Apple is ‘Very Near' to Signing Contract With Magna International & LG Electronics to build its Electric Car, Sources Say
Reports of computer giant Apple Inc building an electric car have been circulating in Silicon Valley for the past 5 years. While Apple has never officially confirmed its plans, CEO Tim Cook has hinted at the project in the past, which is code named "Project Titan." Cook referred to the efforts to build an electric and self-driving car as the "Mother of all AI projects."
Now the Korean Times reports that the iPhone maker is very near to inking a deal with contract manufacturer Magna International to build its futuristic Apple Car.
"LG Magna e-Powertrain is very near to signing contracts with Apple under which they could handle the initial volume production of Apple EVs. Contract details are still being discussed," a source familiar with the talks told The Korea Times.
Magna's pending joint venture deal with LG Electronics is named "LG Magna e-Powertrain."
LG Magna e-Powertrain is valued at $1 billion and will manufacture electric motors, inverters and onboard chargers. LG will own 51% of the new company and Magna, 49%. The transaction is expected to close in July, pending LG shareholders' approval among other conditions.
Late last year, reports surfaced that Apple was in talks with automaker Hyundai Motor Co to build its car, but those discussions ended in February and no deal was struck with Hyundai's Kia brand.
The production volume the Magna LG joint venture could handle won't be as large as Apple intended. Rather it's mostly intending to use its first-generation EVs as an opportunity to evaluate their marketability, according to the source.
"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. From that standpoint, LG's bet on the Apple EV is not that bad, and vice versa for Apple," another source said, adding the monetary volume of the partnership with Apple would not be that large, at least initially.
If an agreement is made, the two parties will jointly establish relevant details for the production of the Apple EV, a prototype of which will be unveiled sometime in early 2024.
Any possible deal with LG Electronics would ensure that Apple will be able to source all of the electronic components its needs to build its Apple Car. LG Group affiliates including LG Display, LG Chem, LG Energy Solution and LG Innotek, all of which are current Apple suppliers.
"Apple doesn't have to worry about any supply chain issues. These LG affiliates are qualified to guarantee production yields and faster delivery of parts needed for Apple EVs," a source told the Korean Times.
LG officials declined to comment on the reports.
After LG Electronics officially abandoned its smartphone business, the company is now under pressure from investors to expand its presence in the auto industry and ramp up its vehicle component-related businesses as a way to boost revenue lost from its exit from the smartphone business.
LG has previously supplied motors, battery packs and other components to General Motors for the Bolt EV, the Jaguar I-PACE SUV, as well for EV pioneer Tesla. While Magna has made automotive electronics and already has established a big presence in the auto industry.
In the past, Magna has worked with some of the world's biggest automakers, including BMW, Jaguar Land Rover and Mercedes Benz.
BMW contracted Magna International's subsidiary Magna Steyr to build its popular X3 SUV at its factory in Graz, Austria from 2003 to 2007. The company also built vehicles for Mercedes Benz equipped with its 4-Matic all-wheel-drive system and was more recently contracted to build the Jaguar I-PACE electric SUV.
Magna Steyr is also building the Fisker Ocean SUV from EV startup Fisker at its factory in Germany. The deal with Fisker will be the company's first contract manufacturing deal with an EV startup.
Magna also retrofits vehicles for Alphabet's self-driving division Waymo.
The joint venture with LG will help accelerate Magna's time to market and scale manufacturing for electrification components, while software and systems integration are competencies that Magna brings to this venture.
In 2018, Cook said that Apple was working on some type of autonomous driving system without elaborating. "Autonomy is something that's incredibly exciting for us and we'll see where it takes us," Cook said at the time.
Bloomberg reported in February that Apple was in talks with multiple lidar developers to supply the sensors for its car project. Lidar sensors are used for perception systems for self-driving vehicles.
Bloomberg also reported that Apple has assembled a team of hardware engineers that are working on developing electric drive systems, external body designs, and an interior for Apple's electric vehicle.
All of the recent reports suggest that Apple is indeed up to something big. An Apple Car could be on the road by 2024. If true, what's still unclear is where it will be built.
Magna said earlier it would build vehicles at a plant in North America if contracted to do so.
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