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Amid rumors that Apple is working on an Apple-branded car that will come out in the next decade, Bloomberg's Mark Gurman has published an article about Apple's troubled search for an existing automaker partner to build the vehicle, and how the company's more traditional approach to launching new products could better work in its favor.

Apple-car-wheel-icon-feature-triad.jpg

Reports first surfaced in January suggesting that Apple was eyeing an existing car manufacturer to be its official partner for Apple Car. Several carmakers are said to have been approached by Apple, including Hyundai and Nissan, but these talks don't appear to have come to anything, and have only served to highlight a general reluctance among automakers to dilute their own brands.

As Apple has recently learned, its strategy of partnering with an existing carmaker invites problems related to brand image that tech giant isn't used to, largely because of its dependence on long-term contract manufacturers that are more than happy to assemble its iPhones, iPads, and Macs in their factories, where public-facing brand image often takes a back seat. Not so with established carmakers, notes Gurman:
In this scenario, Apple would develop an autonomous system for the vehicle, the interior and external design, and on-board technology, while leaving the final production to the carmaker. Such a deal would essentially ask an existing car company to shed its brand and become a contract assembler for a new rival.

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.
The article goes on to note that Apple reaps high profits by focusing on product and development while outsourcing manufacturing, which is generally a low-margin business. This in turn allows it to avoid spending billions of dollars on constructing its own factories, not to mention staff pay and training, along with additional liabilities.

By contrast, the auto industry runs on a different model which includes carmakers running their own high-volume factories and tightly controlling their supply chains at considerable expense – a business model that has lower profit margins than Apple is used to.

According to industry insiders, this is why Apple is more likely to go with a contract manufacturer like Foxconn, which has an existing relationship with the Cupertino company. Foxconn is the main assembler of iPhones, and also recently unveiled an electric vehicle chassis and a software platform to help carmakers bring models to market faster. According to Gurman's report:
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. The person asked not to be identified discussing sensitive matters.
Contract manufacturer Magna is another possibility. Apple was in talks with the assembler about building a car when it first began making inquiries into the possibility of developing an electric vehicle about five years ago. Gurman notes that Magna is also a lot more experienced at making cars, having assembled luxury models for companies like BMW, Daimler AG and Jaguar Land Rover.

"Magna is the most logical choice," said Eric Noble, president of consulting firm the CarLab, speaking to Gurman. Noble has worked with the "amazingly good" Canadian auto supplier, and believes that an Apple-Magna partnership would prove far more stable than one where Apple worked with an existing carmaker, which would be more likely to invite power struggles.

That said, a recent job listing suggests Apple could be eyeing its own production, notes Gurman. Apple is seeking a "senior hands on manufacturing engineer" for its special projects group, which is leading its work on a car. The successful candidate will be responsible for growing a team of engineers focused on manufacturing strategy and the supply chain, drawing on their experience working with aluminum, steel and composites, which are key materials in cars.

Article Link: Apple Could Use Contract Manufacturers Like Foxconn or Magna for Apple Car Assembly
 
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Kabeyun

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That said, a recent job listing suggests Apple could be eyeing its own production, notes Gurman. Apple is seeking a "senior hands on manufacturing engineer" for its special projects group, which is leading its work on a car. The successful candidate will be responsible for growing a team of engineers focused on manufacturing strategy and the supply chain, drawing on their experience working with aluminum, steel and composites, which are key materials in cars.
Maybe this engineering team would partner with the eventual contract assembly company. While rethinking and designing a car seems very much in Apple‘s wheelhouse (ha!), building one doesn’t.
 
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Rochy Bay

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Amid rumors that Apple is working on an Apple-branded car that will come out in the next decade, Bloomberg's Mark Gurman has published an article about Apple's troubled search for an existing automaker partner to build the vehicle, and how the company's more traditional approach to launching new products could better work in its favor.

Apple-car-wheel-icon-feature-triad.jpg

Reports first surfaced in January suggesting that Apple was eyeing an existing car manufacturer to be its official partner for Apple Car. Several carmakers are said to have been approached by Apple, including Hyundai and Nissan, but these talks don't appear to have come to anything, and have only served to highlight a general reluctance among automakers to dilute their own brands.

As Apple has recently learned, its strategy of partnering with an existing carmaker invites problems related to brand image that tech giant isn't used to, largely because of its dependence on long-term contract manufacturers that are more than happy to assemble its iPhones, iPads, and Macs in their factories, where public-facing brand image often takes a back seat. Not so with established carmakers, notes Gurman:
The article goes on to note that Apple reaps high profits by focusing on product and development while outsourcing manufacturing, which is generally a low-margin business. This in turn allows it to avoid spending billions of dollars on constructing its own factories, not to mention staff pay and training, along with additional liabilities.

By contrast, the auto industry runs on a different model which includes carmakers running their own high-volume factories and tightly controlling their supply chains at considerable expense – a business model that has lower profit margins than Apple is used to.

According to industry insiders, this is why Apple is more likely to go with a contract manufacturer like Foxconn, which has an existing relationship with the Cupertino company. Foxconn is the main assembler of iPhones, and also recently unveiled an electric vehicle chassis and a software platform to help carmakers bring models to market faster. According to Gurman's report:
Contract manufacturer Magna is another possibility. Apple was in talks with the assembler about building a car when it first began making inquiries into the possibility of developing an electric vehicle about five years ago. Gurman notes that Magna is also a lot more experienced at making cars, having assembled luxury models for companies like BMW, Daimler AG and Jaguar Land Rover.

