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Does Luxury Carmaker McLaren Have Apple’s Eye?

Sept. 21, 2016
If Apple really is interested in acquiring a stake in McLaren, industry analysts would describe it as a “strange move” that wouldn’t give Apple much “manufacturing scale or know-how about mass-produced cars.”

Apple Inc. is seeking to take a strategic stake in luxury car maker McLaren Technology Group, according to people familiar with the situation.

The technology company is more likely to make a large investment than an outright acquisition, said one of the people who asked not to be identified. The Financial Times reported that Apple was considering buying all of McLaren or taking a stake in the U.K.-based car maker. The New York Times also reported that Apple is in talks about potentially acquiring Lit Motors, a San Francisco startup that has developed an electric motorbike.

A McLaren spokesperson, meanwhile said that the company “is not in discussion with Apple in respect of any potential investment,” according to a report from Agence France-Presse, clouding the immediate speculation over whether Apple is targeting the highest end for its long-rumored car.

Apple declined to comment.

Eager for a new hit to replace the iPhone, Apple has hundreds of engineers working on car design and has been targeting a release as soon as 2020. While the company has been focusing more on self-driving software in recent months, it has never abandoned efforts to build its own vehicle or tie up with an established carmaker, according to people familiar with Apple’s thinking.

With sports cars starting at almost $200,000, McLaren would bring brand strength, advanced engineering and a portfolio of patents to the equation.

In a call with analysts earlier this year, CEO Tim Cook suggested Apple would do more acquisitions and strategic investments. Apple had $232 billion in cash at the end of June, and about $215 billion of that is kept outside of the U.S., Cook told investors in July.

Many analysts have speculated that Apple would buy Tesla Motors Inc., deemed a good fit because it sells electric cars with self-driving capabilities. Tesla shares gave up an early rally once the FT news broke.

Buying a stake in McLaren is less obvious because the U.K. company is best known for luxury cars that go very fast. What’s more, the company lacks mass-manufacturing capabilities. McLaren can make only a few thousand cars a year, compared with mainstream automakers with several factories each cranking out hundreds of thousands of auto each year.

Dominic O’Brien, a London-based analyst at Exane BNP Paribas said that acquiring McLaren would be a “strange move” for Apple. “They wouldn’t gain manufacturing scale or much know-how about mass-produced cars,” he said. “McLaren isn’t known for electric cars or its autonomous driving capability.”

Apple is working on a self-driving project dubbed Project Titan, according to people familiar with the plan. The company recently hired the former head of BlackBerry Ltd.’s automotive software division and has continued to raid auto companies for engineers with expertise in designing vehicle manufacturing systems.

The question, said William Blair & Co. analyst Anil Doradla, is whether Apple uses McLaren as a “tech incubator” or for “rolling out a car.”

By Dinesh Nair and Adam Satariano, with assistance from Jamie Butters, Elisabeth Behrmann, Elliott Snyder and Benjamin Katz.

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