy of targeting the premium segments of the market, which is quite similar to what Apple is famous for. Moreover, the launch of the NIO phone does provide a quantum of synchronicity in the business models of the two companies.
However, there are a number of pitfalls associated with this line of thinking. First, Apple’s largest purchase to date is the $3 billion that it paid for Beats Electronics. With a current market cap of $14.59 billion, NIO's acquisition would be over 5x as much expensive. Of course, with a cash pile of around $200 billion, Apple certainly has the resources to pull off this feat. But the key question arises: what exactly would Apple gain from acquiring or even partnering with NIO? After all, the Chinese EV manufacturer does not have that many unique patents or proprietary technology. Its battery swap stations are notoriously expensive and uniquely suited to China's landscape, which is characterized by hefty state-funded subsidies. Finally, with a theoretical maximum annual production capacity of just around 600,000 EVs, we struggle to see how NIO could ever cater to Apple's demands.
If Apple is indeed keen on an acquisition strategy for its bespoke EV, it would be much better off partnering with Hyundai/Kia, Magna Steyr, or Volkswagen.
Do you think the Apple Car will ever materialize? What are your thoughts on a possible tie-up between Apple and NIO? Let us know your thoughts in the comments section below.
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