Apple is "very near" to signing an agreement with LG and Magna to build its long-rumored electric vehicle, according to The Korea Times.
LG Electronics has publicly undertaken a joint venture with the Canada-based automotive supplier Magna International, in a collaboration preliminarily titled "LG Magna e-Powertrain."
LG Magna e-Powertrain is currently valued at $1 billion and will manufacture electric motors, inverters and onboard chargers, following approval from LG shareholders. LG has previously supplied motors, battery packs, and other components for General Motors' Bolt EV and to Tesla, while Magna already produces automotive electronics.
Sources familiar with the matter, speaking to The Korea Times, said "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."
Although the joint venture lacks the production volume to manufacture a vehicle on a mass-scale comparable to other major automakers, Apple is apparently comfortable with LG Magna e-Powertrain's smaller capacity, from which it may be inferred that the company does not intend to produce the vehicle on the same large scale as other major automakers.
Apple's first-generation of electric vehicles is reportedly seen as an opportunity to evaluate the project's marketability, rather than a true mass-market vehicle, rendering it a more niche brand within the industry, at least initially. This is seemingly supported by Apple's ease with LG Magna e-Powertrain's smaller manufacturing capacity.
LG is already heavily integrated into Apple's supply chain for crucial products such as the iPhone, so the two companies are already very familiar with working with each other for production purposes and have an intertwined supply operation.
Because LG Group affiliates including LG Display, LG Chem, LG Energy Solution and LG Innotek are already included in Apple's parts supply chain, 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.
Following LG's decision to shut down its unprofitable smartphone business, the company is said to be urgently responding to investors' growing calls to produce results from its vehicle components business. LG's exit from the smartphone industry is expected to boost its margins and it could re-invest the salvaged funds into its vehicle component businesses.
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.
The monetary value of the partnership would purportedly not be significant for LG, but would rather yield benefits in establishing the reputation of LG Magna e-Powertrain as a contract auto manufacturer and vindicating the formation of LG Magna e-Powertrain.
Magna is based in Canada, but has previously said that it would be able to manufacture vehicles at a facility in the United States if contracted to do so, which may be a provision Apple is looking to include in its proposed agreement.
If the agreement is reached, the two parties will then jointly establish the precise details for the production of the Apple car, and a prototype will apparently be teased in early 2024.
Magna has been floated as a potential contractor for Apple's vehicle in the past, but this appears to be the most well-reasoned rumor surrounding a contract manufacturer for the project to date.
