If you've been following Tesla (NASDAQ:TSLA) you know that its move into the S&P 500 has been a bit rocky of late. This was supposed to be the start of the company's next leg up, not a new and largely unexpected slump. Some of the latest news may be an indication of what just happened—not just to Tesla, but to the wider market—as new reports emerged to suggest Apple (NASDAQ:AAPL) is looking to get a slice of that market for itself.
What's Next
The word that Apple is looking to join the electric car market, and potentially make the long-considered “iCar” a possibility shook up much of the market around the suggestion. In fact, reports suggest that the mere hint of Apple getting in on the electric car market was enough to spark new gains from Quantumscape (NYSE:QS), a company which is focusing on next-generation battery technology.
Said battery technology has the potential to completely shake up several mining operations, reports note, as the new battery will turn to “lithium iron phosphate.” While lithium—a rare earth metal that's already been the cause of some difficulty in acquisition—will be involved, cobalt will be removed from the process altogether. That makes batteries easier and less expensive to make as cobalt is naturally difficult to come by. Given that QuantumScape has backing from former Microsoft (NASDAQ:MSFT) CEO Bill Gates and also from Volkswagen (DE:VOWG_p), that leaves some fairly big potential winners in play if Apple's plans go through.
The new battery would be impressive, as reports note it has already been seen charging from flat to 80% charged in just 15 minutes' time. It also holds over 80% of its capacity after 800 different charging cycles. Throw in a non-combustible operation and vastly improved energy density and you've got a recipe for a powerful new battery.
Analysts Already in Line for Apple
For the last six months, Apple stock has been considered a buy, based on our latest research of overall analyst sentiment. Currently, Apple sits at three “sell” ratings, 14 “hold” and 26 “buy”. Six months ago, the company was at three “sell”, 12 “hold” and 28 “buy”, which isn't so different from what it came to be six months after.
The price target, though, has been accelerating pretty rapidly, and now represents a surprisingly conservative estimate. Six months ago, it was sitting at $81.15. Today, it's $117.26, and that actually represents a downside of almost 10% of the company's current share price. Price target assessments have been on the rise for the last month, however, with five analysts hiking prices so far.
A Huge New Destabilizing Element
If you've ever seen YouTube chemistry videos involving the introduction of raw sodium into water, you'll have an excellent understanding of what Apple entering the electric car market with a whole new breed of battery would be like.
It's also possibly the worst news that Tesla could have heard; going into the end of 2020, Tesla was the big leader in the field, and most of the other market was either major carmakers looking to shuffle some of their own market share to electric vehicles or newly-minted small-time firms. Now, a major firm with a reputation—albeit a dimming one after the last few years of more-of-the-same mobile devices—for innovation, no shortage of capital, and some dazzling connections is about to enter the fray. That's a catastrophe for Tesla, but a catastrophe that may produce some new results.
If Apple does get into the field, and does so fairly rapidly—its target market likely won't wait for an iCar long before jumping to Tesla or the like—then Tesla will have a major new competitor on its hands. Worse yet, one with an already-built walled garden of users who will cheerfully buy an Apple product because it is an Apple product. It's safe to say there's already some overlap between those who would buy a Tesla, and those who would buy an Apple car, so this may result in Tesla losing its own hard-built market share.
An Apple car would go a long way toward restoring the company's fading brand image as an innovator, and likely generate a substantial new revenue stream. For just about anyone else in the market, however, it's like a new Walmart (NYSE:WMT) just showed up in a place where there wasn't one already. If you weren't already considering buying Apple, it may be a good time to start.