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Progress

Much of the news surrounding Apple these days has to do with secrets brewing inside the Cupertino campus.  From all the speculation thus far, the company seems to be working on a car that resembles the shape of a minivan.  Furthermore, there is a lot of speculation which indicates a strong potential that this car will be an electric vehicle

The super secret project in the Cupertino campus is being worked on by hundreds of employees, such as experienced managers from Apple’s iPhone unit.  It is also worth noting that Apple is taking some of the top employees from leading auto manufacturers.  One of these employees includes Steve Zadesky, a Vice President at Apple in product design.  He is a former engineer at Ford (F), and is in charge of Project Titan. 

It is worth noting that Apple poached Steve Zadesky from Ford.  However, Apple has coaxed other employees from other well known car companies to come to Apple as well.  This includes the ex-head of research and development at Mercedes, Johann Jungwirth.  Apple (AAPL) has also been hiring employees at Tesla (TSLA).  Elon Musk is probably not very happy about that, but it’s harder for him to complain since he has used similar tactics for his company.

Potential

The US car market has done well in 2014, with 16.5 million new cars being sold.  According to Kelley Blue Book data, the average price for a light vehicle sold was $32,500.  The average price for a vehicle multiplied by the number of cars sold tells us that the US car market is valued at well over half a trillion dollars.  That’s the US car market alone.  If Apple, an international company, expanded its car operations abroad, this would expand the areas where Apple can turn over additional profits.

Bottom Line

Obviously, we can only speculate about how far Apple’s ambitions with regards to building a car stretch.  Judging from the employees Apple has added to its arsenal in the last year, it is clear that Apple is definitely working on some secret project, and that it is deeply tied into the auto industry. 

The space Apple would be operating in, should it choose to enter the car market, is a large one.  If Apple makes a successful car that people want, then the company stands to gain big from it, adding even more sustainable growth to its already massive market cap.

AAPL is a Zacks Rank #2 (Buy).  The company has reported positive earnings surprises in each of the last 4 quarters, beating our consensus every time.  Our current EPS consensus for the current quarter is $2.10/share.

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