Hyundai EgmpSource: Hyundai

What you need to know

  • Apple may look away from existing manufacturers to help build Apple Car.
  • A new report from Bloomberg says talks with firms including Hyundai "have not gone well".
  • Apple may instead look to work with a lesser-known manufacturer rather than a recognizable automaker.

A new report says Apple Car talks with manufacturers have not gone well, and that Apple may be considering changing tactics when it comes to building it.

From Bloomberg:

Apple Inc. has a tried-and-true approach to launching new products: The company designs in-house, sources its own components, and works with a contract manufacturer to assemble it for sale. As the tech giant plots a foray into the car market, it could adopt a similar strategy -- working with a lesser-known contract manufacturer -- after talks with some brand name automakers stalled.

Specifically, the report says that discussions with manufacturers including Hyundai "have not gone well". Apple was previously exploring a scenario whereby it would develop much of the vehicle's tech including an autonomous driving system and the interior/exterior design, before leaving final production to an established car maker. Reports this year have swirled that Apple had been considering several different manufacturers including both Kia and parent company Hyundai. However, the report notes this is a tough ask for potential rivals in the business:

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.

Apple even reportedly met with Ferrari last year, but talks didn't advance. Now, Bloomberg suggests that Apple may turn to a contract manufacturer instead as it does with the iPhone 12 and previous generations, possibly even established supplier Foxconn:

Apple is more likely to go with a contract manufacturer because that's the business model they're used to, said Eric Noble, president of consulting firm the CarLab. He thinks a partnership with an existing carmaker would be a power struggle because both companies are used to tightly controlling their supply chains. This is why Foxconn and Magna are two primary contenders for Apple's business, according to industry insiders.

Foxconn makes sense because of the existing relationship with Apple and its own foray into making cars, the report says one Apple employee also noted 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."

The report states that the CEO of "a well-known self-driving car company" was "surprised" Apple was talking to existing car manufacturers when "an option like Magna exists".

Still very much a long way off, the Apple Car is rumored to be a very expensive electric car, capable of autonomous driving. Gurman has previously stated Apple Car is at least five years away.