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Why Is Apple Trying to Buy This Tiny British Automaker?

A report that Apple is in talks to buy a British sports- and racing-car maker McLaren Technology Group raises questions, starting with this: Why?

Apple (NASDAQ:AAPL) has approached McLaren Technology Group, a British maker of high-end sports cars and owner of a Formula One racing team, about a potential acquisition, according to a new report in the Financial Times.

According to the report, which cites three unnamed “people briefed on the negotiations,” Apple is considering either a strategic investment in or an outright takeover of McLaren. Talks between the two companies have been ongoing for several months, the report said.

McLaren is likely to be valued at between 1 billion pounds ($1.3 billion) and 1.5 billion pounds ($1.95 billion), the report said. That would make it Apple’s biggest acquisition since it paid $3 billion for Beats Electronics and Beats Music.

Beats turned out to be the foundation of a significant new offering, Apple Music. The obvious conclusion to draw is that McLaren would somehow factor into Apple’s long-rumored effort to develop a car. But how?

What is McLaren Technology Group?

Let’s answer this first. McLaren is a privately held company with three principal business units:

  • McLaren Racing operates the successful McLaren Formula One auto-racing team. Formula One is generally regarded as the highest level of auto racing; team budgets are huge and the cars incorporate a great deal of cutting-edge technology.
  • McLaren Automotive manufactures a small range of luxury sports cars with prices that start at about $164,000 and can hit seven figures. It produced 1,654 vehicles last year.
  • McLaren Applied Technologies is a contract-engineering company with expertise in high-performance auto engineering, on-board computer systems, and manufacturing with advanced materials like carbon fiber. It has worked with a long list of companies inside and outside of the auto industry.

So what would Apple want with all that?

Well, Apple is probably not looking to go racing. And seven-figure sports cars aren’t really in line with the Apple brand.

But it’s not hard to see how McLaren’s expertise in developing and manufacturing road cars that incorporate a lot of advanced racing-derived technology could play a big role in Apple’s long-rumored effort to develop a car. According to the Financial Times’ report, Apple is interested in McLaren’s technology, engineering expertise, and patent portfolio.

McLaren’s expertise includes some kinds of expertise that are hard to come by in Silicon Valley — a deep understanding of how to design and tune automotive suspension systems, for instance. That kind of expertise might be what Apple is really seeking here.

What does this say about Apple’s car program?

Officially, Apple hasn’t even acknowledged that it’s trying to develop a car, so it’s hard to say for sure. Some (including your humble Fool) have speculated that Apple’s real intention may be to create a self-driving car service, a premium Apple-quality automated competitor to ride-hailing companies like Uber and Lyft that would be integrated into Apple’s technology ecosphere.

Reports have suggested that the program has made a significant shift in recent months, from an effort to develop a complete electric vehicle led by now-departed executive Steve Zadesky, to a more limited project focused on the development of systems to power a self-driving car under longtime Apple veteran Bob Mansfield.

Longtime Apple-watchers have questioned whether that shift actually happened, as it would mean that the company is moving away from its usual approach of controlling both the hardware and the software in its devices.

But as always with the highly secretive Apple, it’s possible that something else entirely is going on: An acquisition of McLaren would suggest that Apple might be focused on a complete car after all.

When will we know more?

Whenever Apple is ready to tell us. That might be in another year or two, or it might be never if the company decides against bringing a product to market.

That’s not the answer that Apple investors want to hear, of course. But if nothing else, the report of Apple’s interest in McLaren suggests that the project is still alive in some form.

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*The author(s) may have a position in any stocks mentioned. The Motley Fool owns and recommends shares of Apple. 

John Rosevear owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

 

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Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.