In regulatory filings, Hyundai pours cold water on Apple Car rumors

From Tim Higgins and Elizabeth Koh’s “Apple’s Electric-Vehicle Talks With Hyundai Break Down” ($) in Monday’s Wall Street Journal:

Apple Inc.’s talks with Hyundai Motor Group have broken down without an agreement for the South Korean auto giant to assemble vehicles for the iPhone company, Hyundai affiliates said Monday.

In regulatory filings, Hyundai Motor Co. and Kia Corp. said they are “not in talks with Apple over developing an autonomous vehicle.” The two auto makers have fielded multiple requests from other firms to jointly develop autonomous electric vehicles, though no initial steps have been determined, according to the regulatory filings.

The companies had held talks with the Cupertino, Calif., technology giant about a deal for Hyundai subsidiary Kia to build vehicles for Apple in Georgia, The Wall Street Journal reported last week. The prospect of an auto partnership had sent the Korean companies’ stocks soaring this year, igniting investor enthusiasm after both Kia and Hyundai had suffered years of slumping car sales.

Shares sank 6% for Hyundai Motor following Monday’s regulatory-filing disclosures, while Kia plunged by more than 13%.

My take: The fires set by Apple car stories got out of control. The key word may be “autonomous.”

9 Comments

  1. Tommo_UK said:
    I’m not playing this game. Just sold 60% of my AAPL in the PM and will take a view as the days(s) go on.

    0
    February 8, 2021
  2. Arthur Cheng said:
    I agree with PED, the key word is autonomous.

    As an aside, I will not buy any autonomous car, even an Apple car. I buy a car for the driving part. Otherwise I will just call an Uber, or hire a chauffeur.

    5
    February 8, 2021
    • Jerry Doyle said:
      @Arthur Chang: Agree! When autonomous cars are built you can bet that Uber, Lyft and others will contract for fleets of them (like rental car agencies) and then every 2-3 years flipping those fleets into the consumer market at suppressed prices. Apple always goes for high margins. To get those high margins Apple must appeal to the consumer experience of owning and driving (at various levels) a personal vehicle. That is where the high margins exist.

      1
      February 8, 2021
  3. Jerry Doyle said:
    My take: Apple Inc.’s talks with Hyundai Motor Group have “broken down” (emphasis added)….

    Talks ARE going on with multiple car manufacturers. This whole Apple car story has high merit. Apple is serious about competing in personal transportation. Some senior executive in Kia leaked rumors of the potential partnership to sabotage purposely the proposed deal. We know some Hyundai/Kia senior leadership did not want Apple prescribing authoritatively unconditional and imperiously production operations. Can you relate with proud Apple contracting with an outside entity prescribing authoritatively unconditional and imperiously operations over Apple staffs? Apple has multiple prospective partnering sources, and Apple could even do a complete vertical integrated build of the Apple car.

    I am confident Apple is proceeding the path of semi-autonomous vehicles. It’s not in Apple’s DNA to surge directly with haste into “not fully dependable basic functionality level 5 autonomy.” There’s also the whole matter of regulatory approval. You need real-world situations for Level 5 involving millions of miles driven (which Tesla cars have experienced) because nothing is more complex than the real world. Apple doesn’t nosedive directly into fires.

    I agree with Daniel Ives. An Apple Car is in the mix. It’s not if, but when; and, it is soon because talks with car manufacturers are being held.

    1
    February 8, 2021
    • Bart Yee said:
      Agree with your comments about a potential internal sabotage, inadvertent or intentional. IMO, it also would not surprise me that some Hyundai Chaebol members also made some nice bank on shares sold when news broke and when talks broke down. In these cases, follow the money first, then follow the family and institutional culture dynamics.

      0
      February 8, 2021
      • Bart Yee said:
        Unfortunately, Kia does possess a nice factory, maybe underutilized for the moment, in Georgia, which would have fulfilled a number of checklist goals for Apple, including Made in America, more US jobs, and easier logistics. A member mentioned some, er, political and private Georgia organi-litia issues which could derail a Kia-Apple partnership as well as threaten other institutions. If those groups don’t want more jobs, more money multiplier effects spread through Georgia and it’s mostly good people, and above all California’s and the US’ largest cap company establishing a working relationship with Georgia, then IMO, the state doesn’t deserve or get Apple’s investment. It seems odd that Korea’s Kia is already accepted, Germany’s Porsche is headquartered in Atlanta, and these people want the state Georgia to secede. My 0.02 rant.

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        February 8, 2021
        • Bart Yee said:
          Maybe Elon Musk could be enticed to build a new Tesla factory in Texas and complete his move from California with his newfound market cap, Bitcoin, and personal wealth. Then Apple could buy his Fremont factory, expand it, and grow organically from there and have literally an arms length control of it all from Apple Park. Of course, it isn’t the most cost effective way to go. But no, Musk isn’t going to help a would be competitor.

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          February 8, 2021
  4. bas flik said:
    autonomous is a hype. like internet hype 2000. tesla the new cisco. ev is a hype. there will be ev but who is going to make money with it is the question. go back to 2000. none of the players we had in mind as internet winners in the end won the race. facebook won google won, cisco heavily lost even did not make it to the finish. ev will be a repetition of 2000. new companies will arise and quickly take the money. hopefully they leave a bit for apple.

    3
    February 8, 2021
  5. Steven Philips said:
    Jerry: You raise an interesting question. IF Uber etc. has fleets of purely autonomous cars, HOW will they flip the 3 year old ones back to the public. Who would want one? I agree with other prior posters who note that there are just too many situations where autonomy won’t work well.
    Which kinda/sorta raises another question. How upgradable will the systems be? Electronics/OS’s etc. can become non-functional with advancements a lot sooner than basic mechanicals, ICE’s etc. I suspect.

    0
    February 8, 2021

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