Hyundai says it is in early talks with Apple about building a self-driving electric car – sending the the vehicle manufacturer’s share price soaring 20 per cent.
Apple has long been rumoured to be working on a passenger vehicle, and reports in 2020 suggested this would include new ‘breakthrough battery technology’.
Korea Economic Daily TV first reported the link-up between the iPhone maker and Hyundai, suggesting the first vehicles could be ready for the public by 2027.
Hyundai has since confirmed that it is in ‘early stage’ discussions about using its factories to build the Apple car – but ‘nothing has been decided’.
Apple is known for its secretiveness when it comes to new products and partnerships. The tech firm declined to comment on the reports.
Korea Economic Daily TV first reported the link up between the iPhone maker and Hyundai, suggesting the first vehicles could be ready for the public by 2027
The South Korean firm didn’t say what the talks were about and omitted a reference in an earlier statement to Apple being in discussions with other global automakers.
In a regulatory filing, issued after the statement, the automaker didn’t mention Apple, saying it was ‘getting requests for cooperation on joint development of autonomous electric vehicles from various companies.’
Hyundai’s statement revisions, removing Apple from the announcement, suggest it is likely to be more cautious about future communications about any potential partnership with the iPhone maker.
An Apple-branded car could be a challenge to electric vehicle market leader Tesla.
It remains unclear who would assemble such a car, but analysts have said they expect the company to rely on a manufacturing partner to build vehicles.
‘We continue to strongly believe Apple ultimately announces an EV strategic partnership in 2021 that lays the groundwork to enter the burgeoning EV space,’ Wedbush analysts said in a note.
Hyundai and Apple already work together on CarPlay, Apple’s software for connecting iPhones to vehicles from a variety of automakers.
‘Apple outsourcing car production to Hyundai makes sense, because (the Korean firm) is known for quality,’ said Jeong Yun-woo, a former designer at Hyundai and a professor at UNIST in South Korea.
‘But I’m not sure whether it is a good strategy for automakers to be like the Foxconn of Apple as automakers face risks of losing control to tech firms,’ he added, referring to the Taiwanese contract manufacturer’s supply contract with Apple on iPhones.
Analysts said Apple may be interested in using Hyundai’s electric car platform and facilities to cut costs to develop and make vehicles.
‘Apple could see Hyundai as an ideal partner, because when it comes to legacy US automakers, they all have strong union, which Apple would like to avoid,’ said Kevin Yoo, an analyst at eBEST Investment & Securities.
‘Moreover, their (legacy U.S. automakers) labour cost is much higher than that of Hyundai, which often plays a big role when it comes to car production.’
A tie-up with Apple would be a major boost to the automaker, whose global sales last year fell more than 15 per cent as the pandemic took a toll on demand.
Friday’s share price surge added nearly $8 billion to Hyundai’s market value.
A longtime champion of rival hydrogen fuel cell cars, Hyundai recently increased bets on battery-powered electric cars, a move welcomed by investors eyeing the recent success of Tesla.
Apple is known for its secretiveness when it comes to new products and partnerships – the tech firm declined to comment on the reports
Hyundai sources batteries from other firms and is expected to launch its first car based on a dedicated electric car platform known as E-GMP early this year.
Philip Beil, Senior Vice President, Transportation & Mobility at consultancy Publicis Sapient said Apple moving into the mobility market makes sense.
‘With the experience to develop best-in-class and innovative customer experience, Apple does have a big chance to succeed in this highly competitive market.’
He said Apple would need to either develop its own manufacturing skills or find a partner that could produce the hardware if it wants to be a major player.
‘Since the first option – doing everything on their own – bears high risk for Apple and little potential gains (Tesla’s example shows how difficult it is to set-up a flawless and efficient car production from the scratch), it totally makes sense for them to look for an external partner.’