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Apple Leases Cars from Hertz to Test Self-Driving Vehicles

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Per media reports, Cupertino-based tech giant, AppleAAPL , has leased a few cars from car rental company, Hertz Global Holdings Inc HTZ , to test its self-driving car technology.

Reportedly, Apple has leased Lexus RX450h SUV models from Donlen, a subsidiary of Hertz. Shares of Apple hardly saw much impact. However, shares of Hertz jumped over 13% following the reports.

Nevertheless, there has been no official word on the matter from either party.

The development comes on the heels of Alphabet's GOOGL self driving car unit Waymo's tie up with Avis Budget Group CAR .The collaboration aims to support and service Waymo's growing autonomous vehicle fleet.

While talking to Bloomberg TV last week, Apple CEO Tim Cook, confirming longstanding rumors, stated that the company was indeed working on a self-driving car technology artificial intelligence (AI) project. As a matter of fact, he referred to the project as the "mother of all AI projects."

Apple Inc. Price

Apple Inc. Price | Apple Inc. Quote

For a while now, there has been tremendous speculation about Apple's autonomous car-technology development efforts, which is apparently codenamed Project Titan.

Project Titan has been in the news since 2014. Initially, it was reported that Apple was working on an "iCar." There were numerous reports of the company making sound talent acquisitions as well as collaborating with the likes of BMW for the car design. VP of Product Design, Steve Zadesky was permitted to set up a 1,000-strong workforce for the project.

Later on, the "iCar" rumors lost steam as the project was reportedly marred by conflicts and management troubles. Following this, the company decided to prune some of the workforce assigned to the project. In Jan 2016, with the resignation of Zadesky, things became more blurred. However, Bob Mansfield was reportedly brought on board at this point.

It was speculated then that Apple may not be designing a full-fledged car but an autonomous self-driving car technology platform.

Why Self Driving Cars?

Apple's revenues continue to be driven by iPhones. For now, with iPhone 7 and 7 Plus performing relatively well and the excitement building up for iPhone 8 (dubbed as a super cycle), Apple can breathe easy.

However, increasing competition, especially from cheaper Chinese handsets like Oppo, Vivo and Xiaomi, is emerging as a big concern. Apple is under great pressure to find newer revenue streams. Apple Pay, Apple Watch and Apple Music are some of the new ventures undertaken by the company to boost the top line. Notably, revenues from App Store are growing.

Apple is working on developing technologies such as AI and augmented reality/ virtual reality (AR/VR), which are fast emerging as lucrative business opportunities. The company's interest in the autonomous car project is understandable as it is being labeled as another big business opportunity.

According to Boston Consulting Group estimates, the autonomous car market will be worth $42 billion by 2025 and $77 billion by 2035. Per Statista, the market for fully autonomous vehicles will grow to almost $6 billion while partially autonomous vehicles market will reach $36 billion by 2025. However, analysts are skeptical about self-driving cars being feasible before 2020, at least.

Zacks Rank & Stock Price Movement

At present, Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

In the past one year, shares of Apple have registered growth of 58.4% compared with the Zacks categorized Computer Mini industry's gain of 57.8%.

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Avis Budget Group, Inc. (CAR): Free Stock Analysis Report

Hertz Global Holdings, Inc (HTZ): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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