If Apple is going to make a success of its car project, it has to target the $230 billion global luxury automobile market. Doing so may be the only way to keep investors happy. But displacing incumbents such as Mercedes-Benz will not be be straightforward.
The iPhone maker has reignited efforts to build its own vehicle, Reuters reported last month, though it's at least five years away from production, Bloomberg reported on Thursday.
Since the project started in 2014, Apple has undergone numerous false starts, laying off hundreds of staff in both 2016 and 2019, as costs ballooned and the focus shifted from electric vehicles to self-driving technology and back again. If CEO Officer Tim Cook proceeds, he faces tough choices on how to enter a market with famously meager profitability.
For all its recent stock market success, Tesla has demonstrated the pitfalls that come from a lack of automotive experience, repeatedly enduring manufacturing problems and missing production goals. So, there is little doubt Apple would contract the manufacturing out to a third party, such as Magna, as Bloomberg has already written.
At one point about five years ago, the Canadian company had close to 100 employees working with Apple, helping steer the tech company through the engineering process. But the work with Magna never graduated to working out how or where to build a car.
This time around, Magna is not the only option. Foxconn Technology Group, which makes iPhones under contract for Apple, is also stepping into the automotive industry -- it established a joint venture last year with Fiat Chrysler Automobiles, the automaker merging with PSA Group. And perhaps more pertinently, established automakers are now very serious candidates.
Indeed, Hyundai seemed to confirm a local report it was in discussions with Apple, before walking the statement back. Such a tie-up could help resolve some of the earlier problems Apple faced with components.