By Christiana Sciaudone
Investing.com -- Apple (NASDAQ:AAPL) rose 4% on news it's getting back into the car business.
The tech company expects to build a self-driving passenger vehicle with its own breakthrough battery technology by 2024 in what is being called "Project Titan," Reuters reported, citing people familiar. Apple started working on a car project in 2014, only to dump it last year.
It's the latest in tech companies moving into self-driving. Rival Alphabet (NASDAQ:GOOGL) has already built a robo-taxi service called Waymo, and just a few weeks, Uber (NYSE:UBER) sold its ATG self-driving unit to start-up Aurora to create a company with a $10 billion valuation, Forbes reported.
The battery is key to the Apple car to reduce costs and expand range, Reuters reported, again citing a person familiar with the situation. The company will work with third parties for elements of the system, including lidar sensors.
The news prompted some skepticism.
Citi analyst Jim Suva offered insights into the impact on the company
"Apple conducts R&D in many areas, and while we are not surprised to hear the media once again discuss Project Titan for autos, we are very skeptical that Apple will actually produce a car, as auto sector profitability is much lower," Suva said in a note, according to StreetInsider. "Rather, we believe the outcome of this is likely a further push by Apple of its operating system into consumer and enterprise markets (Apple’s CarPlay coupled with Apple’s cloud and analytics)".
Apple has a history of higher margins than most automakers, according to Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel.
“My initial reaction as a shareholder is, huh?” he told Reuters. “Still don’t really see the appeal of the car business, but Apple may be eyeing another angle than what I’m seeing.”