Hyundai Motor and Kia Motors, South Korean automakers, said Monday they are not in talks with Apple to create an autonomous vehicle. 

On Monday morning, Hyundai Motor shares fell 6.41 % in South Korea, while Kia Motors shares dropped 13.2 % . Other affiliates were also down sharply, including Hyundai Wia, Hyundai Mobis and Hyundai Glovis.

"Hyundai Motor is getting requests from multiple companies for cooperation in joint development of autonomous, electric vehicles but nothing has been decided since it's in early stage," the company said.

"Hyundai Motor is not in talks with Apple on autonomous vehicle development," it added.

A similar filing was made by its affiliate, Kia Motors, which is South Korea's second-largest car manufacturer behind Hyundai. The company said it was reviewing prospects of cooperating with "multiple companies overseas" over autonomous electric vehicles — but nothing has been decided. 

Kia Motors also said it was not in talks with Apple.


 

Hyundai initially said last month that it was in early-stage talks with Apple, but later revised the statement and made no mention of Apple. At that time, it led to a surge in the shares of Hyundai and its affiliates, including Kia Motors.

Apple was close to finalizing an agreement with Hyundai-Kia to manufacture an Apple-branded autonomous electric vehicle at the Kia assembly plant in West Point, Georgia, but no agreement has yet been reached and Apple may ultimately decide to partner with another automaker on its own, or in addition to working with Hyundai.

Shares may fall further

Since the Jan 8 rumors about a possible partnership with Apple, retail investors have purchased Hyundai Motor and Kia shares worth about $817 million and about $713 million, respectively., according to Sung Yop Chung, regional head of automobiles and components at Daiwa Capital Markets.

The worst case suggests that Kia's shares could correct as much as 31 %, following the negative message from both (Hyundai Motor) and Kia's filing this morning, highlighting that there is currently no EV cooperation with Apple.

Speculation has been widespread for many years about Apple moving into the car industry, but nothing specific has materialized.
 

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Hyundai Motors said on Friday that it was in early discussions with Apple after a domestic broadcaster said the companies were talking about the electric car and the battery tie-up.

Apple was shifting forward in self-driving car technology, which could include its own breakthrough battery technology as early as 2024.

Hyundai said “Apple and Hyundai are in discussions but they are at an early stage and nothing has been decided”.

In a regulatory filing subsequently issued, the car manufacturer stated that it was “getting requests for cooperation on joint development of autonomous electric vehicles from various companies”, without identifying any of them. Apple refused to make a comment.

PARTNERSHIP

Apple and Hyundai already partnered together on CarPlay.

Jeong Yun-woo, a former designer at Hyundai, said “Apple outsourcing car production to Hyundai makes sense, because (the Korean firm) is known for quality”.

Analysts indicates that Apple may be interested in using Hyundai's electric car platform and facilities to reduce the costs of developing and constructing vehicles.
 

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Apple is close to finalizing an agreement with Hyundai-Kia to manufacture an Apple-branded autonomous electric vehicle at the Kia assembly plant in West Point, Georgia, after years of rumors that it would eventually get into the auto industry with its own vehicle, according to several sources who briefed CNBC on the proposal.  

 


 

"Apple Car" which is being designed by an Apple team, is tentatively scheduled to go into production in 2024, although people who are familiar with the talks between Apple and Hyundai-Kia say it may push back the eventual rollout.  

Sources tell CNBC that no agreement between the two businesses has yet been reached. Furthermore, they emphasize that Apple may eventually decide to partner separately or in addition to working with Hyundai with another automaker.

One source familiar with Apple's strategy on developing a car tells CNBC, "I doubt Hyundai is the only automaker they could strike a deal with, there could be somebody else."

After hours on the news, Apple shares grew more than 2 percent.

When contacted by CNBC, spokespersons for both Apple and Hyundai-Kia refused to comment.

If an agreement is finalized, why will Hyundai-Kia be chosen by Apple? Just as importantly, why would the Korean car producer sign an agreement with Apple?


 

Many familiar with the discussions suggest that each company sees a unique advantage in collaborating to create an Apple car. 

The decision to create a car opens up the opportunity for Apple to reach a $10 trillion global demand for vehicles and mobility. In a research note that released in January, Morgan Stanley analyst Katie Huberty clarified the profit potential for Apple.

"Smartphones are a $500bn annual TAM. Apple has about one-third of this market. The mobility market is $10 trillion. So Apple would only need a 2% share of this market to be the size of their iPhone business," Huberty wrote. 

The software maker wants to create the "Apple Car" in North America with an established automaker willing to allow Apple to manage software and hardware to get into the vehicle.    

By partnering with Apple, Hyundai-Kia leaders believe they can speed up the production of their own autonomous plans for electric vehicles. In a joint venture developing autonomous vehicle technology, including robotaxis, Hyundai is currently working with Aptiv.


 

"The first Apple Cars will not be designed to have a driver," said one source with knowledge of the current plan. "These will be autonomous, electric vehicles designed to operate without a driver and focused on the last mile." That could mean Apple cars, at least initially, could focus on package food delivery operations and firms incorporating robotaxis.

The step could bring the tech giant into direct competition with Tesla, which is rolling out its vehicles with self-driving features. Recently, Tesla CEO Elon Musk told investors that converting Teslas into self-driving robotic taxis could help justify the valuation of the firm, as the vehicles will be in operation for more hours a day, enabling Tesla to earn higher revenues per car. Apple brought Doug Field, then senior engineering vice president of Tesla, back to Apple in 2018, where he had previously worked, possibly to work on self-driving cars.

Apple also hired several other former workers from Tesla, including the now Senior Engineering Manager of the Apple Special Project Group and former Tesla Vice President of Engineering. Apple also has recruited a number of Tesla employees.

Musk said he once tried to start talks with Apple about acquiring his electric car business, but Tim Cook, CEO of Apple, declined his meeting invitation.

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