Judging by new reports, Apple (AAPL) - Get Report may have decided it needs to own, or at least closely partner with, an existing automaker if it wants to design and build fully-fledged electric cars. The big question is to what degree Apple still has those ambitions, following a shakeup to its automotive program in the wake of early stumbles.
On Wednesday morning, The Financial Times reported Apple is mulling an acquisition of or strategic investment in British supercar maker and Formula One team owner McLaren. It added Apple is interested in McLaren's "technology, engineering prowess and patent portfolio," and that a deal would likely be worth £1 billion to £1.5 billion ($1.3 billion to $1.95 billion). That would make it the company's second-biggest acquisition after its $3 billion 2014 purchase of Beats.
However, about three hours after the report, McLaren declared it's not currently talking with Apple about any kind of investment. That, of course, doesn't preclude talks from having previously been held. Financial Times reporter Tim Bradshaw says his paper stands by its story.
And around the same time McLaren issued its denial, The New York Times reported Apple has been talking with McLaren about an investment, as well as with startup Lit Motors about an acquisition. Lit is working on a small, self-balancing, two-wheel electric vehicle known as the C-1; it houses two people and promises to combine "the safety of a car" with "the freedom of a motorcycle."
Bloomberg also reported on Apple's interest in a McLaren stake and a Lit acquisition, while adding Apple is interested in Lit's self-driving patents. The NYT says Apple has already hired several Lit engineers.
Lit Motors' C-1 electric vehicle prototype
What should be made of all this? As far as McLaren goes, perhaps an explanation is found in the ninth paragraph of The Financial Times' report, in which we learn sources caution "it was unclear if a deal would go ahead following a recent shift in Apple's car strategy."
The NYT and Bloomberg previously reported Apple's car initiative, codenamed Project Titan, is now focused on creating autonomous driving systems rather than an entire car. Some workers have reportedly been laid off, and -- following the early-2016 departure of Ford vet Steve Zadesky -- the project is now overseen by former Apple hardware engineering chief Bob Mansfield.
If Apple is no longer looking to make a regular-sized automobile, there's isn't much incentive to buy McLaren. While McLaren is considered an innovator when it comes to building cars with advanced materials and powerful onboard electronics, its cars consume gasoline (quite a lot of it, for obvious reasons), and no one would consider the company to be an autonomous driving leader.
Buying Lit, meanwhile, might let Apple adopt a compromise strategy. Instead of directly taking on EV leader Tesla Motors (TSLA) - Get Report and auto industry incumbents, it could try to disrupt the car market from below by selling smaller, relatively inexpensive electric vehicles that come with autonomous driving features and are useful for getting around urban areas.
The addressable market for such vehicles would be smaller than the market for full-blown sedans and SUVs. But it could still be substantial, particularly if the vehicles get adopted by autonomous ride-sharing fleets down the line. And the costs and challenges involved in designing and manufacturing them could be meaningfully lower.
A lot is clearly in flux. The contours of Project Titan might look a lot different in 12 or 18 months. For now, it looks as if Apple is still interested in playing a bigger role in a rapidly-changing auto industry, but is also trying to figure out what it can and can't do successfully.