U.S. tech behemoth Apple appears to be taking steps toward the electric vehicle (EV) business, which is expected to become its future growth engine, as the company has made contact with multiple Korean EV component manufacturers, according to an industry source Monday.
Since last year, Apple has reportedly been planning to jump into the EV business as its next cash-cow business item. As Apple has been sticking to a strategy that it doesn’t rely on having its own manufacturing facilities for its smart gadgets, such as iPhones, iPads and MacBooks, the U.S. tech firm is expected to outsource the manufacturing of its EVs as well. The industry source said that Korean manufacturers of EV batteries and other components will be able to benefit from Apple’s business strategy.
“Apple officials have been in Korea for business talks with its Korean partners in the semiconductor and display sectors. As seen in Apple’s smartphone business, the company is seeking business partners in Korea for its EV business,” a senior industry executive directly involved with the issue told The Korea Times.
“Without partnerships with Korean vendors, Apple won’t be able to complete its EV business plan. As far as I know, Apple has talked with LG, SK and Hanwha, but the talks are still in the early stages.”
Apple reportedly dispatched team members of its EV business project to Korea to have meetings with representatives from SK Group and car component makers, according to local reports. These reports back up the possibility that Apple is moving to work with Korean firms for its EV business.
Thoughts are that Apple had “advanced meetings” with SK Innovation, the EV battery-making arm of SK Group, and LG Electronics, which recently established the joint venture, LG Magna e-Powertrain, along with Canada-based auto parts maker Magna International. Representatives from SK and LG Electronics said that it is hard to confirm whether such meetings occurred. The Korea Times was the first to report that LG Magna was very near to winning volume orders to produce Apple’s first-generation EV.
Apple is considering using a lithium iron phosphate (LFP) battery, which is less likely to overheat and is therefore safer, compared to lithium-ion batteries, which most Korean battery makers are currently manufacturing.
Made of lithium and iron phosphate, LFP batteries show weaker performances at colder temperatures than lithium-ion batteries, but they cost less. In the LFP battery business, mainland Chinese makers take the lead, as there are no Korean makers producing the batteries.
Given the fact that Korean battery firms don’t produce LFP batteries and mainland Chinese battery makers are at the forefront of the LFP battery business, industry views are that Apple is likely to use LFP batteries from these Chinese vendors. According to China Automotive Battery Research Institute, Chinese battery makers such as CATL and BYD provided LFP batteries amounting to 30.8 gigawatt-hours last year, which accounted for 47 percent of the entire EV battery market.
However, chances are likely that Korean battery firms may benefit from Apple’s EV project due to the deepening trade row between the U.S. and China.
For the sales of its EVs in the U.S. market, Apple is also forecast to strengthen ties with Korean battery firms. Due to the growing challenges from China, U.S. President Joe Biden is moving to revitalize domestic manufacturing capacity and create more local jobs in eco-friendly businesses, especially EVs. As President Biden plans to come up with sales rebates and tax incentives for the purchase of EVs manufactured there, it is essential for carmakers to establish EV production lines in the U.S.
LG Energy Solution and SK Innovation have already been operating or are in the process of building battery-manufacturing facilities in the U.S., and Samsung SDI said that it is also considering building a battery plant there.