SEOUL (Reuters) – Hyundai Motor Co of South Korea said on Friday that it was in early talks with Apple after an internal broadcaster said companies were talking about an electric car and battery connection, sending Hyundai shares up 25%.
The report comes just weeks after Reuters reported that Apple was advancing automotive technology and was aiming to produce a passenger vehicle that could include its own revolutionary battery technology as early as 2024.
Earlier on Friday, Korea Economic Daily TV said the iPhone maker and Hyundai were in talks to develop self-driving electric vehicles by 2027 and to develop batteries at U.S. plants operated by either Hyundai or its subsidiary Kia Motors Corp. The broadcaster did not mention sources for its report.
“Apple and Hyundai are in talks, but they are at an early stage and nothing has been decided,” Hyundai said in a statement without saying what the talks were about.
In a subsequent regulatory dossier, the carmaker stated that it “receives requests for cooperation for the joint development of autonomous electric vehicles from various companies”, without identifying any of them.
Apple declined to comment.
An Apple car could be a big challenge for the electric vehicle (EV) market leader, Tesla Inc. It remains unclear who would assemble such a car, but analysts said they expect the company to rely on a production partner to build vehicles.
“We continue to strongly believe that Apple is finally announcing a strategic EV partnership in 2021, which lays the groundwork to enter the booming EV space,” Wedbush analysts said in a note.
LOW COSTS
Hyundai and Apple are already working together on CarPlay, Apple’s software for connecting iPhones to vehicles from a variety of automakers.
“Outsourcing Apple’s 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 carmakers to be like Apple’s Foxconn, because carmakers face the risk of losing control to technology companies,” he added, referring to the contract. Taiwanese manufacturer contracts with Apple on iPhone.
Analysts said Apple may be interested in using the Hyundai electric car platform and facilities to reduce vehicle development and manufacturing costs.
“Apple could see Hyundai as an ideal partner, because when it comes to old American carmakers, they all have a strong union, which Apple would like to avoid,” said Kevin Yoo, an analyst at eBEST Investment & Securities. .
“Moreover, the cost of labor (US heirs in the US) is much higher than that of Hyundai, which often plays an important role when it comes to car production.”
TIE-UP IMPROVEMENT
A link with Apple would be a major boost for the automaker, whose global sales fell by more than 15% last year as the pandemic hit demand.
A longtime champion of rival hydrogen fuel cell cars, Hyundai has recently increased betting on battery-powered electric cars, a move welcomed by investors who are watching 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 machine based on a dedicated electric machine platform known as E-GMP earlier this year.
Hyundai has no dedicated electric car factories in the United States and may have to obtain the strong consent of its South Korean union if it seeks to build electric vehicles abroad, analysts said.
Shares of Hyundai Motor rose up 24.8% to a seven-year high of 255,000 won, while auto parts maker Hyundai Mobis Co Ltd rose nearly 30%. Kia shares rose about 14%.
Battery manufacturers also gained ground with SK Innovation with 7%. The wider KOSPI market grew by 2.8% starting with 0336 GMT.
Reporting by Heekyong Yang and Hyunjoo Jin in Seoul and Stephen Nellis in San Francisco; Editing by Sayantani Ghosh and Kenneth Maxwell