Hyundai and Apple in early talks over EV partnership

Might the Korean automaker build the long-rumored Apple car?

SEOUL - Hyundai may be in early stage discussions with Apple after the Korea Economic Daily reported that the two were in talks to cooperate on electric cars and batteries, sending Hyundai shares surging some 20%.

"Apple and Hyundai are in discussions but they are at an early stage and nothing has been decided," Hyundai said in a statement to Reuters.

Hyundai later backed away from the statement somewhat, saying in a regulatory filing issued later that it was "getting requests for cooperation on joint development of autonomous electric vehicles from various companies," without identifying any of them.

Sources told Reuters in December that Apple, whose automotive efforts had proceeded unevenly since 2014, was now targeting 2024 to produce a passenger vehicle that would include its own breakthrough battery technology.

The news hit shares of Tesla and sent those of a number of current or potential partners for Apple higher. Analysts said at the time that the potential of such a development would hinge on Apple (or a potential partner) having made strides in battery tech. Now, we know that Hyundai is one of those potential partners. 

"We understand that Apple is in discussion with a variety of global automakers, including Hyundai Motor. As the discussion is at its early stage, nothing has been decided," a Hyundai spokesperson reportedly told CNBC:

Hyundai and Apple already work together on CarPlay, Apple's software for connecting iPhones to a variety of vehicles.

"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 chip 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 U.S. automakers, they all have strong unions, 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."

The iPhone maker's automotive efforts, known as Project Titan, have proceeded unevenly since 2014 when it first started to design its own vehicle from scratch. At one point, Apple drew back the effort to focus on software and reassessed its goals. Doug Field, an Apple veteran who had worked at Tesla, returned to oversee the project in 2018 and laid off 190 people from the team in 2019.

Since then, Apple has progressed enough that it now aims to build a vehicle for consumers, two people familiar with the effort said, asking not to be named because Apple's plans are not public. Apple's goal of building a personal vehicle for the mass market contrasts with rivals such as Alphabet Inc's Waymo, which has built robo-taxis to carry passengers for a driverless ride-hailing service.

This article contains information from Reuters.

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