Hyundai and Kia Motors Pause Discussions with Apple to Develop an Autonomous Vehicle
Hyundai and sister company, Kia Motors have both dashed talks that either company was engaged in negotiations with Apple, Inc. for the development of an autonomous vehicle. In the last few weeks, there has been considerable speculation about the tie-up between the iPhone maker, and Korea’s two largest vehicle manufacturers.
People familiar with the matter told Bloomberg late last week that discussions between the parties had been called off. Although the names have not been made public, Apple apparently has been engaged in similar talks with other automobile manufacturers. Both Hyundai and Kia Motors also said last week that they were involved in early discussions with multiple companies regarding developing an autonomous electric vehicle. No decisions have been made, and talks with potential partners in the venture are only in the preliminary stage.
On hearing the news, shares in Hyundai fell 8.4 percent on KOSPI, while shares in Kia fell over 15 percent.
Talks Have Been Dormant
Reports of Apple’s possible entry into the global vehicle market reemerged this year after lying dormant since talks first took place six years ago. Given the project’s potential to upset the entire automobile industry, Apple has kept the talks under wraps.
Lee Jai-il, an analyst with Eugene Investment and Securities in Korea, is quoted as saying.” Talks with iPhone manufacturer Apple coming to an end will not dampen Hyundai’s strategy.” He went on to say that Hyundai is already in the electric vehicle business with the Ioniq brand. The possibility remains for cooperation between both Hyundai and Kia with other automobile manufacturers.
The statement made last week by Hyundai is almost identical to that made a month ago. The company did a poor job of delivering its message about the eagerly anticipated vehicle. First reports suggested that discussions were well along between the two industry giants, only to revise the statement twice in the ensuing hours.
Shares Prices Up
On January 8th, investors sent shares in Hyundai up a staggering 20 percent. Since then, there has been no end of speculation over which vehicle manufacturer Apple may team up with. Kia stock went up a full ten percent on word that the company had received a $3.6 billion (4 trillion Korean Won) investment from Apple to produce electric vehicles.
Last week, word came out via Japan’s Nikkei newspaper saying that Apple is actively engaged in early discussions with at least six other vehicle manufacturers to develop its EV. Dow Jones reported that Kia had sent feelers to potential partners about the possibility of assembling the vehicles in the state of Georgia.
The Market Has Seen a Rash of Tie-ups
It is not just Hyundai and Kia that have expressed interest in producing EVs. In the last few months, there have been several cooperative arrangements made. China’s Geely Holding Group, Co., have forged a cooperative arrangement with search giant Baidu, and Foxconn Technology, the manufacturing partner of Apple in Taiwan, has entered into a deal with Chinese EV startup, Byton.
An electric vehicle from Apple would quickly become a rival of Tesla, Inc., and other new entrants into the market. Recent market entrants include Nio, Inc. and Lucid Motors, as well as long-established names including Daimler AG and Volkswagen AG.
EV Sales Are Booming in Europe
Electric vehicle sales hit a new high in 2020. 2021 is not expected to be any different. There does not appear to be any limit to European EV sales. China is the world’s leading market for electric vehicles. Deliveries in 2020 amounted to well over 1.1 million units.
Bloomberg suggests that EV sales will accelerate rapidly through 2050 when 65 percent of miles traveled will be in electric cars. By the same year, it is estimated that electric vehicle sales will account for three-quarters of new car sales globally.
Hyundai Plans European Manufacturing
Hyundai has developed a new platform dedicated exclusively to electric vehicles. Manufacturing in Europe is expected to commence in March, followed by Kia’s offering later in the year. The technology being employed will charge the vehicle to 80 percent capacity in under 20 minutes. The anticipated range is 500 Km on a single charge.