SEOUL (Reuters) – South Korea’s Hyundai Motor Co said Friday it was in early talks with Apple, after local media reported that the companies were discussing an electric car and battery tying up, pushing Hyundai shares up 25%.
The report comes weeks after Reuters reported that Apple is making advancements in self-driving car technology and wanted to produce a passenger car as early as 2024 that could contain its own breakthrough battery technology.
Earlier on Friday, Korea Economic Daily TV said the iPhone maker and Hyundai were in talks to develop self-driving electric vehicles and batteries by 2027 at U.S. plants operated by Hyundai or its subsidiary Kia Motors Corp. The broadcaster has not named any sources. .
“Apple and Hyundai are in discussion, but as it is still early, nothing has been decided yet,” Hyundai said in a statement. It did not say what the talks were about and omitted a reference in an earlier statement that Apple was in talks with other global automakers and Hyundai.
In a regulatory file published later, the carmaker said it was “receiving requests for collaboration in the joint development of autonomous electric vehicles from several companies,” without identifying any of them.
Apple declined to comment. The iPhone maker is known to keep product plans tight.
An Apple-branded car could be a major challenge for Tesla Inc., the market leader in electric vehicles (EV). It remains unclear who would assemble such a car, but analysts have said they expect the company to be dependent on a manufacturing partner.
“We remain firmly convinced that Apple will eventually announce a strategic electric vehicle partnership in 2021 that will lay the groundwork for entering the fast-growing EV space,” Wedbush analysts said in a note.
LOWER COSTS
Hyundai and Apple are already working together on CarPlay, Apple’s software to connect iPhones to different vehicles.
“It makes sense for Apple to outsource car production to Hyundai, as (the Korean company) is known for its quality,” said Jeong Yun-woo, a former Hyundai designer and professor at UNIST in South Korea.
“But I’m not sure it’s a good strategy for carmakers to be like Apple’s Foxconn, as carmakers risk losing control of tech companies,” he added, referring to the Taiwanese contract chip maker’s supply contract. with Apple for iPhones. .
Analysts said Apple may be interested in using Hyundai’s electric vehicle platform and facilities to reduce vehicle development and manufacturing costs.
“Apple could see Hyundai as an ideal partner because when it comes to old US automakers, they all have strong unions that Apple would like to avoid,” said Kevin Yoo, analyst at eBEST Investment & Securities.
“In addition, their (old American automakers) labor costs are much higher than Hyundai’s, which often plays a major role in car production.”
TIE-UP BOOST
A partnership with Apple would be a big boost for Hyundai, whose global sales fell more than 15% last year as the pandemic took its toll on demand. Friday’s surge in stock price added nearly $ 8 billion to Hyundai’s market value.
A long-standing champion of rival hydrogen fuel cell cars, Hyundai has recently raised bets on battery-powered electric cars, a move welcomed by investors watching Tesla’s recent success.
The South Korean company, which sources batteries from SK Innovation Co Ltd and LG Chem Ltd and others, is expected to launch its first car early this year based on a dedicated electric vehicle platform known as E-GMP.
In 2019, Hyundai and auto parts supplier Aptiv launched a $ 4 billion venture to develop self-driving technologies, called Motional. Last month, ride-hailing firm Lyft and Motional said they would launch a US multi-city robo taxi service in 2023.
Hyundai doesn’t have dedicated electric car factories in the United States and it may need to get approval from its powerful union in South Korea if it wants to build electric cars abroad, analysts said.
It is not known whether Apple is in talks with other car manufacturers.
Japanese carmaker Honda Motor has not held talks with the iPhone maker, a spokesman told Reuters. Larger rival Toyota Motor Corp said it is not commenting on speculation, as Foxconn did.
Shares in Hyundai Motor soared a whopping 24.8%, hitting a high of 255,000 won for over seven years before closing at 19%. Auto parts manufacturer Hyundai Mobis Co Ltd ended the session 18% higher, while Kia shares rose 8.4%.
Battery manufacturers also gained ground, up 7.6% from SK Innovation. The broader KOSPI market closed up 3.97%.
Reporting by Heekyong Yang and Hyunjoo Jin in Seoul, Stephen Nellis in San Francisco; additional reporting by Yimou Lee in Taipei and Eimi Yamamitsu in Tokyo; Edited by Sayantani Ghosh, Kenneth Maxwell and Kim Coghill