Cooperating with CATL to regenerate variables, Apple's car building is still strong

In the new field of car building, even if there are money, people, and appeal, as long as Apple Car does not really hit the road, it is difficult to say that the myth of constant victory will end or continue.

The outline of the Apple Car is getting clearer.

According to a DigiTimes Asia report, Apple is selecting a battery supplier for Apple Car. CATL and BYD are both on the negotiating list. But Apple insists on using batteries made in the United States. If CATL and BYD are unwilling to build factories in the United States, they may not be selected. Apple has begun to turn its attention to Foxconn and Likai Power, which are willing to set up factories in the United States.

Apple has finally made some substantial progress in making cars. Compared with the iPhone iterating once a year, Apple has a long journey of making cars. According to Guo Mingchi, an analyst familiar with Apple revealed in the report: Apple cars will come out in 2025 at the earliest.

At the end of last year, Apple had put on the agenda to set up a factory in the United States, and began to figure out the upstream and downstream supply chain. Last month, according to a Reuters report, Apple had begun negotiations with CATL and BYD. Even if we fail to get a deal in the end, we can see that Apple's car-building plan has reached the stage of the supply chain. According to a Nikkei report, a supplier's executive stated that "(Apple) is advancing negotiations with at least about six companies (to build a complete vehicle)."

In the supply chain of electronic equipment, Apple is a major customer who must win if they break the head. Many companies rely on the skyrocketing market value of Apple and have become popular star companies in a short time. Switching to the automotive field, Apple has become a wary intruder. Apple has always had absolute dominance in the supply chain, but in the ups and downs of the 7 years of building cars, they bitterly found themselves hitting walls everywhere. This is not the first time that negotiations with battery suppliers have changed, and it will not be the last.

Strong Apple VS Strong Supply Chain

Apple has never been able to find a car-building partner who can agree on it.

There is an awkward reality behind this. Apple once defined smart phones, true wireless Bluetooth headsets and tablet devices, and it naturally became the rule maker. It has become accustomed to controlling and toughness.

In many cases, the rise and fall of the supply chain follow Apple's actions. 70% of Foxconn's orders come from Apple, and even moved part of its production lines to Vietnam following Apple's requirements.

Any turmoil about Apple will cause fluctuations in the "fruit chain" company. Xinwangda started to supply batteries for iPhone 3 and iPod in 2011 through cooperation with ATL, but the supplier of iPhone 4 was replaced by Desai, which directly caused Xinwangda's net profit to drop by 13% year-on-year.

Dubbed by investors as the "Three Stupid Fruit Chains" Goertek, Lens Technology and Luxshare Precision have fallen by more than 40% in three months due to factors such as the poor performance of the iPhone 12mini.

Without Apple's blessing, most of these fruit chain companies will become boring and be left behind by the capital market. Ou Feiguang, who was eliminated this year, is a living case-the stock price has fallen back to 2 years ago.

However, in the field of electric vehicles, it is a latecomer. The giants that dominate the industry will certainly not ignore such appealing customers as Apple, but they will not rely on Apple's halo either.

In 2020, CATL’s annual installed capacity will reach 34Gwh, ranking first, followed by LG Chem and Panasonic, which supplies Tesla. Foxconn and Likai Electric are not included in the top ten list. Faced with the battery supply chain that is already a giant, it is difficult to say who is stronger. Apple's finding Foxconn and Likai Power is also a stopgap measure.

The cooperation between Apple and OEMs has been undergoing similar constant transitions.

In 2015, according to the German "Manager Magazine" report, Cook visited the BMW i3 factory in Leipzig with great interest and also wanted to develop his own electric car based on the BMW i3. According to Reuters, the people at BMW also hinted at their intention to cooperate, but the following quickly disappeared because BMW was unwilling to give away its own technology and become a foundry.

Later, Apple found Daimler, the parent company of Mercedes-Benz, and the open ending was similar to that of BMW: not cooperating to build the whole car, and other cooperations were not ruled out. "We do not intend to become Apple's Foxconn." Dieter Zetsche, then CEO of Daimler, said so.

