At the start of discussions with Apple, Hyundai remains silent on electric vehicle tie-down report



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South Korean company Hyundai Motor Co said on Friday it was in initial talks with Apple after a national broadcaster said the companies were discussing an electric car and a battery, pushing Hyundai shares up by 25%.

The report comes weeks after Reuters announced that Apple was moving ahead with self-driving car technology and aimed to produce a passenger vehicle that could include its own breakthrough battery technology as early as 2024.

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Earlier on Friday, the Korea Economic Daily TV said the iPhone maker and Hyundai were in discussions to develop autonomous electric vehicles by 2027 and develop batteries at US factories operated by Hyundai or its subsidiary Kia Motors Corp. The broadcaster did not cite any sources. for his report.

“Apple and Hyundai are in talks but they are at an early stage and nothing has been decided,” Hyundai said in a statement without specifying what the talks were about.

In a regulatory brief released later, the automaker said it was “receiving requests for cooperation on the joint development of autonomous electric vehicles from various companies,” without identifying any of them.

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Apple declined to comment.

An Apple-branded car could be a big challenge for electric vehicle (EV) market leader Tesla Inc. It’s still unclear who would assemble such a car, but analysts said they expected the he company relies on a manufacturing partner to build vehicles.

“We continue to strongly believe that Apple is finally announcing an EV strategic partnership in 2021 that lays the groundwork for entering the burgeoning EV space,” Wedbush analysts said in a note.

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Hyundai and Apple are already working together on CarPlay, Apple’s software for connecting iPhones to vehicles from various car manufacturers.

“Apple outsourcing auto production to Hyundai makes sense, because (the Korean firm) is known for its quality,” said Jeong Yun-woo, former designer at Hyundai and professor at UNIST in South Korea.

“But I’m not sure it’s a good strategy for automakers to be like Apple’s Foxconn when automakers risk losing control to tech companies,” he added, referring to the Taiwanese manufacturer’s supply contract with Apple for iPhones.

Analysts said Apple may be interested in using Hyundai’s electric car platform and facilities to reduce vehicle development and manufacturing costs.

“Apple might see Hyundai as an ideal partner, because when it comes to the former US automakers, they all have a strong union, which Apple would like to avoid,” said Kevin Yoo, analyst at eBEST Investment & Securities.

“In addition, the cost of their labor (of the former US automakers) is much higher than that of Hyundai, which often plays a large role in auto production.”

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TIE-UP BOOST

A tie-up with Apple would be a major boost for the automaker, whose global sales fell more than 15% last year as the pandemic negatively impacted demand.

Long-time champion of competitive hydrogen-fueled cars, Hyundai recently upped its bets on battery-electric cars, a move hailed by investors who are eyeing Tesla’s recent success.

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The South Korean company, which sources batteries from SK Innovation Co Ltd and LG Chem Ltd and others, is expected to launch its first car based on a dedicated electric car platform known as the E- GMP at the start of this year.

Hyundai does not have dedicated electric car factories in the United States, and it may need to get consent from its powerful South Korean union if it seeks to build electric vehicles overseas, analysts said.

Hyundai Motor shares jumped 24.8% to a more than seven-year high of 255,000 won, while auto parts maker Hyundai Mobis Co Ltd jumped nearly 30%. Kia shares jumped 14%.

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Battery makers also gained ground with SK Innovation up 7%. The broader KOSPI market was up 2.8% at 3.36 a.m. GMT.

(Reporting by Heekyong Yang and Hyunjoo Jin in Seoul and Stephen Nellis in San Francisco; editing by Sayantani Ghosh and Kenneth Maxwell)

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