Why Apple Is Charged Up About the Electric Car Business

Is Apple really setting its sights on developing electric cars? Although the computer and smartphone giant has yet to comment, the answer seems to be "yes."

Last week the Wall Street Journal reported that the Cupertino, Calif., company has created a team of employees to explore an Apple-branded electric car.

Now news has surfaced of a lawsuit filed against Apple this month by electric car battery maker A123 Systems. The company, which makes batteries for BMW, Daimler and Tata, accuses Apple of poaching its employees.

Analysts at Barclays Capital Inc. believe there are good reasons for Apple's charge into the electric car business. Here's why.

Lots of cash: Apple is sitting on a $178-billion hoard of cash and securities. It needs to put that money to use. Why not bet on a global move toward electric vehicles? The global car market stands at an annual $2.2 trillion. Battery electric cars -- excluding the various types of hybrids -- account for about $16 billion. Barclays expects that to grow to $70 billion by 2021.

The auto market "seems big enough for Apple to consider -- especially given its ability to disrupt profit pools in the past by selling premium products against the odds -- and assuming a seamless ecosystem and high-end brand will trump all other factors," the Barclays analysts wrote in a report to investors this week.

A strong brand: Apple's brand will be a huge attraction for the next generation of car customers who are unimpressed with the lineups from traditional automakers such as General Motors, Ford and Toyota, the analysts said.

"It would seem this move would logically follow a watch and enhanced living room strategy so that the car environment is consistent with the Apple ecosystem," the Barclays report said. "We note that Apple's leading brand and style may lend itself well to the...

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