Apple reportedly in talks with multiple Japanese automakers over 'Apple Car'

AppleInsider

With "Apple Car" rumors heating up, a report on Thursday claims Apple is in discussions with at least six Japanese automakers over potential production and supply partnerships.

Citing an executive at an automotive parts supplier, Nikkei reports Apple is negotiating deals with a number of Japanese companies that could result in contributions to a much-rumored "Apple Car."

"At least six companies are in negotiations," the person said.

Apple is said to be pushing for contracts that would see Japanese auto firms join the effort under a horizontal division of labor model, a strategy Apple has used to great success in the production of iPhone, iPad and other consumer products. The tech giant plans to develop and design a so-called "Apple Car" and outsource production to third-party manufacturers, specifically automotive companies, according to the report.

The Japanese firms are not exactly jumping at the chance to work with Apple, the source said, noting automakers face a difficult decision in joining an "Apple Car" supply chain. Apple is notoriously demanding of its suppliers and while being part of the brand's supply chain typically drives profit, it also requires major changes that could include diverting important resources.

Japanese companies are also wary of being relegated to the role of subcontractor, a worry shared by another rumored "Apple Car" partner. A report last week claimed Hyundai executives are "agonizing" over a potential collaboration, saying that while a partnership might initially boost brand image, those benefits could quickly fade.

Today's report counters previous claims that Apple is on the verge of finalizing a deal with Hyundai to manufacture the vehicle at Kia's U.S. facilities. With negotiations ongoing on multiple fronts, Apple appears to be entertaining a variety of options as it works toward a contract.

"I don't know if it will be decided by the Korean manufacturer. We are in the process of negotiating where (Apple) will make it," one Japanese supply executive said.

The report claims Apple's research facility in Yokohama, which is said to focus on materials, vehicle and health segments, acts as a point of contact with domestic vehicle manufacturers and parts producers.

"Apple Car" rumors have accelerated over the past few weeks, with reports in the U.S. and South Korea suggesting Apple is closing in on a manufacturing deal with Hyundai and its Kia subsidiary. The South Korean automaker in January confirmed it was in talks to produce the vehicle before quickly walking those statements back.

On Wednesday, South Korean news outlet Dong-A said Apple plans to ink a 4 trillion won deal with Kia on Feb. 27 to secure access to the automaker's U.S. plant in Georgia. That report cited a 2024 start date and claimed initial capacity would be set at 100,000 cars per year with the potential to increase output to a maximum of 400,000 units a year.

Earlier in the week, analyst Ming-Chi Kuo predicted Apple to tap Hyundai's E-GMP electric vehicle platform, with Hyundai Mobis offering assistance with component design and production. Kuo also believes Apple will be in charge of self-driving hardware and software, semiconductors, battery technologies, form factor and user experience, with other -- arguably a bulk --of duties handed off to Hyundai/Kia.

Most recently, CNBC sources confirmed that Apple is nearing a deal with Hyundai to produce a fully autonomous vehicle designed to be operated without a driver. That report suggests "Apple Car" might be marketed as an enterprise mobility vehicle before being sold to consumers.

M68000

Imagine trying to build a car but have to rely on somebody else to do it.  The challenges with knowing what is going on and controlling things.  All the levels of managers and their own ideas of what should be done.  There was a recent article,  I think about Hyundai,  that said their execs are not sure about such a thing.  After all,  who could blame them,  they have their own company with their own plans. Would it just be easier for Apple to build manufacturing plants from the ground up? I mean after all,  it seems every quarterly and yearly financial report is another “record breaking” event and Apple seems to have boatloads of money.  One of the real questions of course is who would buy an Apple car?  just because Apple is great at selling hundreds of millions of iPhones ,  that does not mean those customers want or need an Apple car.

mattinoz

What stops them having multiple models each made by a different group?

Apple Car Mini (2 + 2ish people) , Apple Car (5 people) & Apple Car Max (7 people)

Well apart from the trade dress issues of Apple car mini.

george kaplan

M68000 said:

 One of the real questions of course is who would buy an Apple car?  just because Apple is great at selling hundreds of millions of iPhones ,  that does not mean those customers want or need an Apple car.

Those of us with memories which go back more than a decade recall that same argument was made about cellular phones and watches. Why would a computer company succeed with a cellphone much more expensive than competing models? Why would a computer company hope to carve away a small slice of a watch industry  owned by European manufacturers on the high end and cheap Chinese factories on the low end?

Apple manages to find a way to place the item they’re designing in a different light. The iPhone synthesized the iPod with a phone and rudimentary computer applications, while the Apple Watch took the device deep into areas of fitness and health biometrics. The iPhone is still setting sales records when Nokia, Motorola, Ericsson, and HTC are out of the category or simply a trade name for another company. AppleWatch sells multiples of sales volume compared to the titans of the luxury watch industry, and at comparable margins.

