Hyundai, Kia shares plunge after denial of Apple car talks

SEOUL • South Korea's Hyundai Motor said yesterday it is not in talks with Apple on autonomous electric cars, just a month after it confirmed early-stage talks with the tech giant, sending the carmaker's shares skidding.

Wiping US$3 billion (S$4 billion) off its market value, Hyundai's stock slid 6.2 per cent. Shares in its affiliate Kia, which had been tipped in local media reports as the likely operational partner for Apple, tumbled 15 per cent - a US$5.5 billion hit.

The announcement brings the curtain down on weeks of internal divisions at Hyundai Motor Co Group - parent to both carmakers - over the potential tie-up, with some executives raising concerns about becoming a contract manufacturer for the United States tech giant in a tie-up reminiscent of electronics firm Foxconn's role in making devices for Apple like the iPhone.

"We are receiving requests for cooperation in joint development of autonomous electric vehicles from various companies, but they are at an early stage and nothing has been decided," the carmakers said yesterday, in compliance with stock market rules requiring regular updates to investors regarding market rumours.

"We are not having talks with Apple on developing autonomous vehicles."

Kia shares had jumped 61 per cent since Hyundai initially confirmed a local media report early last month that Apple and Hyundai were in discussions to develop self-driving electric vehicles by 2027 and develop batteries at US factories operated by either Hyundai or Kia.

As recently as last week, media outlets including CNBC reported that a deal was close to being finalised. One South Korean report said the two companies were set to sign the deal on Feb 17.

Hyundai is traditionally 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.

Although shares in Kia and Hyundai had surged on news of the talks, internal opposition to becoming an Apple contract manufacturer was considerable, according to people familiar with the matter.

"We are agonising over how to do it, whether it is good to do it or not," a Hyundai executive aware of internal discussions on the tie-up told Reuters last month. "We are not a company which manufactures cars for others," he said, speaking on condition of anonymity.

Reuters reported in December that Apple was moving forward with autonomous car technology and aimed to produce a passenger vehicle that could include its own breakthrough battery technology as early as 2024.

Apple, known to keep product plans under tight wraps, has never acknowledged talks with the carmaker about building vehicles, and was not immediately available for comment.

Analysts said talks might have collapsed over leaks of the partnership plan to media, or over possible insistence by Apple that Hyundai's role in any tie-up would be that of an equipment manufacturer, rather than a strategic partner.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 09, 2021, with the headline 'Hyundai, Kia shares plunge after denial of Apple car talks'. Subscribe