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[SAN FRANCISCO] As it firms up plans to upend the auto industry, Apple Inc is looking toward British carmaker McLaren and San Francisco-based startup Lit Motors for help.
Both would give Apple some of the know-how needed to compete head to head against or forge a meaningful partnership with automakers. Yet the two companies exist on opposite ends of the spectrum: McLaren designs million-dollar race cars that mostly run on gas for its affluent customer base, while Lit Motors is developing an electric vehicle that looks like a mashup of a Smart Car and a motorcycle.
McLaren is known for its expensive cars, design aesthetic and focus on customer service. None of those features would immediately benefit Apple's work on a car.
The Cupertino, California-based company already has hundreds of car engineers in a special projects group called Project Titan and its Jony Ive-led industrial design team has a former Lamborghini designer on staff. What McLaren would bring to a partnership is a top brand name, high-end buyers and a research-and-development strategy.
"McLaren has experience dealing with high-end customers, customers who discriminate between good and really good," said Anil Doradla, an analyst at William Blair & Co. "In that context, I believe they will be very supportive of an Apple experience in the car."
Apple is exploring a strategic investment in the British carmaker, people familiar with the matter said. Even so, the company denied any current discussions.
Apple also is in active talks to acquire Lit Motors, another person familiar with the matter said. Through its work on a small vehicle known as the C-1, the startup would provide the expertise to develop the components for an electric car or a platform for other automakers.
The company, which has 10 technology patents involving a self-driving platform and has applied for 82 patents internationally, is positioning its portfolio as central to an acquisition, according to a person briefed on the startup's business. It currently employs 13 engineers with car platform experience, the person said.
After returning to Apple full-time earlier this year to oversee the car project, highly regarded engineering manager Bob Mansfield shifted the iPhone maker's focus from building a complete car to developing an underlying platform.
The car team now includes three main groups: one focusing on software, another on self-driving sensors, and a third on mechanical hardware. This newly installed approach gives Apple the option to market whatever platform technology it creates to existing carmakers or sell its own automobiles by its 2020 target date.
"If Apple were just looking to produce a full-baked product or service, McLaren would not be an obvious choice," said Eric Noble, president of CarLab, an automotive-consulting firm. "It's not an area where they have a competitive advantage."
The McLaren brand would be a safe pick for an Apple investment, however, and the carmaker's attachment to Formula 1 Racing could also serve as a future point of marketing and exposure.
The closely held UK company is more than 55 per cent owned by Bahrain Mumtalakat Holding Co, the investment arm of the kingdom of Bahrain. The next two biggest shareholders are TAG Group Ltd, a Luxembourg-based holding company, with 11 per cent, and McLaren chairman Ron Dennis, with 10 per cent.
It's valued at £750 million to £1 billion, (S$1.3 billion to S$1.8 billion), according to Richard Hilgert, a Chicago-based analyst with Morningstar.
Just as Apple seeks to place iPhones in the hands of the world's top photographers and Apple Watches on personalities from Beyonce to Karl Lagerfeld, it would make sense for Apple to want its future car platform on some of the most prestigious tracks in the world.
Beyond strategy, some of Apple's top executives have race car ties. Senior vice-president of marketing Phil Schiller calls the McLaren F1 one of his favourite cars, while services chief Eddy Cue sits on Ferrari NV's board of directors.
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