Project Titan: Magna engineers working with Apple to develop ‘Apple Car’

“At the end of a tree-lined boulevard in rural Ontario sits an imposing castle with steep slate roofs and white stone gables,” Alex Webb, Elisabeth Behrmann and Gerrit De Vynck report for Bloomberg. “Its landscaped gardens and spiral staircase are more Chateau de Fontainebleau than Detroit factory, but If Apple Inc., Google or Uber Technologies Inc. decide to build a car, this will likely be their first stop.”

“It’s the headquarters of Magna International Inc., the world’s biggest contract manufacturer of cars, which helps steer automakers through the laborious stages of design, engineering and assembly,” Webb, Behrmann and De Vynck report. “For years, Magna has eased production bottlenecks for Volkswagen AG, Aston Martin Lagonda Ltd and BMW AG. The carmakers go to Magna when they need assistance manufacturing high-end vehicles.”

“Its engineers do everything from working out the complex jigsaw puzzle of components sourced from a plethora of suppliers, to designing the automated factory that can build the car. Now, the $16 billion Canadian company is ready to build cars for Silicon Valley’s biggest companies — and become the Foxconn for a new generation of automakers,” Webb, Behrmann and De Vynck report. “Apple has been quick to understand that: about a dozen Magna engineers have been working with the iPhone-maker’s team in Sunnyvale to develop a vehicle, according to a person familiar with the arrangement.”

Tons more in the full article – recommendedhere.

MacDailyNews Take: Another tidbit describing a long road.

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        1. The reports DID say no such thing. They said Apple laid off “dozens” of employees on the project (and I wouldn’t be surprised if in fact they were just moved to other Apple projects). Out of over 1,000. That’s not “MOST.” Somebody is confusing “dozens” with “hundreds.”

  1. I generally hate the “Apple should buy” crowd, but for some time I’ve thought Apple should buy Magna.

    I guess they didn’t have to (or want to) buy Foxconn, or re-buy ARM.

    1. Why should they? And why would Magma want them to?

      They are doing just fine doing what they do better than anyone else. Why hand over control to someone who doesn’t do what you do as well as you?

      Car design and manufacturing is far more complex than computers and/or operating systems.

      1. Setting aside the question of would Magna sell, there’s every reason for Apple to want to own and control the foundational technologies. That’s what they do.

        They tend not to want to own the means of production, but buying Magna brings a lot of proprietary technology and know-how in this space.

        Owning Magna would deprive Apple’s future car competitors (Google, Uber, GM, Ford, BMW, Mercedes, and on and on) of contract production capacity, and would let Apple own all of the technology they enhance getting their car to market.

        1. I’m not sure you comprehend what Magna actually does. They’ll be ENABLING Apple to make their own car with their own design. It won’t be a Magna car. If Magna also contracts with all or any other automaker, those companies will equally be making their own cars, not Magna cars.

        2. Sorry but how could someone understand anything *other* than that?

          Right now they are almost literally the Foxconn of the automobile world. If they follow the same path as in the electonics world, they would have Magna build them an Apple car to Apple’s specification (a la iPhone, etc.)

          Instead, if Apple is interested in another path (which they seem interested in, given their investments in manufacturing automation for the MacPro trash can), they might/should buy Magna to:

          1. Secure immediate manufacturing capacity.
          2. Have the expertise to build enormous new manufacturing capacity at locations of their choosing.
          3. Freeze out their upstart competitors in this space (Google, Uber) a la AuthenTec (fingerprint sensors).

        3. Magna isn’t equatable to Foxconn. Let’s end that one. They’re not going to be Apple’s assembler. I also don’t wee Magna being Apple’s manufacturer, which involves more than assembly. Maybe that could change.

          I do think your second point is valid. Rethinking your third point does make sense to me now in that if there is ‘special knowledge’ Magna can impart to their contractors, Apple would like to own it. But I don’t see that as being the case at this point in time. What does Magna know about autonomous electric cars? Anything? I don’t know. They do, however, have all the mechanical knowledge that would encase that technology, which I’m guessing is what Apple wants seeing as Apple has no skills in that field.

    2. If you want to burn Apple’s money on foolish projects, why don’t you just save some effort and put the bonfire in the center of Apple’s new fire ring. Every office will have a nice view.

        1. Here is Wikipedia’s article about ARM. Jump down to the ‘History’ section and you’ll see that the company had a considerable history before Apple joined in:

          The official Acorn RISC Machine project started in October 1983. . . .

          In the late 1980s Apple Computer and VLSI Technology started working with Acorn on newer versions of the ARM core. In 1990, Acorn spun off the design team into a new company named Advanced RISC Machines Ltd., which became ARM Ltd when its parent company, ARM Holdings plc, floated on the London Stock Exchange and NASDAQ in 1998.

          The new Apple-ARM work would eventually evolve into the ARM6, first released in early 1992. Apple used the ARM6-based ARM610 as the basis for their Apple Newton PDA.