Japanese and Korean car companies have become Apple's next wave of targets, and similar stories with BMW and Daimler have been repeated on Nissan. But the cooperation with South Korean companies is already on the horizon. On February 3 this year, CNBC reported that Apple is cooperating with Kia to produce cars, and it is a veritable "Apple Car". Kia has given a lot of support, and both software and hardware will be in Apple's own hands.

However, a week after the report was released, Kia issued an announcement stating that it had not negotiated with Apple on cooperation in the development of autonomous vehicles.

When an anonymous executive explained the reason, he repeated the same concerns of Kia, BMW and Daimler. But this may be just one of the reasons. SK Securities analyst Kwon Soon-woo said, “The news exposure may have violated the confidentiality agreement. This is not very comfortable.”

Apple has always been strict in its supply chain management and control, with special emphasis on confidentiality. CNBC reports touched Apple's rebellious scale. When working with each other, they have their own minds, and it is not a surprise to leave after unhappy. After the cooperation with Kia fell through, Apple found LG, also in South Korea, and the outcome was still up in the air.

Whether it is an OEM or a Tier 1 supplier, it’s hard not to worry about a behemoth like Apple with a market value of $2 trillion. Perhaps for Apple, the past glorious success has become a curse.

Apple enters a strange land

No one can deny Apple’s technological prowess. According to Reuters, Apple has developed a "breakthrough" battery technology monocell (single-cell), which is to fuse all batteries and remove the gaps between the batteries. The battery pack of the same size can accommodate a larger capacity battery, providing longer battery life and saving costs.

If this technology is mass-produced, just as the iPhone turned out at that time, it will undoubtedly be another industry earthquake.

But the technical difficulties of electric vehicles are not just batteries. Electric drives, motors, etc. are areas that are unfamiliar to Apple. Apple also wants to get involved in driverless and in-vehicle systems. Apple is most keen on this kind of large-scale software and hardware, Tesla's success has also proved its feasibility, but compared to start-up companies, Apple obviously has more constraints.

At first, Apple took a two-pronged approach. Although the hardware was not progressing smoothly, the car system CarPlay was well received. 60% of the new cars sold last year supported CarPlay.

This is just a stopgap measure. Sooner or later, automakers will use their own systems. The operating system alone cannot carry Apple's ambitions. After the development of its own car hit the wall, Apple once turned to driverless technology with a higher threshold.

But Apple doesn't seem to be going all out. For many years, its road test data has lagged behind Google by a large margin. According to the 2020 report of the California Department of Motor Vehicles, Apple's road test mileage last year was 30,000 kilometers, and Google's self-driving car company Waymo had a road test mileage of 1.01 million kilometers last year.

No one knows what is going on inside Apple. The outside world can only rely on the departure of individual executives to describe its turmoil. In 2021 alone, three senior executives from Apple’s self-driving car team left, including veteran Benjamin Lyon, who helped build the initial car team and led several key projects.

But from digging around with high salaries, it can be seen that Apple attaches great importance to the automotive business. In the car-building team, there are Manfred Haller, the vice president of Porsche chassis development business, and Doug Field, the former chief engineer of Model 3 and Tesla's senior vice president of engineering. Last month, Ulrich Kranz, a former BMW executive, joined the Apple team. It was he who led the development of i3, which Cook was particularly interested in.

Even if the cooperation with external parties lingers, many people still believe in Apple's ability to integrate the supply chain. Morgan Stanley once said: "Learning from Tesla's success, we have always believed that technology companies like Apple are more competitive than traditional OEMs."

Apple hasn't overturned consumer electronics for many years, and even left the impression that as long as it sells, the product will sell well. However, in the new field of car building, facing cars with more than 30,000 parts, even if there are money, people, and appeal, as long as Apple Car does not really hit the road, it is difficult to say that the myth of constant victory will end or continue.

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