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Apple is considering an EV partnership.
Jack Taylor / Getty Images
Shares of South Korean automaker
Hyundai engine
skyrocket Friday because of
Apple.
Reports of a possible automotive partnership between the tech giant and the auto world have rocked investors. This type of deal could become a theme for investors in 2021.
Hyundai stock (ticker: 005380. Korea) jumped 19.4% in overseas trading on Friday. This is the second best daily jump in the stock since the 1980s, when stocks jumped 45% a day in 1988.
Today, the peak concerns Apple (AAPL) and provides for an Apple autonomous electric vehicle. Stories about an Apple car surfaced late last year. Apple declined to comment on its plans, but the company has been playing with the idea of an Apple-branded automobile since at least 2014.
“Over the past six years, we’ve seen a lot of twists and turns in Apple’s automotive ambitions,” Wedbush analyst Dan Ives wrote in a research report Friday. He thinks the chances of Apple going it alone in the auto business are not high. Cars require a lot of capital to build the required scale – even more capital than it costs to build smartphones and computers. “We continue to strongly believe that Apple is finally announcing a strategic EV partnership in 2021.”
Apple and Hyundai were not immediately available for comment. The idea of an Apple-Hyundai tie-up is only speculation at this point: Investors appear to have jumped to Apple on initial reports that Hyundai is in talks with U.S. companies about partnerships.
Hyundai’s target partner certainly doesn’t have to be Apple. There are other reasons to join companies in the age of electric vehicles and autonomous driving.
XPeng
(XPEV) recently announced a partnership with a supplier of laser radar, or Lidar. Hyundai could do something similar as all the global automakers try to start businesses related to autonomous robotaxis.
Aptiva
(APTV),
Luminar Technologies
(LAZR), and
Veoneer
(VNE) are three companies involved in autonomous driving technology. Aptiv integrates sensor data, and Luminar and Veoneer are both lidar companies. These are three companies that can benefit as the pressure for partnerships intensifies.
Hyundai is a household name because of its cars – it’s one of the biggest automakers on the planet, with a market capitalization of around $ 50 billion. Hyundai also owns around 34% of
Kia Engines
(000270, Korea), which has a market value of approximately $ 25 billion. Kia, in a cross-holding company, also owns 21% of Hyundai’s shares. Together, Hyundai and Kia sell more than 5 million vehicles per year.
These are impressive numbers for the auto industry, but they are eclipsed by Apple and the phone industry. Apple’s market capitalization is around $ 2.2 trillion.
2021 will be an interesting year as the number of car manufacturers proliferates – Xpeng,
Fisker
(FSR) and other EV companies with billion dollar valuations didn’t exist a decade ago – and as new companies make decisions about sourcing, manufacturing and of technology.
Ives doesn’t cover a lot of automakers; it mainly covers technology companies. It values Apple Buy stocks and has a price target of $ 160.
Apple shares are up about 0.3% at the start of Friday’s session. the
S&P 500
was up 0.4% and the
Dow Jones Industrial Average
rose only 0.1%.
Write to Al Root at [email protected]
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