Apple’s Car Talks with Hyundai Have Come to a Screeching Halt

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In what’s now shaping up to have been a short-lived burst of excitement, it looks like Apple and Hyundai may be parting ways on a possible Apple Car partnership, leaving an open question as to how Apple may actually go about meeting its ambitions for a revolutionary self-driving car.

News of a partnership with Hyundai first broke early last month, as at least one South Korean news source actually cited a company executive as coming right out and saying that the automaker was in talks with Apple. While they quickly walked that statement back — likely after being chastised by Apple for speaking out of turn — it wasn’t long before other sources also started weighing in, pointing to a timeline that could see as many as 100,000 Apple Cars roll off the production line by the end of 2024.

Subsequent reports suggested that Hyundai would tag its Kia Motors subsidiary to take point on the project, partly to distance the Hyundai brand from the project, but also to fulfill Apple’s requirement that the cars be manufactured in the U.S.; Kia’s plant in West Point, Georgia seemed like a perfect fit for this, as did the smaller automaker’s more contemporary brand.

Despite this, however, Hyundai executives were still reportedly ‘agonizing’ over the idea of partnering with Apple, with some still fearing that the multi-trillion dollar Cupertino company would overpower Hyundai’s brand image, turning the South Korean automaker into little more than an OEM for the Apple Car. In fact, according to those reports, some Hyundai executives were so opposed to the idea that the only way a deal would be signed would be for those execs to be shown the door.

So perhaps it’s not all that surprising that the deal has now fallen apart, according to The Wall Street Journal, which reports that Hyundai affiliates say talks “have broken down without an agreement” between the two companies. This latest report came following news from Bloomberg late Friday that talks had merely “paused.”

Recent regulatory filings by both Hyundai and Kia have also added they are “not in talks with Apple over developing an autonomous vehicle,” which suggests that the party is definitely over for now.

While it’s not entirely impossible that the two companies could return to the table, the unequivocal regulatory statement makes it clear that any discussions between the two companies are effectively finished.

The excitement about Apple’s secretive car project is clearly palpable among investors, however, as the Journal notes that the stocks for both Hyundai and Kia soared by up to 24 percent in the days following the initial announcement of a potential Apple partnership. By contrast, however, Hyundai shares have already dropped over six percent, and Kia’s over 13 percent following the regulatory announcement that an Apple deal was no longer on the table.

Avoiding a Culture Clash

It’s unclear exactly why the talks broke down, but it seems as if Kia was at least forging ahead with the idea, having reportedly reached out to several other potential partners about beginning Apple Car production even before the deal had been locked down. Instead, it sounds like while Kia was enthusiastic about the potential partnership, its parent company, Hyundai, ultimately decided that the risks of tying its brand to Apple weren’t worth the potential benefits.

According to a report last week, Hyundai and Kia both believed that in the short-term such a partnership would raise their profile quite a bit, but the fear was that in the longer term they would just be “providing shells” for cars, with Apple handling “the brains.” As one source suggested, both Apple and Hyundai are used to being “the boss” and therefore such a partnership ultimately wouldn’t really work anyway.

On the other hand, it also seems that Apple was none too pleased with Hyundai’s antics either; as Bloomberg noted, Hyundai’s original disclosure of the discussions “upset Apple,” especially after subsequent reports started spilling even more details that the secretive company would have otherwise liked to keep private. Whether this was enough to make Apple walk away from the table is unclear, but it’s a safe bet that it didn’t help the negotiations.

Now What?

Although the Journal doesn’t say what Apple’s next move might be, it’s hard to believe that the company hasn’t been hedging its bets — there’s no way a company with the logistical savvy of Apple would have put all of its eggs in one basket, so it’s undoubtedly been talking to other automakers as well — they’re just likely much better at keeping a secret than Hyundai was.

A report from CNBC last week has also confirmed this, noting that Apple has been in talks with other automakers — something that even Hyundai implied after the news of its potential partnership broke last month. While it’s unclear exactly who these could be, some sources have said that Apple has already been in talks with six Japanese automakers, and a recent investor note by Ming-Chi Kuo revealed that Apple had been in “deep collaboration” with both General Motors and Peugeot’s PSA Group in the recent past.

Although Kuo stated that he believed Apple preferred that Hyundai take the lead, this was of course only if a deal could be reached, and it’s unfathomable that Apple doesn’t have a plan B on the books — we may just have to wait a bit longer before we actually hear any tangible news of it, as it’s unlikely any other partner is going to risk Apple’s ire by making the same mistake that Hyundai did.

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