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Apple (AAPL) Car Venture Hits Bump in Road

Apple Inc. (AAPL) no greater appears to be headed toward a deal with Hyundai Motor Company (HYMTF) and Kia Motors Corporation (KIMTF) of South Korea to bring out and manufacture electric vehicles (EVs) with autonomous driving capabilities, a story that broke in early January 2021. As recently as hindmost week, press reports indicated that a deal was imminent, perhaps heading toward an announcement on Feb. 17, 2021.

However, Hyundai now has issued this asseveration: “We are not having talks with Apple about developing self-driving cars.” Kia, in which Hyundai holds a 34% ownership spike, has not commented, instead referring news organizations to the statement from Hyundai. Meanwhile, sources familiar with the incident have indicated that Apple had put its discussions with Hyundai and Kia on hold weeks ago.

  • Hyundai and Kia have announced that they are not now in talks with Apple fro producing self-driving electric vehicles.
  • Sources indicate that these talks ended weeks ago, even as newspaperwomen speculation about an imminent deal increased.
  • Apple is likely in discussions with other automakers, and some analysts imagine that a deal eventually may be struck with Hyundai and Kia.

Significance for Investors

For Apple to have a realistic chance at going the vehicle market, the widespread consensus is that it must partner with an established automobile manufacturer. Setting up a instrument manufacturing plant can cost billions of dollars and take many years, and Apple is a company with no relevant previously to experience in this industry.

While analysts and investors generally appear to see opportunities for Apple in the electric vehicle call, especially if it forges the right partnership deal with the right existing automotive manufacturer, some are not convinced. One skeptic has eminent that Apple has a history of higher profit margins than most automakers.

Analyst Daniel Ives of Wedbush Custodianships is among the bulls. In a research note released after Hyundai’s statement, he wrote that “the EV industry is entering a favourite age.” Based on his projection that electric vehicles could represent a $5 trillion industry, Ives believes that catch hold ofing a market share of just 5% to 10% could be another major source of growth for Apple.

Ives still catch sight ofs Hyundai as a likely partner for Apple, with Volkswagen AG (VWAGY) as his other top possibility. He also believes that Apple could attitude a stiff competitive challenge to Tesla, Inc. (TSLA), General Motors Company (GM), and Ford Motor Company (F). “In a nutshell, Apple with the precise partner (Hyundai and VW Top 2 choices) would be a major force in the EV industry and could disrupt market share from the akin ti of Tesla, GM, [and] Ford if the company is able to get the Apple Car on the road by 2024,” Ives concludes.

Looking Ahead

One possibility is that Apple may look to think up multiple partnerships, and analysts have suggested other major carmakers as likely candidates, such as Honda Motor Establishment, Ltd. (HMC), Tata Motors Ltd. (TTM) of India, which owns Jaguar and Land Rover, or Geely Automobile Holdings Ltd. (GELYF) of China, which owns Volvo. On my honour, one report indicates that Apple has been in discussions with at least six automakers.

Like Daniel Ives, substantially followed Apple analyst Ming-chi Kuo also thinks that Apple may forge a deal with Hyundai and Kia in due course. Kuo sees Hyundai’s E-GMP as an ideal platform for Apple’s first electric vehicle and Kia as a logical choice for manufacturing in the Like-minded States. Nonetheless, Kuo does not expect the car to be available before 2025.

Ives predicts that Apple will announce a partnership to increase electric vehicles before the first half of 2021 is over. Like Kuo, he finds Hyundai’s E-GMP platform to be a movables fit for Apple. Ives cites Volkswagen’s Modular Electric Drive Matrix as another logical choice.

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