Apple Isn’t Building a Car. It’s Building Its Guts

The automotive industry pundits. Analysts. Tech bloggers. Fellow car journalists. They chided, they derided, they scolded. How could MotorTrend have gotten it so wrong? The idea that Apple would outsource the manufacturing of a self-driving electric vehicle, rather than build a proper car for actual drivers? What daftness.

This magazine’s June 2016 cover story, “Hello. Are You The Apple Car?” blew up the Internet. Our report talked about an “inside-out” car, with focus on convenience rather than dynamics. In other words, the exact model every other automaker is now pursuing in developing their autonomous creations.

We also forecast, “Apple will probably contract it out, outsourcing the manufacturing intricacies overseas and avoiding U.S. taxes that could take upward of a 40 percent bite from its overseas war chest.”

Now, this magazine’s prediction of an electric, mostly autonomous, outsourced vehicle seems remarkably prescient. According to recent South Korean media reports, the maker of iPhones and MacBooks appears ready to unite with automaking giant Hyundai Motor in a joint venture to build an autonomous vehicle, equipped with some version of Apple’s iOS in automotive form, starting in 2024.

Apple has quietly operated an automotive skunkworks—ironically named Project Titan—since 2014. And folks have gotten revved up about the idea of an iCar ever since. But notoriously secretive Apple has never commented on the group or its work, barely even acknowledging its existence in back-channel conversations.

Here’s the thing: Apple was never going to build its own car. It saw the mess of “manufacturing hell” Elon Musk encountered in creating Tesla, not to mention the ridiculous scale of capital and manpower necessary to undertake the ambition of being a global automaker. Apple had a market cap of $2.2 trillion at press time, but allocating $5 billion to $10 billion to become a viable car-making entity is still something that might attract a few inquisitive memos from the finance department. So it’s taking a lower-risk, higher-return direction of developing the innards that makes the machine go.

Want proof? Go to Apple’s careers page, and search for “automotive.” You’ll get a few dozen results, most of which are along the lines of “software engineer.” Now do the same thing for EV startups like Rivian. Or Lucid. They’re searching for hundreds and hundreds of folks, mostly in the engineering of the chassis, batteries, vehicle dynamics, and vehicle body. Oh, and manufacturing.

If Apple was going to directly engage in vehicle production, there’s no way such an enterprise would still be a secret, because the human resources headhunters would be hiring like crazy for a 2024 launch. What’s more, the Silicon Valley rumor mill told of hundreds of layoffs from Project Titan (and its even-more-secret market-research arm SixtyEight Research) in the not-so-distant past. Then, in 2019, Jony Ivy, Apple’s design whisperer and resident chief car nerd, departed Apple to hang his own shingle. Tea leaves, folks.

So what is Apple doing? Becoming a next-gen Tier 1 supplier. It’s going to create the electronic guts of the machine—the automotive equivalent of “Intel Inside,” which made that software company hugely rich. Apple may be playing four-dimensional chess here, envisioning the vehicle-to-vehicle autonomous communication architecture of 2030 and beyond.

Although early reports spoke of manufacturing the car in America, Apple may not care about engaging with fully developed, narrow-margin auto markets like the U.S. (get over it, exceptionalists). The company might instead look to Asia, specifically China, where the rapidly rising middle class wants automobiles but may not care to learn how to drive them. Rather than engage with China’s nascent auto industry, Apple chooses Hyundai—a proven automaker with high-quality componentry, and which has better entrée into China than the big Japanese OEMs.

A Hyundai spokesman confirmed reports of talks between the two companies but mentioned Apple is negotiating with several OEMs. Heck, Apple doesn’t have to pick just one automaker. It could pick several. But will any of the resulting products wear an Apple badge? Doubtful.