Whatever “Apple Car” turns out to be, it will be a rethinking of mobility from what we know now. Simply building another driver-operated passenger car is old thinking. Apple is skating to where the puck will be.

lolliver

M68000 said:

Imagine trying to build a car but have to rely on somebody else to do it.  The challenges with knowing what is going on and controlling things.  All the levels of managers and their own ideas of what should be done.  

Apple already does this with every device they sell. Yes, entering into car manufacturing is going to be very different to personal electronics but that doesn't mean it's not possible. Magna International are similar to Foxcon in the automotive industry so this type of arrangement is not new to the auto industry. There are also a lot of partnerships between different car brands to release similar  vehicles based on the same framework. So they already know how to work with manafers and visions from different companies and achieve agreed upon outcomes.

It makes a lot more sense for Apple to outsource production and assembly as that's how they operate for all their other devices. It's more an issue of finding the right manufacturing partners who are willing to work on Apple's terms. 

The main focus of this entire article (and others like it) are on the car companies and if they are willing to work with Apple.If Apple can find the right manufacturing partners I'm sure it will work well for Apple. If this will be true for the established vehicle brands will be up to them to decide. 

entropys

I am starting to think it is actually just about getting Apple tech and patent ideas into existing car companies’ products.

cg27

I would say a new phone with billion small components and new functions once a year is much harder to build than a car .And this car would be essentially controlled by an iPad. Sure initial logistics could be an issue and who says they won’t build a huge factory themselves a couple years down the road? Steve Job never made an Apple
CPU like they are doing now right?

I would say you don’t have a clue how difficult it is to engineer and manufacture autos with dozens of complex moving mechanical systems, let alone complex electro-mechanical systems.  Apple’s products barely have any moving parts.  That’s not to discount how difficult it is to mass produce electronics, but automobiles are orders of magnitude more complex in terms of safety and environmental regulations, electronics, and logistics of big heavy complex components arriving just-in-time, etc etc etc.  But I know, cars are ubiquitous and seem to grow on trees so it must be easy.

tzeshan

There is a big hurdle facing Apple. Almost all automotive companies provide three years/thirty six thousand miles bumper to bumper warranty. Electronics companies only provide one year warranty on their products. 

applejakes

Can we assume that the price tag will be quite hefty at 100K units? Even at 400K units an iCar could draw a premium.

Also, are we looking at an exchange program like the iPhone?

I realize I'm getting way ahead here but just thinking out loud.

fastasleep

entropys said:

I am starting to think it is actually just about getting Apple tech and patent ideas into existing car companies’ products.

You're starling to think wrong, as five years of patents and rumors have suggested the exact opposite.

fastasleep

cg27 said:

I would say a new phone with billion small components and new functions once a year is much harder to build than a car .And this car would be essentially controlled by an iPad. Sure initial logistics could be an issue and who says they won’t build a huge factory themselves a couple years down the road? Steve Job never made an Apple
CPU like they are doing now right?

I would say you don’t have a clue how difficult it is to engineer and manufacture autos with dozens of complex moving mechanical systems, let alone complex electro-mechanical systems.  Apple’s products barely have any moving parts.  That’s not to discount how difficult it is to mass produce electronics, but automobiles are orders of magnitude more complex in terms of safety and environmental regulations, electronics, and logistics of big heavy complex components arriving just-in-time, etc etc etc.  But I know, cars are ubiquitous and seem to grow on trees so it must be easy.

"PC guys aren't just going to walk in" etc

You should really read the other posts on this subject from the past week. A lot fo this has been covered and you clearly haven't read any of the stuff regarding utilizing existing drivetrains, manufacturing partners, hiring chassis designers from Porsche, etc.

This patent maybe suggests Apple knows how to design moving parts? This is a more recent of one of dozens and dozens of car-related patents they have on all sorts of moving parts of a vehicle:

https://www.patentlyapple.com/patently-apple/2021/02/apple-wins-a-second-project-titan-patent-today-covering-a-next-gen-active-suspension-system.html

GeorgeBMac

cg27 said:

I would say a new phone with billion small components and new functions once a year is much harder to build than a car .And this car would be essentially controlled by an iPad. Sure initial logistics could be an issue and who says they won’t build a huge factory themselves a couple years down the road? Steve Job never made an Apple
CPU like they are doing now right?

I would say you don’t have a clue how difficult it is to engineer and manufacture autos with dozens of complex moving mechanical systems, let alone complex electro-mechanical systems.  Apple’s products barely have any moving parts.  That’s not to discount how difficult it is to mass produce electronics, but automobiles are orders of magnitude more complex in terms of safety and environmental regulations, electronics, and logistics of big heavy complex components arriving just-in-time, etc etc etc.  But I know, cars are ubiquitous and seem to grow on trees so it must be easy.

