'Apple Car' Global Order Battle... LG Electronics Riding Magna Gains Increased Expectations

[Asia Economy Reporter Su-yeon Woo] As attention focuses on the selection of the production partner for the 'Apple Car,' the possibility of Magna winning the order has emerged, raising expectations for LG Electronics, which established an electric vehicle powertrain joint venture.

According to industry sources and foreign media on the 20th, Magna, the world's third-largest parts supplier, is being mentioned as one of the leading candidates to win the Apple Car order. Recently, as the atmosphere of negotiation breakdown with Apple was detected among the major automakers who were considered strong candidates, Magna, which has already been entrusted with contract manufacturing of finished vehicles, is emerging as a strong contender.

On the 8th, Hyundai Motor and Kia announced that "we are not in discussions with Apple regarding autonomous vehicle development," dismissing the possibility of cooperation. Another leading candidate, Japanese automaker Nissan, reportedly discussed negotiations at the working level but ultimately failed to reach an agreement.

Industry insiders interpret the failure of negotiations as stemming from automakers hoping to become partners to jointly develop autonomous electric vehicles with Apple, whereas Apple is looking for subcontractors to manufacture cars according to their own designs and concepts. Ultimately, automakers fear a decline in their brand value by being reduced to Apple's subcontractors, making the Apple Car a 'poisoned chalice' from their perspective. Foxconn, Apple's smartphone contract manufacturer, is also preparing to produce electric vehicles, but it is expected to take considerable time to pass reliability tests for vehicle safety, which guarantees passenger safety.

However, for Magna, which already produces vehicles under contract for automakers, the Apple Car could be an attractive option. Magna, the world's third-largest automotive parts supplier, covers a wide range of fields from vehicle chassis and car seats to transmissions, camera sensors, and software for driver assistance systems.

Additionally, Magna already produces 160,000 finished vehicles annually under contract at its Graz plant in Austria, including Mercedes-Benz G-Class, Jaguar electric vehicle I-PACE, BMW 5 Series, and BMW sports car Z4. In China, Magna has established a joint electric vehicle factory with Beijing Automotive, producing 180,000 units annually, which recently started operations in Jiangsu Province, China.

Moreover, Magna's early collaboration discussions with Apple during the initial stages of the electric vehicle project also strengthen its chances of winning the order. Earlier, Swami Kotagiri, CEO of Magna, expressed confidence in Magna's technological capabilities in an interview with Canadian media BNN Bloomberg, responding positively to the question of whether Magna has the ability to manufacture the Apple Car.

Another company gaining attention as Magna's chances of winning the Apple Car order rise is LG Electronics. Last year, LG Electronics established the electric vehicle powertrain joint venture 'LG Magna' with Magna. From the early stages of the joint venture's establishment, the possibility of both companies winning the Apple Car order was mentioned, confirming high expectations.

Industry insiders believe that even if Magna fails to win the Apple Car finished vehicle order, the possibility of LG Magna and LG affiliates winning orders for electric vehicle parts remains high. LG Electronics, which has a broad portfolio in the electric vehicle parts ecosystem, has sufficient incentives to be selected as an Apple partner.

Dongwon Kim, a researcher at KB Securities, said, "LG Electronics is emerging as the best partner in the global electric vehicle market and is expected to lead ecosystem formation," adding, "Considering the short preparation period of 2-3 years and the competitive landscape with Tesla, big tech companies like Apple, expected to enter the market in 2024, do not seem to have many options for electric vehicle partners."