The iPhone maker needs someone to help it in the fast-moving autonomous vehicle arena.
Apple is clearly grappling with two key questions as it turns its eye to the car market.
Just what role does it see itself playing? And how much auto industry know-how does it need?
The build-or-buy question could be a piece of the recent “reset” Apple has had within its stealth auto operation.
The company has hired a large number people with car experience, especially on the electric car front. But it has also held talks with a number of luxury car makers as early as a year ago, several sources confirmed. And according to a report Wednesday from the Financial Times, British carmaker McLaren is among those manufacturers with which Apple has been having discussions.
McLaren officially denied the reports that Apple is considering acquiring the car-maker, though the Financial Times wrote that they stand by their story.
Obviously we stand by our story despite McLaren's statement. https://t.co/MalTHATZdM
— Tim Bradshaw (@tim) September 21, 2016
It can be helpful to look at how Apple has entered new areas in the past, as it did with the iPod (music) and the iPhone (cellular). In both cases, it hired a bunch of people with subject knowledge, but also partnered more extensively at the beginning as it got up to speed.
With the original iPod, it didn’t have its own operating system or chips or desktop software, relying on others to provide each of those key components. Much of that first iPod’s guts came from a company called PortalPlayer, while the key differentiating component — a smaller-sized hard drive — came from Toshiba. Apple did have the foresight to basically lock up supply so that rivals were stuck using larger drives meant for notebook computers.
With phones, Apple had a short-lived and ill-fated partnership with Motorola that led to a disappointing product, the ROKR, but gave Apple some useful knowledge. It also partnered tightly with a single carrier, Cingular (now AT&T).
But while moving from PCs into music and phones were big leaps for Apple, getting into the car business is way, way more complex.
Software may well come to define the car experience. But building a car involves so many things beyond software. Sure, you have to drop-test a cell phone and pass FCC radiation standards. But with cars, the safety and manufacturing issues automakers may face have very real and often dangerous implications.
Just this month, there have been 45 recalls of vehicles made by incumbent automakers. Even Tesla — which has had trouble meeting its production deadlines due to manufacturing delays — had to recall 2,700 Model X cars in April due to a faulty hinge that could cause its seats to collapse inward.
Apple ideally needs three things from whichever company it either buys or works with. It needs a company that knows how to manufacture cars; whose ideas and skills for the future outweigh its focus on its legacy gas-based car business; and, perhaps toughest of all, who’s willing to work with Apple, a company well known for not always being the greatest of partners.
Finding a car company that meets all these criteria is no easy task and explains why Apple has been willing to look far and wide, perhaps going so far as a tony British race car maker.
At first blush, McLaren appears to provide less than other carmakers of what Apple needs most, as it isn’t a manufacturing giant. The company hand-crafts its luxury sports cars and Formula 1 racers.
However, it’s worth remembering that Tesla, too, started at the high end and worked its way down. The company started with a $105,000 Roadster and only produced a total of 2,500 of the cars.
But even Tesla had to turn to a partner to jump-start its foray into electric vehicle production. Then-CEO and co-founder of Tesla Martin Eberhard admitted that neither he, nor his co-founder Marc Tarpenning, nor the company’s chairman Elon Musk had a background in automotive engineering. That’s why Tesla turned to supercar manufacturer Lotus Cars.
Tesla’s relationship with Lotus was threefold: Tesla licensed safety and structure technology from Lotus and contracted Lotus Engineering to help design and engineer the car, and Lotus Cars was the contract manufacturer for the Tesla Roadster.
While McLaren may not be able to necessarily fulfill Apple’s manufacturing needs, the company does know a thing or two about car engines, something you don’t get by designing iPhones and Macs.
It’s also important to remember that of the tech companies that are making moves into the automotive space, Musk himself said Apple would be the most direct competitor to Tesla. The company has also seen an influx of former Tesla engineers, to which Musk responded by calling Apple the “Tesla graveyard.”
It stands to reason, then, that Apple’s car project, dubbed “Project Titan,” may begin with a high-end, low-volume “super car.” With an asset like McLaren, it’s certainly possible.