Apple could soar 66% in bull-case scenario as it searches for a 'golden' partnership to build electric vehicles, Wedbush says

Brendan Smialowski/AFP, Richard Drew/Associated Press

  • Apple could surge to $225 in Wedbush’s bull-case scenario as the iPhone maker searches for a partner to help build electric vehicles.
  • Wedbush expects Apple to strike a formal partnership with an auto manufacturer in 2021, according to a Monday note.
  • Recent media reports suggest Apple has held talks with Hyundai and Nissan as it searches for a partner. 
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Apple’s ambitions in the electric vehicle space are heating up, as recent media reports suggest the iPhone maker has held talks with both Hyundai and Nissan on a potential partnership to develop an Apple car. 

Wedbush analyst Daniel Ives expects Apple to strike a formal partnership with an auto manufacturer sometime in 2021, which could lead to a bull-case scenario where shares of Apple surge 66% to $225, according to a Monday note.

Ives assigned an 85% chance that Apple will announce an EV partnership over the next three to six months, and pressure for Apple to finalize its plans is likely on the rise as recent announcements from Ford and General Motors revealed aggressive EV ambitions.

“With a Biden-driven green tidal wave on the horizon, we believe now is the time for Apple to dive into the deep end of the pool on the EV front,” Ives said.

The electric vehicle sector is “entering a golden age” as several factors including advancing battery technology, regulatory incentives and tax credits, and more affordable models create “a perfect storm for demand,” according to the note.

“With a market that could be $5 trillion+ over the next decade, if Apple gets just 5% – 10% of share this could represent another major growth pillar within Cupertino,” Ives explained.

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To capitalize on the opportunity, a “golden partnership” could set Apple up well for the next decade.

Ives speculated that Apple could strike a strategic partnership with Hyundai, Tesla, Ford, Nio, or Volkswagen.

The top two choices, according to Ives, are Hyundai and Volkswagen. Hyundai has “huge” production capabilities thanks to its proprietary Electric Global Modular Platform, and its robotic assembly design could fit well with Apple’s software and autonomous integration capabilities, Ives said. 

Meanwhile, Volkswagen’s Modular Electric Drive Matrix “is a next generation design framework that would allow easy integration of new models from the likes of Apple,” Ives said. Volkswagen is also invested in QuantumScape, which could ultimately develop a differentiated battery pack for electric vehicles with its solid state battery technology, according to the note.

“In a nutshell, Apple with the right partner would be a major force in the EV industry and could disrupt market share from the likes of Tesla, GM, Ford if the company is able to get the Apple Car on the road by 2024,” Ives concluded.

Wedbush reiterated its Outperform rating and 12-month price target of $175 on shares of Apple, representing potential upside of 29% from Friday’s close. 

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