Engineering 100 year old technology shouldn't be all that hard -- or expensive.   Which is one reason why American manufacturers (and others) have been dragging their feet on releasing EVs:   they want to milk that cow for every drop before moving on to modern technology.  Plus, they have had to deal with the fact that their engineers probably didn't have a clue on how to build a modern car.

sirdir

The Japanese believe in H2, I don’t see a bright future fit them 

qwerty52

The conclusions from all those rumors are two: a) we don’t know yet for sure who is going to produce Apple Car 

b)  the rumors coming this days are confirming the fact that Apple Car is finalized and almost ready for test production.

ireland

mattinoz said:

What stops them having multiple models each made by a different group?

Apple Car Mini (2 + 2ish people) , Apple Car (5 people) & Apple Car Max (7 people)

Well apart from the trade dress issues of Apple car mini.

They won’t be able to use the name “mini” for starters.

ireland

Wiseman said:

I would say a new phone with billion small components and new functions once a year is much harder to build than a car. And this car would be essentially controlled by an iPad.

You're new around here. Are you a shareholder? Your comment is a total simplification. Have you seen how much car market has changed? Have you seen the competition heating up? Latest model S tech, and upcoming Rivian and Lucid vehicles. And the many other competitors. The competition is fierce. I would argue building an EV is much more complex than building an iPhone, for Apple  Apple's brand is on the line, so this car will have to be exceptional on many fronts. The driving and handling of the car will ruthlessly be compared to their competitors who are iterating as we speak. Apple's car will be compared to Tesla, Rivian and Porsche Taycan whether they like it or not. And a smart car has more components than a smart phone btw. Make no mistake, this challenge is a big one for Apple. A fierce undertaking. And in spite of the recent rumours, yes, this car will indeed be able to driven physically by a human being. And will be a consumer product. I agree with @cg27 above.

ireland

entropys said:

I am starting to think it is actually just about getting Apple tech and patent ideas into existing car companies’ products.

I am not seeing this at all. Apple is purely looking for component suppliers. They'll probably end up doing their own chassis design (Porsche VP of chassis design they just hired). And if they use chassis from competitors expect them to modify the chassis design to an unrecognisable degree. Apple knows what they are up against and understand the standards to beat are high and are heating up.

ireland

qwerty52 said:

The conclusions from all those rumors are two: a) we don’t know yet for sure who is going to produce Apple Car 

b)  the rumors coming this days are confirming the fact that Apple Car is finalized and almost ready for test production.

I would argue these rumours confirm nothing.

MplsP

From all the other rumors that have been circulating, I thought Apple had already written a check to Kia and the cars were coming off the line later this year?

As some people here seem to get while others are oblivious, cars are not phones. @cg27 is right - a car has thousands of moving parts exposed to the environment. The only moving part in an iphone is the switch. You wouldn’t expect Ford or Toyota to march in and make a great smart phone, why do we expect Apple to march in and make a great car? Ostensibly, that is exactly why Apple would partner with a car company. Apple could focus on the tech and interface and leave the manufacturing tech to the car company. 

Design is important, too. Not the Jonny Ive design, but designing the components so they can be efficiently and reliably assembled. Apple has experience designing phones that Foxconn can assemble, not cars that an assembly line can assemble.

Finally, does apple realize that ‘right to repair’ already exists in the automotive world?

davgreg

Nobody truly has any idea what they have planned excepting those directly involved, but going into cars looks like a bag of hurt.

1- There is a vast amount of overcapacity in the car/truck business and  many/most existing makers are the recipients of considerable subsidy or tax advantage in their home countries. Anything that impacts that is a political third rail. There will be a shakeout in the business, but governments will fight tooth and nail to keep incumbents in the game. Government Motors and Chrysler are US examples of that.

2- These days many carmakers outsource considerable portions of the design to component suppliers, giving guidance but letting them handle the guts of a door assembly or such things. I am not sure the anal retentive control freaks of Apple are willing to do that with the supplier firms and going it alone greatly complicates the process.

3- The manufacturing process and supply chain involved in making cars and trucks is not something an outsider just jumps into and does well. Tesla started with a legacy GM/Toyota plan in California, hired experienced Auto industry people and and still struggled mightily with production bottlenecks and quality.

The weak point among legacy manufacturers is software and user interface. That is where Apple has a natural competency and partnering with an existing player like Volkswagen would make sense. The new VW ID 3 and 4 are very well done but they are still working the kinks out of the software and responsiveness of the interface.

Xed

I wonder if people here still think Apple has no intention of being in the automotive business.