BMW-Apple Courtship: It’s Complicated

BMW-Apple Courtship: It’s Complicated
BMW-Apple Courtship: It’s Complicated

BMW and Apple may rekindle a courtship put on hold after an exploratory visit by executives of the world's top maker of electronic gadgets to the headquarters of the world's biggest seller of premium cars.

Apple Chief Executive Tim Cook went to BMW's headquarters last year and senior Apple executives toured the carmaker's Leipzig factory to learn how it manufactures the i3 electric car, Reuters reports.

The dialogue ended without conclusion because Apple appears to want to explore developing a passenger car on its own, a source close to the matter said.

Also, BMW is being cautious about sharing its manufacturing know-how because it wants to avoid becoming a mere supplier to a software or Internet giant. During the visit, Apple executives asked BMW board members detailed questions about tooling and production and BMW executives signaled readiness to license parts, one of the sources said. News of the Leipzig visit first emerged in Germany's Manager-Magazin last week.

"Apple executives were impressed with the fact that we abandoned traditional approaches to car-making and started afresh. It chimed with the way they do things too," a senior BMW source said. The carmaker says there are currently no talks with Apple about jointly developing a passenger car and Apple declined to comment. However, one of the sources said exploratory talks between senior managers may be revived at a later stage.

It is too early to say whether this will be a replay of Silicon Valley's Prometheus moment: The day in 1979 when Apple co-founder Steve Jobs visited Xerox's Palo Alto Research Center where the first mouse-driven graphical user interface and bit-mapped graphics were created, and walked out with crucial ideas to launch the Macintosh computer five years later.

BMW has realized next-generation vehicles cannot be built without more input from telecoms and software experts, and Apple has been studying how to make a self-driving electric car as it seeks new market opportunities beyond phones.

  Staff Changes

Since the visit, there has been a reshuffle at the top of BMW, with Harald Krueger, appointed BMW chief executive in May, in favor of establishing his own team and his plans for BMW by the yearend, before engaging in new projects, a person familiar with his thinking told Reuters.

A further complication was the departure of BMW's board member for development Herbert Diess, who played a leading role in initial discussions with Apple. He defected to Volkswagen in December.

Diess oversaw the development of BMW's "i" vehicles which are built using lightweight carbon fiber, using a radical approach to design and manufacturing. Car technology has become a prime area of interest for Silicon Valley companies ranging from Google Inc, which has built a prototype self-driving car, to electric carmaker Tesla Motors Inc.

Diess has said the German auto industry needs to undergo radical change because consumers are demanding more intelligent cars and anti-pollution rules mean the next generation vehicles will increasingly be low emission electric and hybrid variants. In 2030, only two generations of new cars away in auto manufacturing timescales, only a third of vehicles will be powered by a conventional combustion engine alone, experts predict.

"It means that in two cycles we will shut down two-thirds of our engine manufacturing," Diess told a panel discussion in July last year, adding that the value chain for new electric cars is already shifting, with vehicle batteries made mainly in Asia.

"The second part is that the car will become intelligent, part of the Internet," Diess continued. "And the strong players in this area are in the United States, in the software development area. We will surely need to find alliances in this field."

Diess said Germany has two years to prove that it can hold its own against new entrants when it comes to shaping the future of luxury vehicles.