Fwd: Apple, Inc. & Tesla Motors Inc.: Partners or Competitors?
Tesla has dominated the spotlight in EVs and applied AI in transport. Apple CEO Tim Cook views autonomous cars as the 'mother of all AI projects' and a core technology. We think Tesla investors must prepare for serious competition for talent and investment of capital in this market.
Please see our colleague Adam Jonas's note on the same topic, with added color from Tesla's point of view. In a recent Bloomberg interview, Apple's CEO made some of the most candid and direct statements on the company's position on disrupting autos and transport. We share the following thoughts on this evolving topic: 1. Many investors we speak with believe Tesla's lead in miles traveled and data capture is insurmountable. We question this position, particularly at this still very early stage of commercial application in shared autonomy. It is the working assumption of the Morgan Stanley Global Autos & Shared Mobility team and the Tech Hardware team (led by Katy Huberty) that Apple will pursue a strategy in cars/transport, an addressable market we calculate is worth many trillions of dollars in revenue and many hundreds of billions of consumer hours annually. For more, please see our May 15th TSLA downgrade, The Price of Ambition: Downgrade to EW. 2. If Apple is serious about pursuing autonomous driving systems as a 'core technology,' it will have to harvest real-world miles on public roads in very large quantities, perhaps in the not too distant future. There are many potential ways in which it can go about this: (a) with established ride sharing firms, (b) with established car rental firms, (c) in partnership with OEMs, (d) through its own proprietary machine learning network, (e) more than one or all of the above. 3. From the Apple perspective, core self-driving software is likely the first step in its autonomous pursuits, and we believe Apple will eventually move beyond just software into designing a full car and/or launching a platform for third party services and content over time.
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Please see the full report for risks, disclosures and other important information.
Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures.
Morgan Stanley Wealth Management Not Acting as Municipal Advisor Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule") and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule.
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The copyright in materials provided by Morgan Stanley is owned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.
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From: "Morgan Stanley" <████████████████████████████>
Subject: Apple, Inc. & Tesla Motors Inc.: Partners or Competitors?
Date: June 14, 2017 at 12:29:51 AM EDT
To: <████████████████████████>
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Apple, Inc. & Tesla Motors Inc.: Partners or Competitors?
Tesla has dominated the spotlight in EVs and applied AI in transport. Apple CEO Tim Cook views autonomous cars as the 'mother of all AI projects' and a core technology. We think Tesla investors must prepare for serious competition for talent and investment of capital in this market.
Please see our colleague Adam Jonas's note on the same topic, with added color from Tesla's point of view. In a recent Bloomberg interview, Apple's CEO made some of the most candid and direct statements on the company's position on disrupting autos and transport. We share the following thoughts on this evolving topic: 1. Many investors we speak with believe Tesla's lead in miles traveled and data capture is insurmountable. We question this position, particularly at this still very early stage of commercial application in shared autonomy. It is the working assumption of the Morgan Stanley Global Autos & Shared Mobility team and the Tech Hardware team (led by Katy Huberty) that Apple will pursue a strategy in cars/transport, an addressable market we calculate is worth many trillions of dollars in revenue and many hundreds of billions of consumer hours annually. For more, please see our May 15th TSLA downgrade, The Price of Ambition: Downgrade to EW. 2. If Apple is serious about pursuing autonomous driving systems as a 'core technology,' it will have to harvest real-world miles on public roads in very large quantities, perhaps in the not too distant future. There are many potential ways in which it can go about this: (a) with established ride sharing firms, (b) with established car rental firms, (c) in partnership with OEMs, (d) through its own proprietary machine learning network, (e) more than one or all of the above. 3. From the Apple perspective, core self-driving software is likely the first step in its autonomous pursuits, and we believe Apple will eventually move beyond just software into designing a full car and/or launching a platform for third party services and content over time.
This alert is sent from:
Andrew Atlas,
You received this because you requested that you receive content and reports from: APPLE INC.
Please contact your FA if you want to unsubscribe from the alerts.
Disclosures:
Please see the full report for risks, disclosures and other important information.
Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures.
Morgan Stanley Wealth Management Not Acting as Municipal Advisor Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule") and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule.
Copyright
The copyright in materials provided by Morgan Stanley is owned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.
© 2017 Morgan Stanley Smith Barney LLC. Member SIPC.