Apple car may upset auto industry manufacturing model

Since last December, the Apple car project called Titan has been generating much interest with speculations surrounding design manufacturing and OEMs of the car. An Apple car is highly likely to break into the automobile sector in the next 2 to 5 years. The target date for Apple’s car production is 2024.

Initially, Apple was working on a full car, but it seems the focus has now shifted to an in-car autonomous driving system.  In 2017, Apple CEO Tim Cook confirmed that Apple is working on autonomous driving software. “We’re focusing on autonomous systems. It’s a core technology that we view as very important. We sort of see it as the mother of all AI projects. It’s probably one of the most difficult AI projects actually to work on,” he said.

Apple Car under Project Titan

Apple and Hyundai’s collaboration on the Apple Car production will include manufacturing of the electric vehicles and the development of the battery that will be used, Hankyung said.

The tech company is planning a tie-up agreement with an automaker using a business model similar to its iPhone production.

News of a self-driving car by Apple has created some upheaval in the investment circles with share prices of the US and Chinese high-tech companies moving upwards. Lidar sensor companies and battery makers are all inviting unprecedented interest in both the US and China.

Velodyne Lidar, a maker of light detection and ranging (lidar) sensors has aroused strong investor attention. In China, Contemporary Amperex Technology, the world’s largest maker of batteries for electric vehicles, and other suppliers of EV-related components are drawing world attention. Other products are likely to be outsourced to Hon Hai Precision Industry, a top Taiwanese contract electronics manufacturer also known at Foxconn. The company has been providing parts for iPhones too.

Research analysts predict that an Apple Car would be a “mass” of high technologies and suppliers of key automobile components will be tapped. Apple will be applying its smartphone development and production knowhow to design cars and then outsource out the horizontal division of production.

It will be heavily involved in the designing of the car. Another area of interest for Apple is developing next level battery technology to extend range and efficiency. Much of the project is helmed by Doug Field, who rejoined Apple in 2018 after a stint at Tesla, where he had been overseeing vehicle engineering and manufacturing.

“This means designing the components and designing every part of the product… how it looks and feels to the consumer, the software and the ecosystem that surrounds those products,” said Morgan Stanley analyst Katy Huberty, according to a research note sent to clients this month.

The application of the smartphone model to EV manufacturing is bound to upset the auto industry model where vertical integration is the key with big automakers involved in the whole processs from the drawing board to the road.

Baidu, a Chinese internet company, announced recently that it would produce EVs with Zhejiang Geely Holding Group, an automaker in China, on an original-equipment-manufacturing basis. Didi Chuxing, China’s biggest ride-hailing platform, has tapped BYD Auto to manufacture EVs for Didi. It is planning to put 1million EV units into use by 2025.

For its autonomous driving software, Apple has raised a team of ex BlackBerry QNX engineers in Canada to develop the base operating system and the software that will run on it. Also, Magna International, a top Canadian auto parts supplier that has advanced into the production of cars on behalf of automakers, is seen as a leading candidate to manufacture the Apple Car. Hyundai Motor of South Korea said this month that it was in early talks with Apple over a tie-up to develop an EV.

But analysts are worried that large orders for EV vehicle production servicing will upset the present workings of the auto industry. Automakers may “become Apple’s subcontractors and lose their originality,” warned an executive at a Japanese carmaker.

In these pandemic-induced cash strapped times, automobile makers are looking to increase production and will be happy to put their production units to optimal use. BYD decided to produce EVs on behalf of Didi because it can expect to profit through increasing output, an auto industry analyst said. Another worry is that China and other Asian nations will move in due to their available preparedness and capacities to meet the manufacturing needs of the industry. Japan may not be able to match the Chinese and South Korean rivals, and lose the race.

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Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine; she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

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