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Automobile Manufacturers Says No To Apple Car

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Remember the much-rumored Apple Car, yeah Automobile manufacturers are not really interested in that. Apple originally hoped to collaborate with existing automakers to build cars, but automakers are not willing to support this new potential rival.

The production of the Apple Car will likely be reversed back to the Apple HQ, and they may have to take on the production themselves alone or they may hand it over to the contract manufacturers.

The Apple Car

Right now, Apple is trying to enter the automobile market with its Apple Car. After negotiating with some well-known manufacturers Apple failed to make progress, Apple may cooperate with lesser-known OEMs to build cars, or they can contact contract manufacturers.

Previous Contacts

Apple has contacted multiple auto manufacturers, including Hyundai Motors, but the deal did not reach a good conclusion. According to Apple’s vision, the company will develop/design autonomous driving systems, futuristic design, and technology-based cars, and then hand over the final product to the car manufacturer. Such an arrangement actually requires existing car companies to abandon their brands and become pure contract manufacturers for a new potential rival.

A senior executive who once worked for both Apple and Tesla said that making cars for Apple is like letting Samsung make the iPhone for Apple. Especially Apple wants to change the production process and make everything custom, A traditional car manufacturer would not be willing to help with this.

Last year, Apple’s self-driving car team also met with representatives of Ferrari. It is not yet clear what the two sides discussed, but people familiar with the matter confirmed that the deals did not move forward.

Reactions of manufacturers on hearing about Apple Car

Last month, Volkswagen CEO Herbert Diess said that he is “not afraid” of Apple entering the auto industry.

BMW CEO Nicolas Peter also recently stated that he is not afraid of the threat of Apple cars and that he “sleeps very well.”

Profit Margins

In the production of computers, iPhones, iPads, and Macs, Apple relies on contract manufacturers such as Foxconn, Pegatron, Wistron, and Luxshare Precision. That’s why Apple doesn’t need to build its own factories, they don’t need to spend so much money in building factories, payment for workers, training, etc so they rely on their partners. Apple just needs to design and develop the product. And with that, Apple’s profit margins far exceed those of suppliers such as Foxconn and Pegatron, as well as most automakers, and that is the case why most auto manufacturers are not interested in the Apple Car.

Even Tesla has lost billions of dollars in operating its own factories and has only recently achieved regular profits. Last year, Tesla’s profit was close to 700 million U.S. dollars, while Apple’s profit in the same period exceeded 60 billion U.S. dollars.

Doing a collaboration with an already big name in the market can save Apple in branding as well as marketing and people already trust that brand. I think Apple will gain big profits if they get in collaboration but if they have to put up their own production it will be a bit difficult.

What are your thoughts on the Apple Car? What do you think should happen? Share in the comments below.

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