Apple (AAPL) Said to Plan Relatively Rapid Entry into Auto Industry

(Updated - February 20, 2015 7:58 AM EST)

Apple (Nasdaq: AAPL) may have automobile ambitions, but there's still going to be a few years before an 'iCar' hits the road.

According to Bloomberg, Apple isn't likely to begin selling its car before 2020. While that might seem like quite a long time to wait, it generally takes anywhere from five to seven years for an established manufacturer to develop and begin production of a new automobile. That's generally why you might, say, only see a redesigned Ford Mustang or Chevy Silverado hit the streets every five years.

Of course, a portion of that is allowing all the consumers that like the features and design of a current model-year vehicle to buy one; automakers constantly adjusting vehicle design would probably hamper sales and cause less brand loyalty. Retooling factories and sourcing new parts would also be some of the myriad of factors that would drive up costs for a new vehicle to go into production each year.

It was reported earlier in the week that Apple had begun poaching top engineering talent from now-defunct battery maker A123 Systems in 2014. The news and market speculation hinted that Apple's first vehicle would run solely on electricity. Both Tesla Motors (Nasdaq: TSLA) and General Motors (NYSE: GM) are looking to launch new electric vehicles with ranges around 200 miles on a single charge and cost $40,000 or less.

While Apple recently reported having $178 billion in cash, the company spent just $6.04 billion on research and development over the past year. Activist investors have been pushing for better capital allocation plans for shareholders and, even with larger buybacks and dividends, Apple would certainly have enough to withstand a few cycles in the auto industry to establish itself.

Shares of Apple are indicated higher in early trading Friday.

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