For years Apple has teased the globe with speculation they might one day begin working on an Apple Car. Between electric vehicles, hybrid and autonomous self-driving cars, the potential for vehicles has come a long way, and Apple has finally stepped forward with their own plans for a vehicle.
Now an ‘Open Secret’ for some time, it recently gained some spotlight. In a flurry of somewhat murky news reports, Apple and Hyundai confirmed they were discussing the potential of working on the Apple Car together and gave tentative estimates for release dates and locations. Although many sources leaked some information as the negotiations developed, the two companies have kept quiet as much as possible.
The Hyundai-Kia and Apple Car Talks Have Ended
It took a tumultuous turn soon enough. Although Hyundai recently confirmed that although they have made a habit of trying and refraining from giving too many comments, the negotiations were ended.
Everything looked set to go in earlier January, speculative rumors then news and reports confirmed they were entering negotiations. Still, Apple and Hyundai had made it clear they were only engaged in ‘early talks.’
Securing Hyundai’s partnership would allow Apple to connect to global auto markets and take advantage of Hyundai’s vast auto manufacturing plants and properties. They had planned to secure a finalized agreement no later than March but that may have proved optimistic in hindsight.
Apple and Hyundais Stocks both saw changes to their share values that followed the reports’ ups and downs in their negotiations. Hyundai saw a small jump of 14.6% and Kia 9.7%, respectively, following the reports of the early stages of negotiation. According to Reuters, Apple rose almost 2%. When negotiations suddenly ended, the stocks fell around 8.4% for Hyundai and 13.3% for Kia.
Why They Stopped Talking
It was reported that the executives over at Hyundai weren’t all on board with the proposal of working with Apple as some noted it would not necessarily be a beneficial partnership but more of a contractual agreement and use of resources.
Even though Hyundai entertained partnering to produce the Apple Car, it would have been by all means an Apple car first and foremost. The apple car would be designed and engineered by Apple and not simply a Hyundai with Apple integrated features.
Design and Production
Apple intended to control all the hardware and software being engineered into the vehicles but gain access to Hyundais production plants and resources and contract them to build the cars. This severely limited any potential creative or design involvement on Hyundais behalf in the structure of the agreement being proposed.
However, it was fairly typical of Apple’s business strategies for developing most of their products. Apple usually completes all the design elements for new products and then outsources the actual production. They are now attempting to bring their business model to the automotive industry, and the executives from Hyundai were less than thrilled at the prospect.
Hyundai would effectively provide the basic shells of the Apple Cars and access to all the resources and manufacturing plants necessary to build large volumes of vehicles. At the same time, Apple would take over the rest. Apple would oversee the design, technology, quality controls, and everything else with pretty much just the basic car frame platforms made in bulk by Hyundai and provided to Apple.
Brand Quality
The structure of agreement contrasted with the Hyundai executive’s goals of improving their own brand image and quality standards.
Hyundai is focusing on improving their brand’s quality standards and brand image and promoting their Genesis line, which is their high-end alternative brand line. Working as a contractor to produce only the frames and platform for Apple Car would not help build or promote their Genesis brand line.
If the negotiations had succeeded, reports suggested that Apple would have been starting manufacturing in North America. They would have potentially used Kia Motors automotive factory in Georgia, Atlanta, to build new car plants altogether.
Apple and Its Future with Electric Autonomous Vehicles
Early comments had placed the release date cautiously for 2024. The Apple car will be the companies first entry into the automotive market. At the same time, Apple retains a large portion of the global smartphone, computer, and tablet markets they have yet to tap into the automotive market.
The global cellphone market can be valued at around 500 billion, and Apple is estimated to take roughly up to a third of the market. The automotive market is valued somewhere around $10 trillion. If Apple could release a successful vehicle to the automotive market, it could bring their company to new heights.
Elon Musk has stated he initially tried to enter discussions with Apple over selling Tesla to Apple. Still, their Director Tim Cook declined to engage at the time and refused to take a meeting to discuss it. We see Apple trying to enter the market in what is considered direct competition with Tesla and other new electric motor companies like Lucid Motors.
The CEO has even debated buying out an automotive company to facilitate the Apple car production, turning the tables, and reaching out to Elon Musk about purchasing Tesla. However, Tesla is doing very well these days, and Elon Musk was no longer interested in selling.
Next Steps For Hyundai
While Hyundai has their own plans for an electric vehicle to enter the market, Apple has been in contact with several other Japanese automakers.
In the meantime, Hyundai is going to continue working on their own strategies for developing electric and self-driving vehicles. They won’t let a little adversity deter them, and they are determined to keep pursuing other options and even more potential partnerships.
With their own companies’ future in mind, Kia implemented a recent brand refresh towards innovation that comes with a new EV dedicated platform they hope to build multiple future models around. This could be another reason they didn’t finalize an agreement with Apple in hopes of promoting their own independent electric vehicles.
Next Steps For Apple
Meanwhile, Apple has moved on to begin talking with other Japanese automotive manufactures. Reports from the industry claim at least six others, to be specific.
However, like Hyundai, other Japanese car manufacturers are wary of entering a deal with Apple and simply becoming their frame subcontractor and parts providers. The worry expressed by executives over the long term ramifications of the brand image and their role in the relationship being proposed by Apple is shared by many of the Japanese automotive car manufacturers.
As such, it is unclear which of the automotive manufactures will end up pairing with Apple or what kind of release dates we might be expecting for any Apple Cars, but we know Apple is making waves and showing a dedicated effort to pursuing viable options and planning negotiations to start building prototypes for the Apple Car.
