Yesterday saw the news emerge of a potential takeover bid of loss-making British supercar brand McLaren by Apple, the world’s most valuable company. If the acquisition rumours are true (reports of failed partnership bids with BMW and Daimler lending weight to Wednesday’s news) it appears as though Apple is struggling to make inroads into the motoring industry.

When ‘Project Titan’, Apple’s venture into the automotive world was announced last year, it was supposed to be the company’s latest attempt to enter the ranks of long-established industry leaders. However, Apple and other blue chip technology sector companies are falling behind a new wave of competitors; Uber won the race against Google’s parent company Alphabet to providing the US with self-driving cars and Tesla, the tech company seemingly to have taken on the mantra of most innovative from Apple, is firmly in the driving seat of mass-producing of electric cars.

Furthermore, Apple faced the prospect of replacing of the previous head of its motoring division Steve Zadesky in January, with company veteran Bob Mansfield eventually stepping up to the plate.

Not only would the takeover of the British supercar producer be Apple’s largest acquisition since its takeover of headphone producer Beats in 2014, it would also mark a move into unknown territory for the tech giant. Production of an Apple-branded product centred almost entirely on the involvement of an external firm.

Apple is reaching a crossroads. Long gone are the days when product development teams were entirely sourced internally, as the diversification of projects in the pipeline essentially negates the previous ability of many key employees to move from production line to production line.

Now it seems Apple is not simply looking to invest some of its vast cash resources into the acquisition of one of the world’s leading engineering firms, but also tap into a pool of knowledge unrivalled in motoring expertise, forgoing the erroneous task of headhunting individuals. The move is set to expand the already impressive repertoire of forward-thinkers at the leader of technological progression in the last two decades and contribute to the shake up taking place under Mansfield’s leadership.

However, acquiring a loss-making supercar manufacturer famed for its anally retentive processes and minimal unit production was not the move analysts were expecting it to make.

The belief was that Apple would again look to China in its production process and, after a $1bn investment in ride-hailing app Didi Chuxing was made in May, it seemed as though the all the pieces were in place. However, previous controversies involving working practices at Chinese manufacturing contractor Foxconn and the speed at which automotive technologies are advancing may have diminished Apple’s willingness to invest too far from established product development centres.

An Apple-McLaren partnership would help Tim Cook’s company break new ground in its efforts to beat the rest of the pack to joining the existing framework of consumer motoring choice.

As calls from investors for Apple to direct a bid for Tesla fell on deaf ears, ‘why join them, when you can beat them’ seems an apt phrase for the direction of the company’s motoring division.

Henry Croft, Research Analyst – 22nd September 2016