Apple car deal with Hyundai and Kia is reportedly now off

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SEOUL – South Korean Hyundai Motor Co said Monday it is not in talks with Apple Inc about autonomous electric cars now, just a month after it confirmed early talks with the technology giant, causing the automaker’s stock to slip.

Clearing $ 3 billion from its market value, Hyundai’s stock fell 6.2%. Shares in its affiliate Kia Corp, tipped in local media reports as the likely operating partner for Apple, plummeted 15% – a hit of $ 5.5 billion.

The announcement lowers weeks of internal divisions at Hyundai Motor Co Group – the parent company of both carmakers – over the potential partnership with Apple, with some executives voicing concerns about becoming a contract manufacturer for the US tech giant in an agreement that does think about electronics. Foxconn’s role in making iPhones.

“We are receiving requests to collaborate in the joint development of autonomous electric vehicles from different companies, but these are at an early stage and nothing has been decided yet,” the automakers said Monday, in line with stock market rules requiring regular updates. to require investors across the market. rumors.

“We are not in talks with Apple about the development of autonomous vehicles.”

Kia’s share was up 61% since Hyundai initially confirmed a report in local media in early January that Apple and Hyundai were in talks to develop self-driving electric vehicles and batteries at US plants operated by Hyundai or Kia by 2027 .

“Apple and Hyundai are in discussion, but as it is still at an early stage nothing has been decided yet,” Hyundai said, before releasing subsequent statements that removed all mentions from Apple, but said Hyundai is requesting cooperation with electrical cars received from parties. identify.

Last week, media outlets, including CNBC, reported that a deal was close. A South Korean report said the two companies would sign the deal on Feb. 17.

‘Haunting’

Hyundai has traditionally been known for its reluctance to work with outsiders, making engines, transmissions and even its own steel in-house in a vertically integrated supply chain as South Korea’s second largest conglomerate.

While shares in Kia and Hyundai had risen on the news of the talks, internal resistance to becoming an Apple contract manufacturer was significant, according to people familiar with the matter.

“We are grappling with how to do it, whether it is right or not,” a Hyundai manager who was aware of internal discussions about the partnership in January told Reuters. “We are not a company that makes cars for others,” he said on condition of anonymity.

Apple and Hyundai first began talks about a car partnership in 2018, another person familiar with the matter previously told Reuters. But progress has been hindered by the South Korean carmaker’s reluctance to work with outsiders, the person said.

Reuters reported in December that Apple is making advancements in autonomous car technology, aiming to produce a passenger car by 2024 that could contain its own breakthrough battery technology.

Apple, which is known to keep a close eye on product plans, has never spoken with the automaker about building vehicles and was not immediately available for comment outside of US business hours.

Analysts said the talks may have failed due to the leakage of the partnership plan to the media, or due to Apple’s possible insistence that Hyundai’s role in any deal would be that of an equipment manufacturer, rather than a strategic partner.

“With numerous news reports of discussions between the two companies that should have adhered to nondisclosure agreements, it would have been uncomfortable,” said Kwon Soon-woo, an analyst with SK Securities.

Kevin Yoo, analyst at eBEST Investment & Securities, said: “It seems clear that Hyundai Motor Group has not been too happy with the partnership with Apple … They made it clear they don’t want to be treated as Apple’s supplier or manufacturer. . “