Coronavirus will hit Apple revenues this year. The company’s share price fell in response to Tuesday’s warning before recovering yesterday. The bigger issue for many companies in 2020, including Apple, will arguably be the intense pace of change spurred by technology.
Innovation is a critical variable for policymakers. The wide dispersion in share prices for companies is proving to be a useful yardstick for ‘creative destruction’.
Tesla has become the bellwether for disruptive technology. Tesla has stolen a big march over conventional auto manufacturers. The share price for the EV pioneer climbed to a fresh high yesterday and is now up 119.3% since the start of 2020, and up 175.7% since the start of 2019. By contrast, General Motors has seen its share price edge up 2.9% since the start of 2019. A ‘teardown’ of the Model 3 suggests that Tesla has a six-year lead over mainstream rivals as a result of chips designed in-house.
The disruptors face the threat of disruption too. A new EV start-up in Israel is ‘reinventing the wheel’: REE has managed to squeeze “a vehicle’s motor, steering, suspension, drivetrain, sensing, braking, and electronics all into its wheels.”
Nevertheless, Tesla has a significant lead in the race for autonomous cars. The advent of 5G may stretch Tesla’s lead in connected vehicles and eventually, autonomous driving. But the car industry is not the only example of intense disruption, where old business models are being upended, causing share prices to diverge dramatically within sectors.
