SEOUL (Reuters) – South Korea’s Hyundai Motor Co said on Friday it was in initial negotiations with Apple, after local media reported that companies were discussing an electric car and a strapped battery, causing Hyundai’s shares were up 25%.
The report comes weeks after Reuters reported that Apple was moving ahead with self-driving car technology and intended to produce a passenger vehicle that could include its own innovative battery technology as early as 2024.
Earlier on Friday, Korea Economic Daily TV said the iPhone maker and Hyundai were in discussions to develop autonomous electric vehicles by 2027 and develop batteries in factories in the United States operated by Hyundai or its affiliate Kia Motors Corp. The station did not cite sources.
“Apple and Hyundai are in discussion, but as it is still an early stage, nothing has been decided,” Hyundai said in a statement. He did not say what the negotiations were about and omitted a reference in a statement prior to the fact that Apple was in discussions with other global automakers, as well as Hyundai.
In a later regulatory act, the automaker said it was “receiving requests for cooperation for the joint development of autonomous electric vehicles from several companies”, without identifying any of them.
Apple declined to comment. The iPhone maker is known for keeping product plans under wraps.
An Apple-branded car can be a major challenge for Tesla Inc., the market leader in electric vehicles (EV). It is not yet clear who would assemble such a car, but analysts said they expected the company to have a manufacturing partner.
“We continue to strongly believe that Apple finally announced a strategic EV partnership in 2021 that lays the foundation for entering the growing EV space,” Wedbush analysts said in a note.
LOWER COSTS
Hyundai and Apple are already working together on CarPlay, Apple’s software for connecting iPhones to a variety of vehicles.
“Apple outsourcing car production to Hyundai makes sense, because (the Korean company) is known for quality,” said Jeong Yun-woo, a former Hyundai designer and professor at UNIST in South Korea.
“But I’m not sure if it’s a good strategy for automakers to be like Apple’s Foxconn, as automakers face risks of losing control to technology companies,” he added, referring to the manufacturer’s supply contract. Taiwanese chips with Apple on iPhones.
Analysts said Apple may be interested in using Hyundai’s platform and electric car facilities to cut vehicle development and manufacturing costs.
“Apple could see Hyundai as an ideal partner, because when it comes to traditional American car makers, they all have strong unions, which Apple would like to avoid,” said Kevin Yoo, an analyst at eBEST Investment & Securities .
“In addition, its labor cost (former American automakers) is much higher than that of Hyundai, which often plays a large role when it comes to car production.”
TIE-UP BOOST
A partnership with Apple would be a big boost for Hyundai, whose global sales last year fell more than 15%, as the pandemic affected demand. The stock price hike on Friday added nearly $ 8 billion to Hyundai’s market value.
Long-time champion of rival hydrogen fuel cell cars, Hyundai recently increased its bets on battery-powered electric cars, a welcome move by investors looking to Tesla’s recent success.
The South Korean company, which supplies batteries from SK Innovation Co Ltd and LG Chem Ltd and others, is expected to launch its first car based on a dedicated electric car platform known as E-GMP earlier this year.
In 2019, Hyundai and automotive parts supplier Aptiv launched a $ 4 billion venture to develop autonomous driving technologies, calling it Motional. Last month, hitchhiking company Lyft and Motional said it would launch a robot taxi service in several cities in the United States in 2023.
Hyundai does not have electric car factories in the United States and may have to obtain the consent of its powerful union in South Korea if it intends to build EVs abroad, analysts said.
It is not known whether Apple is in talks with other automakers.
Japanese automaker Honda Motor has not held talks with the iPhone maker, a spokesman told Reuters. The biggest rival, Toyota Motor Corp, said it does not comment on speculation, as Foxconn did.
Hyundai Motor shares jumped by as much as 24.8%, reaching the biggest increase in more than seven years of 255,000 won, before closing with a 19% rise. Automotive parts maker Hyundai Mobis Co Ltd ended the session 18% higher, while Kia’s shares jumped 8.4%.
Battery manufacturers also gained ground, with SK Innovation closing at 7.6%. 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; Editing by Sayantani Ghosh, Kenneth Maxwell and Kim Coghill