"Magna is the most logical choice," said Eric Noble, president of consulting firm the CarLab, speaking to Gurman. Noble has worked with the "amazingly good" Canadian auto supplier, and believes that an Apple-Magna partnership would prove far more stable than one where Apple worked with an existing carmaker, which would be more likely to invite power struggles.

That said, a recent job listing suggests Apple could be eyeing its own production, notes Gurman. Apple is seeking a "senior hands on manufacturing engineer" for its special projects group, which is leading its work on a car. The successful candidate will be responsible for growing a team of engineers focused on manufacturing strategy and the supply chain, drawing on their experience working with aluminum, steel and composites, which are key materials in cars.

Article Link: Apple Could Use Contract Manufacturers Like Foxconn or Magna for Apple Car Assembly
Stock noise to me.. too much speculation for a company currently underperforming the market.
 
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syklee26

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Jul 26, 2005
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If Apple goes to Foxconn and fail to capture EV market because of low production yield, that may be the end for Tim Cook.

Magna is a good call, but I really think they should just go with Kia because they are the best option
 
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69Mustang

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In between a rock and a hard place
Finally someone reputable announcing what we are all thinking. All indications are leading to Foxconn or Magna. Why not go with what has proven hugely successful in the past?
Foxconn being successful at assembling phones is not an indicator of success at building cars. Nothing about their car tech is proven. As someone else noted, Magna makes sense from a small batch perspective. Foxconn would be an unproven gamble.
 
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DailySlow

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Taiwan is an awkward choice, I agree, albeit ruefully. Magna (know little about it even though am CDN) is apparently a good option to get an iCar off the ground. Taiwan? Read Singer & Cole “Ghost Fleet”. Oh it’s about silicon too. An autonomous vehicle platform is a solid basis for airborne vehicles too down the “road”.
 
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DelayedGratificationGene

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Stock noise to me.. too many speculation for a company currently underperforming the market.
Up 80% is not underperforming the market...plus autonomous EV news is now a daily event. We haven’t heard Apple Car news partnering with a big car automaker in awhile...probably because the Bloomberg report is what is now happening
 
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1258186

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This was always going to be the most likely outcome. The established car makers would be crazy to help Apple take their business and profits.
 
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Macyourdayy

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Get on board or get left behind. Sounds like an opportunity, but sticking with old stuff never hurt a business.
 
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HarryWild

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Finally, Apple has found an experienced assembly company that did the Apple Car.
 
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ArtOfWarfare

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If Apple goes to Foxconn and fail to capture EV market because of low production yield, that may be the end for Tim Cook.

Magna is a good call, but I really think they should just go with Kia because they are the best option

Tim Cook has already had a long run producing nothing but duds.

Steve was around form 76-85 (9 years, then Sculley lasted until 93 (8 years), Apple had two more CEOs in the years after that before bringing back Jobs from 97-11 (14 or 15 years.)

And now we’ve had 10 years of Tim Cook. His tenure as CEO has already been the second longest run at Apple. The company still doesn’t seem to have any clue how it’s going to bring the car to market right now, plus everyone seems to be getting old and retiring at Apple. I’m skeptical the car ever comes, and if it does, it’ll be after Cook has left.
 
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iapplelove

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Talk about being all over the place. I’m sure Apple executives must know at some point all that iPhone revenue may not be so lucrative. I get it, explore other avenues of revenue.

But lately, a car, VR glasses, music, movies, tv etc. etc.

Can they not just do what they do best, and still compete ?
 
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ericwn

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How about open an American facility? Oh that’s right they’re also choosing Munich for the new chip facility design. Very good at exporting jobs....

They are not being exported as they never were in the US. International companies like Apple tend to operate in more than one country.
 
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ericwn

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Talk about being all over the place. I’m sure Apple executives must know at some point all that iPhone revenue may not be so lucrative. I get it, explore other avenues of revenue.

But lately, a car, VR glasses, music, movies, tv etc. etc.

Can they not just do what they do best, and still compete ?

They are competing and searching for areas to grow as they are responsible for growth for their shareholders.

A company with more than 100000 employees can easily focus on multiple fields at once.
 
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ericwn

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Tim Cook has already had a long run producing nothing but duds.

Steve was around form 76-85 (9 years, then Sculley lasted until 93 (8 years), Apple had two more CEOs in the years after that before bringing back Jobs from 97-11 (14 or 15 years.)

And now we’ve had 10 years of Tim Cook. His tenure as CEO has already been the second longest run at Apple. The company still doesn’t seem to have any clue how it’s going to bring the car to market right now, plus everyone seems to be getting old and retiring at Apple. I’m skeptical the car ever comes, and if it does, it’ll be after Cook has left.

With just about 11 million driving EV (an article on German tv news had that earlier this week) worldwide there’s probably no chance to enter the stage in the usual apple formula when all key technologies have been developed.

Jobs had the idea for something like iPad in the early 80s and it took until 2010 to have a launch. Some things take time.
 
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iapplelove

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They are competing and searching for areas to grow as they are responsible for growth for their shareholders.

A company with more than 100000 employees can easily focus on multiple fields at once.
That’s not always a given. They still need good leadership and a long term plan. They are just throwing things at a wall to see what sticks.
 
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