Benzinga | Mar 11, 2021 09:37AM EST

Why Apple Car Is Likely To Follow iPhone's Playbook On Production

Apple Inc (NASDAQ:AAPL) is likely to use an approach similar to one it uses to make the iPhone for manufacturing its rumored electric vehicle, Bloomberg reported Wednesday.

What Happened: The Tim Cook-led company may work with a contract manufacturer after talks with some automakers did not bear fruit.

For making computers, smartphones, and tablets, the Cupertino, California-based company partners with manufacturers such as Hon Hai Precision Industry Co. Ltd (OTC:HNHPF), better known as Foxconn, as well as Pegatron, Wistron, Flex Ltd (NASDAQ:FLEX), and Luxshare. Profit margins of contract suppliers are dwarfed by those of Apple as factories are low-margin businesses.

See also: How To Buy Apple Stock

Why It Matters: The contract manufacturing approach allows Apple to avoid expenses related to construction, salaries, training, and other sundry expenses noted Bloomberg.

Last month, EV talks between Apple and Korea's Hyundai Motor Company (OTC:HYMTF) fell through.

Apple was also said to be in discussions at the time with General Motors Company (NYSE:GM) and Stellantis NV (NYSE:STLA).

Nissan Motor Co., Ltd (OTC:NSANY) also had fleeting contact with the iPhone maker but discussions did not reach fruition as the latter did not want to take a step down from being an automaker to a hardware supplier.

Price Action: Apple shares closed nearly 0.9% lower at $119.98 on Wednesday.

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