Hyundai Is ‘Agonizing’ over Whether to Build the Apple Car

Despite several recent reports that Apple and Hyundai have been in advanced talks to manufacture the highly anticipated Apple Car, it looks like Hyundai is still having some serious doubts about whether the two companies will really be a good fit for each other.

Ironically, much of the hand-wringing seems to be stemming from the fact that Apple and Hyundai are in many ways too similar in their approach — both large players in their industries that insist on controlling all the pieces of their products, which could post a problem for their relationship over the longer term.

According to Reuters, most of Hyundai’s executive team actually remains strongly divided over whether a deal with Apple is a good idea, to the point where some executives could actually need to be shown the door to avoid a culture clash if the potential partnership has any hope of moving forward.

At the heart of the dispute is whether Hyundai wants to risk diluting its reputation due to the possibility that it could ultimately play second fiddle to the Apple juggernaut, and despite a report last month that it’s looking to tag Kia Motors with the Apple Car project, it’s possible that this hasn’t been enough to dissuade those executives who are vehemently opposed to the idea.

We are agonizing over how to do it, whether it is good to do it or not. We are not a company which manufactures cars for others. It is not like working with Apple would always produce great results.

Hyundai Executive

In fact, as the Reuters report notes, Hyundai is as unique among auto manufacturers as Apple is among tech companies, preferring to avoid working with outsiders as much as possible, to the extent of manufacturing engines, transmissions, and even its own steel as part of a larger conglomerate, rather than sourcing these components from other manufacturers.

Of course, that’s exactly how Apple rolls as well, eschewing third-party components as much as possible in favour of its own. Apple’s mobile devices have been powered by its own processor chips from the very beginning, and of course, that’s now shifting to the Mac lineup, and while Qualcomm continues to dominate the industry for modem chips, Apple is still aggressively working to change that.

Talks Began Years Ago

What’s also interesting about this latest report from Reuters is that the talks between Apple and Hyundai aren’t a recent development at all. The two companies apparently began discussing a car partnership almost three years ago, back when the Apple Car project was still only being known as “Project Titan” and was being headed up by Alexander Hitzinger — presumably only a couple of months before former senior Apple engineer Doug Field returned from Tesla to take over the project.

Presumably, these discussions continued even after Hitzinger left for Volkswagen and Field came on board, but the discussions have also moved very slowly due to Hyundai’s reluctance to work with outsiders in general.

Clearly, this hesitation on the South Korean automaker’s part was never enough to walk away from the table, and Apple has continued to be patiently persistent in working toward a deal, which according to other recent reports seems like it could be imminent, but it also looks like Hyundai hasn’t managed to overcome all of its internal opposition to the idea just yet.

Apple is the boss. They do their marketing, they do their products, they do their brand. Hyundai is also the boss. That does not really work.

Some of this may simply be a matter of necessity for Hyundai, which reportedly has excess production capacity right now, which Apple could help it fill, thus bolstering its bottom line, which could explain why there’s so much division between the senior executives within the company regarding how to proceed, with those against the partnership fearing that Hyundai would lose its own identity and simply become “an Apple contract manufacturer,” like Foxconn.

A cooperation may initially help raise the brand image of Hyundai or Kia. But in the mid- or longer-term, we will just provide shells for the cars, and Apple would do the brains.

Part of this fear stems from the fact that Apple not only wants to be fully in charge of the design of the Apple Car, but also the supply chain used for its components, sourcing frames, bodies, drive trains, and other parts from its own channels and simply using Hyundai or Kia as the final assembly site.

On the other hand, those within Hyundai and its Kia subsidiary who support the plan suggest that Hyundai would “be more than just a Foxconn” to Apple, since both companies could benefit from each other’s expertise in various areas — Hyundai has the electric car platform and the established supply chain for it, while Apple has its own autonomous vehicle stack and software platform.

It also seems clear that the Kia Motors angle isn’t coming solely from Hyundai’s side either; Apple has reportedly insisted that the Apple Car be manufactured in the U.S., and since Kia’s West Point, Georgia plant has available capacity in the U.S., it seems like a logical choice. From Hyundai’s perspective, however, it’s trying to develop its premium Genesis brand, and believes Apple won’t help its image.

At this point, neither Apple nor Hyundai have commented publicly on the talks. While Hyundai let it slip in early January that it was in talks with Apple, it rapidly walked that statement back, stating that it had merely been talking with “various companies.” Not surprisingly, Apple has admitted to nothing at all, declining requests for comment at every turn.

Coincidentally, around the same time, Apple announced its stunning quarterly results, last week the South Korean automaker also reported its best quarterly profit in over three years, although it said nothing at all about any talks with Apple, much less whether they even remain active.

Based on previous reports, however, it seems that the two companies are at a watershed moment, either on the verge of signing a deal in the coming weeks or about to walk away from the table for good. However, sources have suggested that if a partnership were to come to fruition, Hyundai’s Kia subsidiary could be ready to start manufacturing the first Apple Car models by late 2024. However, it’s also very likely that Apple hasn’t put all of its eggs in one basket, which suggests that it’s working toward this same timeline regardless of whether Hyundai decides to come along for the ride.