Apple is "almost certainly" exploring how to build an entire car but would likely need to partner with a manufacturer due to the complexities of making a whole vehicle, a top analyst said.
The comments come after it was revealed on Friday that the U.S. technology giant received a permit to test self-driving cars in California.
It has been long-rumored that Apple has been working on a car with the codename Project Titan, but recent reports suggested that it has scaled back its ambitions and is no longer attempting to build the entire vehicle. Instead, the focus is said to be on creating software to go into autonomous cars.
Gene Munster, who was a widely followed analyst at Piper Jaffray before leaving to launch venture capital firm Loup Ventures, said Apple's "dream car" would be one where the company owns both the hardware and software like it has done with other products such as the iPhone to create "superior" experiences.
But doing this with a car could be tough.
"In an ideal world, Apple's car project would involve the company building the actual automobile, combining hardware and software," Munster wrote in a blog post on Monday.
"In reality, the complexity of designing and manufacturing a vehicle may push the company to integrate deeply with an automotive partner or partners in an effort more similar to the Apple TV — plugging Apple's technology into an existing product."
Currently, Apple has an in-car operating system (OS) called CarPlay which users can browse on a screen within the vehicle to access apps or send messages. Munster notes that Apple has the necessary components to build upon this with technology such as its voice assistant Siri, image processing which will be key to driverless cars, and security such as its fingerprint sensor.
But a manufacturing partner would likely be required because the "auto market poses challenges that Apple may not be able to overcome on the hardware side", Munster said.
Just like Foxconn makes the iPhones that Apple designs, partnering with companies capable of building cars to the tech firm's specifications might be the route it chooses. Still, Apple is far behind companies such as Tesla and Google which actually have autonomous vehicles driving around now and could be years away from even a completed design for a car, Munster said.
"Aside from finding a partner, we note that the typical automotive design process takes 5-7 years. Even on an accelerated time table, Apple is likely multiple years away from a completed hardware design for a car," the VC noted.