  2. Is Apple going after a 200,000 unit per year market, or are they changing the world? Using Magna to get started is one thing, but there is no contract automobile manufacturing industry at the scale of the contract electronics assembly industry. Maybe Apple is going after the same market that bought the original Watch Edition, but I think their aim is more likely the crowd that buys iPhones, or at least the Watch Series2.

    1. Perhaps, but you’d be shocked at how many cars they make. Odds are pretty good your car was at least in part manufactured by Magna.

      They make many more cars than most car makers make.

      To give you some idea of scale, they have 150,000 employees.

      1. Magna is indeed competent and bigger than most people realize, but it’s just not an attractive market move for Apple.

        Why repeat what Tesla has done <> by internal development or by purchase of an existing player? Both are cash burns that will likely not be recouped. Musk’s company showed that it takes a hell of a lot of effort to establish oneself as a new player, and it has also shown that the overhead costs and supplier complications are nearly fatal. Meanwhile every luxury player has a car that competes head to head with the Tesla, except practically none of them have gone up in flames like Teslas do every few months. Electric car profits are elusive because so much money has to be reinvested in the business and in the charging network. We want it to happen, but Apple isn’t the one to do it.

        Then there’s the whole legal quagmire to be negotated around electronic driver aids / driver replacements, which is a risky attempt to justify the high costs of the EV in the first place.

        Before you claim Apple should become an automaker, please fill in three lines for us:
        — Average gross profit margin of Apple products:
        — Average gross profit margin of finished luxury automobiles:
        — Average gross profit margin of Tesla cars:
        Hint: Your data may vary and there are outliers, but you don’t lauch a project assuming you’ll be setting records of profitability. Recent history the first line is consistently over 30%, the second is about 15% — a bit more for established players like Porsche, McLaren, or Ferrari, much lower for new market entrants. Then you take away overhead costs and you see that automakers aren’t exactly printing money for themselves. Tesla’s reported gross is 22.8% but every cent is poured into the business such that operating margin is -17.7% as it tries to grow its factory, R&D, marketing, and infrastructure.

        If Apple wants to get into a profitable (and also highly regulated) industry, it should destroy the ugly profiteers currently dominating the medical device and pharma industries. Surely Apple could make a better Epinephrine dispenser for less than $300 per dose.

        Or if Apple wanted to regain its innovator label, as opposed to iPhone Maker label it currently wears with pride, then it should make serious inroads into 3D design, analysis, and manufacturing (not just “3D printing”) technologies. Sell the picks and shovels to the miners of the future.

        1. Okay, so you don’t think they should enter the car business.
          But if they did (and I think they might), buying Magna would be a good and cheap way to do it. (It’s something like a cross between buying Beats, and buying PA Semi).

          I suppose their other option would be to licence a platform, like Google is attempting. But that doesn’t seem like Apple’s style. They like to own the whole widget, and an automobile is a big chunk of hardware.

      2. The 200,000 units number came from the Bloomberg article: “Magna expects the orders to max out its 200,000 vehicle annual capacity by 2018”. For Magna to build any cars for Apple, they would have to free up some capacity already committed to other carmakers. They would build a beautiful, but expensive car.

        Or build new capacity, but cars are expensive to ship from distant manufacturing facilities. That’s why the big Japanese auto manufacturers have located plants in the US. If Apple is going to focus on a few high-end cars for the luxe market, a contract manufacturer in a distant location may work. For mass market offerings, closer will be better.

  3. What interests me is what Mate Rimac had to say about how vehicles are designed and manufactured today. Founder of Rimac Automobile, manufacturer of th world’s fastest electric car, described the way cars are designed and manufactured today is grossly inefficient and unnecessarily expense. Not being able to afford the parts he required for his Concept One, he designed his own. They turned out to be much better, and less expensive, than what is available through traditional suppliers.

    Knowing how Apple likes to create its own processes, materials, etc., I don’t see them go down the traditional path. More likely they are using Magma (if indeed they are using Magma) to make sure they haven’t missed something.

    As an example of the problems in manufacturing a vehicle, Tesla just doesn’t work. Tesla contracted with Louts to build its Tesla Roadster. Building the Model 3 included converting/upgrading a 40 year old Toyota/GM plant. Tesla’s big problem wasn’t expertise, it was the lack of the capital needed to design the Model 3 AND construct a factory.

    In my estimation Magma’s role (again, if they have one) at Apple is as consultants.

    1. Don Walker: “To be assuming that new entrants are going to come in and dominate this industry in five years is craziness.”

      Ed Colligan: “PC guys are not going to just figure this out. They’re not going to just walk in.”

  4. …Excellent. From the various rumors over the past couple years, it’s been evident that Apple has been repeatedly trying to work with an actual, experienced automobile manufacturer. BMW was one of the rumored companies. But everyone turned Apple down, allegedly. NOW Apple’s wheels have hit the tarmac and they’re clearly moving forward. This is most promising. It also indicates that Apple will be making THEIR OWN car, not a rendition of someone else’s design. That’ll be kewl.

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