Hyundai and Apple Car Deal Is No Longer Happening (At Least For Now)

Just when the world was hoping for something revolutionary after the potential collaboration of the decade started making rounds, South Korea’s Hyundai Motor Co wiped away all the rumors of being in talks with Apple Inc to produce autonomous electric cars. Although Hyundai was the one itself that confirmed early-stage talks a month ago but nothing really happened afterward.

As a result, there was also a sharp decline in Hyundai’s share price - a 6.2% drop and $3 billion lost in terms of market value. Furthermore, shares in affiliate Kia Corp, also went down by 15%, as per reports emerging from the local media and it is a $5.5 billion hit to be exact.

In response to the market rumors, the automakers have stated that they are receiving a number of requests from different companies for joint development of autonomous electric vehicles but since all of them are at an early stage, therefore, no collaboration has been decided as of yet. However, they also didn’t identify the parties making such requests for the investors.

When the reports of Apple teaming up with Kia first came out, Kia enjoyed a sharp hike in its shares of 61% since Hyundai was the one that actually confirmed that they are in talks with Apple to develop the series of self-driving electric vehicles by 2027 and with that, there were chances that the batteries would also be developed in U.S. factories which would have been controlled by either Hyundai or Kia.

Some media outlets including CNBC also reported that the deal was about to be finalized and the two companies had the plan to sign the deal on Feb. 17.

What Really Went Wrong? (Opinion)

Hyundai is known as a company that always hesitates to work with outsiders. They make their own engines, prepare transmissions and even have their steel produced in-house through a vertically integrated supply chain which is also regarded as the second-largest conglomerate in South Korea.

So despite Kia and Hyundai shares going up, there still existed an internal opposition, as per sources, which was not in favor of the company becoming an Apple contract manufacturer.

In fact, as per a Hyundai executive who was a part of internal discussions on the similar matter admitted in January that the company is agonizing over whether it is good to tie-up or not since Hyundai doesn’t prefer to be a company that would manufacture cars for others.

Another person familiar with the tie-up also told that Apple and Hyundai first began discussing a potential car partnership back in 2018, but the progress never took place because of the automaker’s reluctance.

On the other hand, just like the way Apple always remains strictly silent about their upcoming plans, never said anything about such talks with Hyundai. It was media outlets like Bloomberg and Reuters that began revealing Apple’s plans to jump into autonomous car technology along with the aim to produce a vehicle based on their own breakthrough battery technology by the start of 2024.

Moreover, according to Kevin Yoo, an analyst at eBEST Investment & Securities, it seems like that Hyundai Motor Group also got uncomfortable in dealing with reports coming out from media outlets which should have been held till a non-disclosure agreement or maybe they are not happy with Apple’s deal at all since the company clearly doesn’t want to be Apple’s supplier or manufacturer.

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