SEOUL (Reuters) – South Korean Hyundai Motor Co said on Friday it was in early talks with Apple after a domestic broadcaster said the companies were discussing an electric car and battery connection, pushing Hyundai’s 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. for his report.
“Apple and Hyundai are in talks, but they are at an early stage and nothing has been decided yet,” Hyundai said in a statement without saying what the talks were about.
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.
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 depend on a manufacturing partner to build vehicles.
“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 vehicles from different car manufacturers.
“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 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 legacy 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 major boost for the carmaker, whose worldwide sales fell more than 15% last year as the pandemic took its toll on demand.
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.
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.
Shares in Hyundai Motor soared a whopping 24.8%, with a seven-year high of 255,000 won, while auto parts maker Hyundai Mobis Co Ltd jumped nearly 30%. Kia shares shot up about 14%.
Battery manufacturers also gained ground, with SK Innovation up 7%. The broader KOSPI market was up 2.8% from 0336 GMT.
Reporting by Heekyong Yang and Hyunjoo Jin in Seoul and Stephen Nellis in San Francisco; Adaptation by Sayantani Ghosh and Kenneth Maxwell