Apple May Have Just Found a Partner to Build the Apple Car

Powertrain Electrification LG Magna Credit: Magna International
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By all reports it’s been a long search for Apple to find a manufacturer willing to help it with its automotive ambitions, but it may have finally found a kindred spirit in the form of a joint venture between two other unlikely partners: Korea’s LG Electronics and Canada’s Magna International.

Even though Apple and Magna were said to be in talks a few years ago, it appears that the automotive company wasn’t necessarily Apple’s first choice. Over the past several months, reports have emerged that Apple has approached first-tier carmakers such as Hyundai and Nissan, but found itself mostly snubbed out of fears that the Apple juggernaut would eclipse their own brands.

Of these automakers, Hyundai seemingly came the closest to making a deal, thinking that perhaps letting its Kia Motors subsidiary build the Apple Car would prevent the main Hyundai brand from playing second fiddle to Apple. In the end, however, even those talks fizzled out entirely.

This left Apple turning to its iPhone playbook and try to forge partnerships with more general contract manufacturers like Foxconn and Magna International — both of whom would presumably be more open to such a deal.

After all, Foxconn already builds almost all of Apple’s other products, and Magna has been building automotive systems and components for big names carmakers for years, including such prominent brands as Audi, BMW, Daimler, Fiat, and Jaguar Land Rover.

More to the point, however, is that both companies are quite accustomed to being in the shadows; in fact, that’s what their entire business model is predicated upon. Either company would be quite content to be the power behind the Apple throne.

A New Player on the Field

According to a report from The Korea Times, however, it looks like there may be a new player in the mix in the form of Korea’s LG Electronics.

It seems that LG, which perhaps fittingly just exited the smartphone business entirely, is now pursuing vehicle component-related businesses.

Late last year, LG and Magna announced a joint venture in which the two companies would join forces to make key components for electric vehicles, including e-motors, inverters, and onboard chargers.

Now it looks like the new conglomerate, known as LG Magna e-Powertrain, is hoping to take an even bigger leap, going beyond merely building components into actually assembling the very first Apple Car models.

The Korea Times notes that the company is “very near” to finalizing a contract with Apple in which it would handle the first run of the Apple Car. While sources say that details are still being ironed out, it seems like all the parties involved are very optimistic that a deal will be reached.

While it’s a somewhat ambitious move for the newly formed LG/Magna partnership, it’s important to remember that Magna International is a Fortune 500 company that’s been in the business of building automotive components since before Tim Cook was born.

While Magna has mostly only dabbled in electric vehicle components — it sold off its EV battery technology division to Samsung back in 2015 — this is where the LG Electronics partnership comes into play, making LG Magna e-Powertrain perhaps the perfect fit to build the Apple Car.

Strictly speaking, Apple can also afford to sign a deal with a manufacturing partner who can grow with it, as recent reports have indicated that the initial production run for the first-generation Apple Car will be limited to only 100,000 vehicles. While Apple hopes to eventually ramp that up to 400,000 vehicles per year, the lower initial run would allow LG Magna to build up its production capacity more slowly.

Because LG Group affiliates including LG Display, LG Chem, LG Energy Solution and LG Innotek are already included in Apple’s parts supply chain, Apple doesn’t have to worry about any supply chain issues. These LG affiliate are qualified to guarantee production yields and faster delivery of parts needed for Apple EVs.

The Korea Times

The new partnership would also benefit from LG’s existing supply chain relationship with Apple. LG Group affiliates such as LG Display and LG Innotek already supply parts for Apple’s other products, and sources say that this would allow the venture to guarantee that it can supply sufficient parts to Apple on schedule.

As the LG brand is not that strong in the global EV industry, it needs a pretty competitive reference to show off its transformation efforts.

The Korea Times

The deal may also be appealing to Apple as LG Magna isn’t asking for all that much in terms of monetary volume. Instead, in stark contrast to all the mainstream carmakers that have snubbed Apple, LG hopes that it will benefit from the Apple brand in building its reputation as a serious player in the industry.

Apple has also reportedly been looking for a partner who will build vehicles in the U.S., or at least somewhere in North America, and while LG is based in Korea, Magna’s headquarters are just out of Toronto, Canada. The automotive company has also previously stated that it would build Apple’s vehicles at a plant in North America if it were contracted to do so directly, so there’s every reason to believe the same would be true with the LG Magna partnership.

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