Apple in Talks With Hyundai About Car Ambitions, Auto Maker Says
January 07 2021 - 11:54PM
Dow Jones News
By Elizabeth Koh and Tim Higgins
SEOUL -- Apple Inc. has held talks with Hyundai Motor Co. about
cooperation on driverless, electric vehicles, the South Korean car
giant said.
The brief statement, which sent Hyundai's shares soaring early
Friday in Seoul, included no details and said talks were
preliminary but offered rare public confirmation of Apple's
car-related efforts. The iPhone maker has been working secretly on
the car project in fits and starts for more than six years, while
watching the success of Silicon Valley's Tesla Inc. ignite interest
in electric vehicles.
In recent weeks, Apple has reached out to suppliers about the
possibility of doing its own car, potentially starting production
as soon 2024, a person familiar with the matter said last month.
Apple shelved an earlier effort to develop its own car a few years
ago to focus on driverless car technology.
Apple declined to comment.
Hyundai, in saying Friday that it has held discussions with
Apple, said that "as it is at [an] early stage, nothing has been
decided." In a later statement filed with Korean securities
regulators, Hyundai said it had fielded requests of potential
cooperation on electric vehicles from multiple companies. Hyundai,
with affiliate Kia Motors Corp., ranks among the world's largest
auto makers by sales.
Hankyung TV, the broadcast arm of the Korea Economic Daily,
earlier reported the talks.
Hyundai shares soared 24% in Seoul trading after the report. The
investor excitement comes after a year of frothy valuations for
electric vehicle startups aiming to take on Tesla. Its market value
has shot past $700 billion, making Chief Executive Elon Musk the
world's richest man as of Thursday.
The full extent of Apple's ambitions aren't clear. It has a
history of depending on Asia suppliers to assemble its
California-designed smartphones and tablets. The company has
previously explored the idea of turning over vehicle assembly to a
third party, a rare approach in the auto business.
Former Tesla engineering chief Doug Field is helping lead
Apple's project after returning to the iPhone maker in 2018. He
played an instrumental role in the development of the Model 3
compact car. It has helped fuel sales growth at Tesla and sparked
investment excitement that electric cars can go mainstream, despite
making up a small percentage of the industry's overall sales.
"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,"
Dan Ives, an analyst for Wedbush, said in a note to investors.
Traditional auto makers from Asia to Europe to the Motor City
have been trying to catch up with Tesla, announcing scores of
projects and billions of dollars of investment plans.
The challenge for many is balancing the costs for converting a
fleet of cars to batteries, after generations of milking
gas-powered vehicles, with investing in technology to some day
deploy autonomous vehicles. That shift has led many companies to
seek alliances.
Hyundai, for example, in 2019, announced a $2 billion investment
to join with parts supplier Aptiv PLC. in a driverless vehicle
joint venture, later dubbed Motional, with the aim of deploying
robot taxis. Last year Hyundai said it plans to spend 100 trillion
won ($91 billion) by 2025 to expand its electric vehicle
lineup.
Auto industry executives have long looked at Apple's balance
sheet and worried what kind of muscle it could bring to a business
that has traditionally incinerated lots of cash and resulted in low
margins. Apple had around $192 billion in cash and marketable
securities on hand at the end of its latest financial year that
closed in September.
Write to Elizabeth Koh at Elizabeth.Koh@wsj.com and Tim Higgins
at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
January 07, 2021 23:39 ET (04:39 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Sep 2023 to Sep 2024