A new Bloomberg report has detailed Apple’s effort on building its own car and why it might not find a partner so easily.
The report notes that Apple wants to adopt technology similar to iPhone production for the Apple Car. While this approach has worked for iPhones and other Apple products, it is unlikely to work for building a car.
Apple essentially wants a contract manufacturer to build and assemble a car with its own design, specs, and requirements. While this might not seem like a big deal on paper, no reputed car brand would be interested in simply acting as a contract manufacturer for Apple.
A longtime manager at both Apple and Tesla Inc. said this would be like Apple asking bitter smartphone rival Samsung Electronics Co. to manufacture the iPhone. Apple wants to challenge the assumptions of how a car works — how the seats are made, how the body looks, the person said. A traditional automaker would be reluctant to help such a potentially disruptive competitor, said the person, who asked not to be identified discussing private matters.
Another issue with contract manufacturing is that it is a low-profit margin business, which is why Apple has not delved into it. This could also be why any reputed car maker would not be interested in acting as a contract manufacturer for Apple.
Apple was reported to be in talks with Hyundai-Kia for assembling the Apple Car, but the discussions fell through. Reportedly, Apple’s self-driving car team also met with Ferrari representatives last year, but the talks did not advance much.
Eric Noble, president of consulting firm CarLab, believes that Apple will end up going with a contract manufacturer because they are used to this business model. This is why he believes Foxconn and Magna are two primary contenders for assembling the Apple Car.
An Apple employee involved in manufacturing said Foxconn is used to having Apple engineers tell it what to do and that the company’s factories are already filled with Apple-designed equipment.
Despite the barrage of Apple Car reports coming out recently, one must remember that the vehicle is still half a decade away from its launch at the earliest. Apple is still in the early stages of developing the car, so there’s a lot of work that still needs to be done before the vehicle reaches the assembly stage.[Via Bloomberg]