Given the issue with margins, the other way to boost valuation is growth, and there’s little question that the market for EVs is growing. EVs currently account for only 3% of all new vehicles sold. By 2025, one estimate has EV’s accounting for 30% of all new vehicle sales. Analysts at Loup Ventures expect Tesla to hold about one-third of the global market for EVs at the end of that five-year period.

Global sales totaled around 86 million units in 2019 and are forecast to fall to around 70 million this year. If sales recover to around 90 million in 2025, 30 million of those vehicles will be EVs, and Tesla, which has forecast 500,000 unit sales for this year, is expected to sell 10 million of those. Volkswagen, the world’s largest carmaker by unit volume, manufactures some 11 million vehicles a year. If Apple begins to deliver EVs in 2024, it will face a slew of competitors as it carves out space in the market, although even the idea of an Apple-branded EV could send chills up the spine of Tesla investors.

The biggest thing that Apple has going for it, should it decide to get into the transportation business, is its brand. However, can the company use that as a lever to separate consumers from $30,000 instead of $1,000 for a new iPhone?

As Morgan Stanley auto industry analyst Adam Jonas told Barron’s: “Apple may have an interest in enhancing the driving experience with vertical integration of hardware, software and services.” If Apple chooses to go that way, the company avoids the low-margin, capital-intensive auto manufacturing business.

Even then, is the effort worth the reward? If Apple doesn’t build the cars (or have the final voice in what the hardware needs to provide), it doesn’t control the vertical integration that Jonas sees as the company’s opportunity.

The Reuters report boosted Apple stock by nearly 3% on Tuesday, but the shares traded up only fractionally Wednesday morning, at $132.02 in a 52-week range of $53.15 to $137.98. The price target on the stock is $127.11.

Tesla stock traded down about 1.5% on Tuesday and was up about 0.8% Wednesday morning to $645.37. The 52-week trading range is $70.10 to $695.00, and the consensus price target is $411.53.

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