Apple Inc. (AAPL) reportedly has been in talks with Hyundai Motor Company (HYMTF) of South Korea to develop and manufacture electric vehicles (EVs) with autonomous driving capabilities. This follows reports in December 2020 that, after scaling back its vehicle-related research and development (R&D) efforts in 2019, Apple subsequently reinvigorated them, with a goal of starting production in 2024.
- Apple reportedly is in discussions with Hyundai to produce self-driving electric cars.
- However, the same reports indicate that both companies also are talking with other prospective partners.
- These reports are highly speculative, and production may be a number of years into the future.
- Apple’s vehicle development efforts have had “many twists and turns.”
Apple’s Project Titan
Apple has been exploring an entry into the EV market through its secretive Project Titan, which was launched in 2014 but eventually downsized in 2019. However, recent reports indicate that Apple has renewed this effort, supposedly designing an advanced battery that will offer significantly increased range at much lower cost than current technology allows. Additionally, Apple’s plans reportedly include self-driving capabilities.
Possible Apple-Hyundai Deal
A representative of Hyundai Motor recently revealed that the company is in early talks with Apple. However, the same representative also indicated that Hyundai has received inquiries about possible collaboration on the development and manufacture of autonomous electric vehicles from other companies as well, while Apple has been in discussions with other major automakers.
A report in the Korea IT News offered various details that were removed in an updated version. The initial report claimed that Apple and Hyundai were planning to sign a partnership deal by March 2021 and begin full-scale production in the United States roughly around 2024.
The initial Korea IT News report also claimed that a “beta version” of the vehicle would be released in 2022 and that later full-scale production may take place in a Kia Motors Corporation (KIMTF) plant located in the United States, in Georgia. Hyundai owns a 34% stake in Kia, while Kia is a minority shareholder in 22 companies that are majority-owned by Hyundai.
The initial Korea IT News report also said that Apple and Hyundai were considering another option, building a new plant in the United States that could produce 100,000 vehicles annually by around 2024, with annual capacity eventually being raised to 400,000. This is another detail that was removed in an updated version of the story.
Significance for Investors
A major stumbling block for Apple in entering the market for vehicles is that it has no experience in this highly capital-intensive industry. As a result, a logical point of entry is an alliance or partnership with an established global vehicle manufacturer.
Thus, indications that Apple is in discussions with one or more leading automakers suggest that Apple is getting serious about entering the vehicle market. However, even if a deal were to be finalized relatively soon, getting a vehicle into production by 2024 with all the advanced features that Apple supposedly is promising, and with all the bugs worked out, may be much too ambitious.
“Over the last six years we have seen many twists and turns in Apple’s automotive ambitions,” warn analysts Daniel Ives and Strecker Backe from Wedbush Securities, in a recent research note. They caution that Project Titan was “significantly scaled down from its initial ramp a few years ago,” possibly hinting that investors should not be surprised if it hits some bumps in the road ahead.