Hyundai Motor Co backed away from a statement confirming talks are underway with Apple Inc to develop a self-driving car that added $ 9 billion to the Korean automaker’s market value on Friday.
Hyundai revised its statement for the second time within hours, saying it had been contacted by potential partners for the development of autonomous electric vehicles, removing any reference to Apple. Hyundai’s shares rose 25% after local Korean media initially reported talks and traded near those levels even after the statement was revised to confirm the discussions.
By initially naming Apple, Hyundai risks the wrath of the tech giant known for its secrecy on new products and partnerships. With development work in its early stages, it will take Apple at least half a decade to bring an autonomous electric vehicle to market, people aware of the effort told Bloomberg News. This suggests that the company is in no hurry to select potential partners from the auto industry.
Hyundai’s intraday stock jump in Seoul was the largest since 1988. A cable television unit for Korea Economic Daily first covered the talks with Apple, saying Hyundai had completed internal talks on the project and was awaiting approval from the chairman.
Following the report, Hyundai initially issued a statement that it was one of several automakers Apple contacted early on. The Korean company then revised that statement less than 30 minutes later, removing the reference to other automakers. Another revision was released a few hours later, omitting Apple:
“We have received requests from various companies about a possible cooperation in the development of autonomous electric vehicles,” says the latest version. “No decisions have been made as the discussions are at an early stage.”
Apple declined to comment.
The iPhone manufacturer, based in Cupertino, California, is known to be secret from employees and suppliers. In 2018, it warned workers not to divulge internal information about future plans and aroused the specter of potential legal action and criminal charges. An internal memo said it “caught 29 leaks” in the past year. In 2012, CEO Tim Cook promised to keep the company’s work under wraps.
An Apple car would compete with electric vehicles from Tesla Inc and offers from companies like Lucid Motors and established manufacturers like Daimler AG and Volkswagen AG. An auto plant can cost billions of dollars and take years to set up, probably why Apple is talking to potential manufacturing partners.
“Apple has to enter into a partnership with an automaker because it has no manufacturing capacity or distribution network to sell its cars,” said Lee Han-Joon, an analyst at KTB Investment & Securities Co. in Seoul. “These functions cannot be set up quickly, so Apple needs a partner to do this.”
Bending metal is also a lower margin business than providing the software, chips and sensors that future cars will rely on. Apple has continued to research whether its self-driving car system could be built for a third-party auto partner rather than its own vehicle, as the famous people said, and the company may ultimately ditch its own auto efforts in favor of that approach.
Other tech companies looking to expand into autonomous driving space have also sought partnerships. Alphabet Inc.’s self-driving unit Waymo worked with Chrysler, while Amazon.com Inc. hired Rivian Automotive Inc. to work with delivery trucks.
Many more alliances between automotive and tech companies will emerge, especially after the coronavirus slowed such combinations last year, said Takeshi Miyao, an analyst at Tokyo-based consulting firm Carnorama.
Hyundai would provide Apple with a partner who is already advancing new technologies such as electric cars, driverless and flying cars, including creating a $ 4 billion joint venture for autonomous driving. The company with Aptiv is expected to have a series-ready autonomous driving platform for robot taxi providers, fleet operators and manufacturers in 2022.
The South Korean company will present its first EV this year, Ioniq 5, which is based on a special platform. Hyundai, along with its Kia unit, plans to have 23 new EV models and sell 1 million units by 2025.
In the next year, Hyundai also plans to offer models with level 3 autonomous driving technology that allow the driver to take their hands off the steering wheel and look away from the road. The company has also invested in Aurora Innovation Inc., a startup founded by a dream driverless team of former bosses for Google’s self-driving car project and Tesla’s autopilot.
“Hyundai has achieved a presence in electric cars, but faces the problem that it cannot move up in the overall standings,” said Miyao of Carnorama. “To improve, it needs to team up with other companies in the autonomous driving space.”