There are rumors that Apple is developing an Apple-branded car that will come out in the next ten years. Bloomberg’s Mark Gurman published an article about Apple’s search for existing auto manufacturer partners to produce this car. The problems encountered, and how Apple’s more traditional way of launching new products is better for itself.
It was first reported in January this year that Apple is considering an existing automaker as an official partner of Apple Cars. It is said that several automakers, including Hyundai and Nissan, have approached Apple, but these negotiations seem to have yielded no results, showing that automakers are generally unwilling to downplay their brands.
As Apple has learned recently, its strategy of cooperating with existing automakers has brought about problems related to brand image, and the tech giant is not used to it, mainly because it relies on long-term contract manufacturers. Manufacturers are very happy to assemble iPhones, iPads and Macs in their own factories, hidden behind the public-facing Apple brand, but this is not the case with established car manufacturers.
In this case, Apple will develop an autonomous system for the car, internal and external design, and in-vehicle technology, while leaving the final product to the car manufacturer. Such a transaction essentially requires an existing car company to give up its brand and become a contract assembler for a new competitor.
This is like Apple asking rival Samsung Electronics to produce iPhones. Apple wants to challenge the assumptions of how cars work, how the seats are made, and how the body looks. A traditional car manufacturer is unwilling to help such a potentially disruptive competitor.
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Apple obtains high profits by focusing on products and development while outsourcing manufacturing (which is usually a low-margin business). This in turn allows it to avoid spending billions of dollars to build its own factories, not to mention employee salaries and training, and additional debt.
In contrast, the business model of the auto industry is different, including automakers operating large-scale factories themselves and strictly controlling the supply chain at a very high cost. The profit margin of this business model is lower than Apple’s previous levels.
According to industry sources, this is why Apple is more likely to cooperate with OEMs such as Foxconn, which already has a cooperative relationship with Apple. Foxconn is the main assembler of the iphone, and recently launched an electric vehicle chassis and a software platform to help automakers bring their models to the market faster. An Apple employee involved in manufacturing said that Foxconn is used to letting Apple engineers tell it what to do, and Foxconn’s factories are already full of Apple-designed equipment.
Contract manufacturer Magna is another possibility. About five years ago, when Apple first began investigating the possibility of developing electric cars, it was in discussions with assemblers about making cars. Magna also has extensive experience in automobile manufacturing, having assembled luxury models for companies such as BMW, Daimler and Jaguar Landrover. Magna is the most logical choice. The partnership between Apple and Magna will be far more stable than that between Apple and existing automakers, which is more likely to trigger a power struggle.
Nevertheless, a recent job list shows that Apple may have set its sights on its own products. Apple is looking for a “senior hands-on manufacturing engineer” for its special project team, which is leading its automotive research and development efforts. The successful candidate will be responsible for cultivating a team of engineers focused on manufacturing strategy and supply chain, using their experience in aluminum, steel and composite materials, which are key materials for automobiles.
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