An Apple Car Would Require An Automotive Foxconn

Apple Store in Hong Kong (Photo by S3studio/Marcio Rodrigo Machado/Getty Images)

If Apple really is working on a self-driving car, one challenge will be finding a partner to manufacture the vehicle.

Many Apple products famously are etched with the words:

“ Designed by Apple in California. Assembled in China.

"Designed by Apple in California." Photographer: Brent Lewin/Bloomberg

Chinese assembly for the iPhone is performed by many companies, most notably Foxconn, a Taiwanese firm. Foxconn specializes in "contract electronics manufacturing," which means the company builds products that Apple designs, for a fee.

Were Apple to design their own car, they might follow this model. Unlike Tesla, which opened its own automotive manufacturing facility, Apple might contract with an external manufacturer for assembly.

In this vein, engineering executive Doug Field has returned to Apple, according to both blogger John Gruber and The San Jose Mercury News. Field is a hardware engineer, and his most prominent role at Tesla was head of Model 3 production. Gruber speculates that his return to Apple may signal Apple's desire to build an entire vehicle, not just self-driving software.

“ I think it’s an interesting hire, primarily because it suggests to me that Apple still has an interest in making actual vehicles, despite reports that the company has scaled back the project to merely make autonomous systems for inclusion in vehicles made by other companies. That rumor never really made sense to me anyway — Apple’s modus operandi has always been to make the whole widget. Apple makes products, not components.

Building a car is a much bigger operation than building a smartphone, however. That limits the number of firms that Apple might be able to work with.

BMW assembly plant in Indonesia. Photographer: Dimas Ardian/Bloomberg

Furthermore, vehicles are substantially more expensive to ship across an ocean, and trade policy often dictates that cars sold in America are made in America. Even European and Asian car companies make many of their vehicles in the US.

And while there is an extensive network of Tier 1 automotive suppliers, these suppliers typically assemble and ship components, not entire vehicles. The value of a car has traditionally been tightly connected to its brand, so the companies that make cars are also the companies that sell cars. It's rare for a company to assemble cars on a contract and then put another company's brand on them.

One prominent recent exception was Google's partnership with Roush to assemble the Firefly vehicles that were formerly used by the Google Self-Driving Car Project. Roush only needed to produce 150 of these, however, and Waymo has described the cars as "hand-built in Michigan." A potential Apple self-driving car might require mass manufacturing of thousands of units per week or more.

 Waymo Firefly Self-Driving CarWayMo

Perhaps Apple is most likely to work with existing automotive manufacturers. Apple is history's most valuable company, worth over $1 trillion dollars and with hundreds of billions of dollars of cash on its balance sheet. That is more than enough cash to purchase most automotive manufacturers outright, or Apple could simply offer a sufficiently lucrative contract that an existing manufacturer agrees to use capacity for manufacturing Apple vehicles.

That means that a company consumers purchase cars from today might be destined to become the Foxconn of autonomous vehicles.

That wouldn't necessarily be a bad fate. At over 100 billion dollars, Foxconn's market capitalization is larger than almost every automotive manufacturer.

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