Analysts: Apple Dropping EV Plans 'Black Eye' For Industry, 'Indirect Nod' Tesla Is Leader

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by Tyler Durden
Wednesday, Feb 28, 2024 - 07:25 PM

Analysts are just now getting their footing on what Apple dropping out of the EV race means.

For Wedbush, Apple dropping its plans to build an electric vehicle is a 'black eye' for the EV industry, which has struggled mightily over the last year due to super-saturation, exorbitant labor contracts and ugly economics.

Wedbush also said in a note Wednesday morning that Apple stepping out of the race was an "indirect nod" to Tesla being the leader in the EV market, per a Bloomberg wrap up. 

The analyst called it “clearly another negative narrative” for the industry altogether. 

Bloomberg Intelligence also weighed in on the decision in the same Wednesday morning note, stating that "Apple’s decision to abandon electric cars and shift resources toward generative AI is a good strategic move given the long-term profitability potential of AI revenue streams".

At Morgan Stanley, they also commended the move as 'cost management' for Apple, saying the move would allow them to reallocate resources towards more critical ventures such as generative AI.

They also noted that Apple's endeavors in autonomous/electric vehicles lagged significantly behind those of its well-capitalized rivals, casting doubt on its potential for successful market entry and the ability to offer a distinct product.

And as was reported yesterday, it simply isn't the pricing environment to introduce a high priced car that would afford Apple the margins on products that it is used to. 

As we noted yesterday, 16 years after Apple first planned to build an electric car, it's over. Bloomberg reported, according to people with knowledge of the matter, the mega-cap tech company is abandoning one of the most ambitious projects in the history of the company - its effort to build an electric car.

Apple made the disclosure internally Tuesday, surprising the nearly 2,000 employees working on the project, said the people, who asked not to be identified because the announcement wasn’t public.

The decision was shared by Chief Operating Officer Jeff Williams and Kevin Lynch, a vice president in charge of the effort, according to the people.

As Bloomberg highlighted yesterday, the decision to ultimately wind down the project is a bombshell for the company, ending a multibillion-dollar effort that would have vaulted Apple into a whole new industry. The tech giant started working on a car around 2014, setting its sights on a fully autonomous electric vehicle with a limousine-like interior and voice-guided navigation.