Hyundai shares rose 20% as the company confirmed talks for a possible Apple-Hyundai car. A brief statement from the South Korean automaker confirmed that preliminary talks are ongoing between them and Apple Inc for the manufacture of a driverless, electric vehicle.
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Hyundai did not offer any details on the talks and emphasized they were preliminary. Nevertheless, the confirmation signaled that Apple’s car-making plans are taking shape.
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Hyundai Stocks Went Flying
Hankyung TV, owned by the Korea Economic Daily, reported the rumored partnership. In a brief statement, Hyundai confirmed that “Apple and Hyundai are in discussions but they are at an early stage and nothing has been decided.” Despite the lack of detail, Hyundai stocks immediately went flying, rising more than 24% during South Korean trading hours. However, a later statement filed with Korean securities regulators said that the company is in talks with a number of companies regarding electric vehicles. Then, a more recent version did not mention the American computer and mobile device giant. Even with the apparent media miscommunication, Hyundai’s value surged by $9bn (£6.5bn) shortly afterward. Meanwhile, Apple shares rose 3% during Thursday’s trading hours.
Partnering with a core supplier isn’t something new for Apple, For its computers and mobile devices, the company often looks to its Asia-based suppliers to assemble its American-designed gadgets. A similar approach to its planned electric vehicle might make sense as well.
Despite the apparent confusion surrounding the talks with Hyundai, Apple declined to comment. Apple’s efforts to develop an electric vehicle and driverless technology is ongoing for more than six years. It gained enough momentum to earn its project name: Project Titan. However, Apple’s enthusiasm remains erratic. It shelved earlier efforts to focus on driverless technology. Recently, Apple said that it’s targeting 2024 as the year to start production of their electric vehicles. However, pandemic-caused delays can push the production start to 2025 or beyond.
Apple initially thought of producing its own car. Then, it also considered partnering with established car companies to assemble vehicles. If talks with Hyundai prove true, this confirms Apple’s direction to leave automobile manufacturing to a more experienced partner instead of handling everything by itself.
Wedbush analyst Dan Ives applauded the decision for a potential Apple-Hyundai car. He said that “We believe based on our investor conversations over the last few weeks that many on the Street would rather see Apple partner on the EV path, than start building its own vehicles/factories given the margin and financial model implications down the road, coupled with the strategic product risk around such a gargantuan endeavor.”
Electric Vehicles Starting to Make Waves
Apple’s decision to join the EV car revolution comes at a time when electric vehicles are starting to gain mainstream attention. The current frontrunner, Tesla Motors, recently reached a market capitalization of $774 billion, making it the fifth most valuable Wall Street listed company. Tesla is now more valuable than social media titan Facebook and just behind the Alphabet, the parent company of Google. Shares are trading at $816, even after a 5 to 1 stock split last year.
Other traditional car manufacturers such as Renault, GM, Toyota, and Hyundai are already selling electric versions. However, their combined sales pale in comparison to Tesla’s all-electric lineup. Tesla just finished the last quarter a few cars shy of its target of 500,000 vehicles. Hyundai itself is adapting to the future trend of EVs. It partnered with Aptiv PLC in 2019 to jointly develop a fleet of robot taxis. Last year, the Korean giant said it plans to spend $91 billion by 2025 to expand its lineup of electric cars.
An Apple On Every Highway
With the growing popularity of electric cars, Apple’s interest makes complete sense. If it can apply the same technological wizardry it did with its computers and phones to an electric car, then it can compete with the established players. Hopefully, the complaint about short battery life for its earlier phones won’t be an issue for an Apple-Hyundai car.
Watch the Bloomberg Markets and Finances report on Hyundai stocks rising on the report of Apple tie-Up:
Do you agree with Apple’s apparent decision to partner with a car manufacturer instead of going at it alone? Tell us what you think about the possibility of an Apple car in the future. Leave your comments in the section below.