Here’s the main reason why Apple wants to get into the low-profit car business, according to Goldman Sachs

Here’s the main reason why Apple wants to get into the low-profit car business, according to Goldman Sachs

FILE PHOTO: VW re-starts Europe's largest car factory after coronavirus shutdown

Reuters

Apple's reported interest in developing and selling its own cars raised eyebrows this week as it would catapult the high-margin iPhone maker into a historically low-margin business.Even in an optimistic scenario where Apple sells hundreds of thousands of vehicles, the earnings impact would be minimal, according to a note from Goldman Sachs.The real reason why Apple wants exposure to the car business is because of the increased time "consumers are likely to spend in self driving cars using information services as they make their way from point A to point B," Goldman said.Visit Business Insider's homepage for more stories.

Apple's desire to develop and sell vehicles sent shares surging as much as 6% since Reuters broke the news Monday afternoon. 

But Apple's profit potential in the low-margin car business is minimal, even in optimistic scenarios, Goldman Sachs said in a note on Wednesday. More upbeat scenarios include Apple capturing 5% of the electric vehicle market by 2025, selling 417,000 vehicles at an average price of $75,000.

"We believe that a car makes sense for Apple as a hardware platform supporting its services but the lower profitability of the auto business likely means