Investors’ reaction to recent reports that Apple (NASDAQ: AAPL) will launch an Apple-branded EV/self-driving car is only a knee-jerk reaction that could be short-lived, TFI Asset Management analyst Ming-Chi Kuo wrote in a recent note to clients.

Investors rushed to buy shares of concept stocks in different markets globally following reports about AAPL EV/self-driving cars. However, Kuo says that there is an “exceptionally high” risk of entering Apple Car concept stocks, mainly due to three uncertainties.

“We predicted in a previous report that Apple will launch Apple Car in 2023–2025. However, our latest survey indicates that the current development schedule of Apple Car is not clear, and if development starts this year and everything goes well, it will be launched in 2025–2027 at the earliest. Due to changes in the EV/self-driving market and Apple's high-quality standards, we would not be surprised if Apple Car's launch schedule is postponed to 2028 or later,” Kuo says.

Secondly, there is significant uncertainty related to suppliers. Current names that are being thrown in the mix are only speculations.

“We believe that the current heated discussion on the potential specs of Apple Car reflects the market's high expectations of this product. However, because the EV/self-driving car technical specs are still evolving, and the Apple Car launch is scheduled for 2025–2027 at the earliest, we believe that the Apple Car specs have not yet been finalized. Based on our bull case scenario, if Apple Car will be launched in 2025–2027, the suppliers/specs will not be decided until 2023–2025 at the earliest.”

Third, there is a major uncertainty of how competitive the Apple product will eventually be.

“The market has high expectations for Apple Car. Still, we remind investors that although Apple has a variety of competitive advantages, it is not always successful in new business. For example, Apple failed to enter the smart speaker market. The demand for HomePod and HomePod mini were lower than expected, and the development of new smart speaker models had been temporarily suspended.

“The competition in the EV/self-driving car market is fiercer than that for smart speakers, so we think it's perilous to jump to the conclusion that Apple Car will succeed. If Apple Car wants to succeed in the future, the key success factor is big data/AI, not hardware. One of our biggest concerns about Apple Car is that when Apple Car is launched, the current self-driving car brands will have accumulated at least five years of big data and be conducive to deep learning/AI. How does Apple, a latecomer, overcome this lagging gap?” writes Kuo.

Finally, he reiterates that investors shouldn't be buying Apple Car concept stocks at this time.