SEOUL (Reuters) – South Korea’s Hyundai Motor Co said on Friday it was in initial negotiations with Apple after a domestic broadcaster said companies were discussing an electric car and a tied battery, causing the shares of Hyundai 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 US plants operated by Hyundai or its affiliate Kia Motors Corp. The broadcaster did not cite sources for its report.
“Apple and Hyundai are in negotiations, but they are at an early stage and nothing has been decided,” Hyundai said in a statement, without saying what the negotiations are about.
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.
An Apple-branded car could be a major challenge for the market leader in electric vehicles (EV) Tesla Inc. It is not yet clear who would assemble such a car, but analysts said they expected the company to have a manufacturing partner to build vehicles. .
“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 vehicles from several automakers.
“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 Taiwanese manufacturer’s supply contract. 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 legacy American automakers, they all have a strong bond, 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 the automaker, whose global sales last year fell more than 15%, with the pandemic affecting demand.
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.
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.
Hyundai Motor shares were up 24.8%, reaching the biggest increase in more than seven years of 255,000 won, while auto parts maker Hyundai Mobis Co Ltd was up almost 30%. Kia’s shares jumped about 14%.
Battery manufacturers also gained ground, with SK Innovation growing 7%. The broader KOSPI market rose 2.8% at 0336 GMT.
Reporting by Heekyong Yang and Hyunjoo Jin in Seoul and Stephen Nellis in San Francisco; Sayantani Ghosh and Kenneth Maxwell edition