By Elizabeth Koh and Tim Higgins 

SEOUL -- Apple Inc. has held talks with Hyundai Motor Co. about cooperation on driverless, electric vehicles, the South Korean car giant said.

The brief statement, which sent Hyundai's shares soaring early Friday in Seoul, included no details and said talks were preliminary but offered rare public confirmation of Apple's car-related efforts. The iPhone maker has been working secretly on the car project in fits and starts for more than six years, while watching the success of Silicon Valley's Tesla Inc. ignite interest in electric vehicles.

In recent weeks, Apple has reached out to suppliers about the possibility of doing its own car, potentially starting production as soon 2024, a person familiar with the matter said last month. Apple shelved an earlier effort to develop its own car a few years ago to focus on driverless car technology.

Apple declined to comment.

Hyundai, in saying Friday that it has held discussions with Apple, said that "as it is at [an] early stage, nothing has been decided." In a later statement filed with Korean securities regulators, Hyundai said it had fielded requests of potential cooperation on electric vehicles from multiple companies. Hyundai, with affiliate Kia Motors Corp., ranks among the world's largest auto makers by sales.

Hankyung TV, the broadcast arm of the Korea Economic Daily, earlier reported the talks.

Hyundai shares soared 24% in Seoul trading after the report. The investor excitement comes after a year of frothy valuations for electric vehicle startups aiming to take on Tesla. Its market value has shot past $700 billion, making Chief Executive Elon Musk the world's richest man as of Thursday.

The full extent of Apple's ambitions aren't clear. It has a history of depending on Asia suppliers to assemble its California-designed smartphones and tablets. The company has previously explored the idea of turning over vehicle assembly to a third party, a rare approach in the auto business.

Former Tesla engineering chief Doug Field is helping lead Apple's project after returning to the iPhone maker in 2018. He played an instrumental role in the development of the Model 3 compact car. It has helped fuel sales growth at Tesla and sparked investment excitement that electric cars can go mainstream, despite making up a small percentage of the industry's overall sales.

"We believe based on our investor conversations over the last few weeks that many on the Street would rather see Apple partner on the EV path, than start building its own vehicles/factories given the margin and financial model implications down the road, coupled with the strategic product risk around such a gargantuan endeavor," Dan Ives, an analyst for Wedbush, said in a note to investors.

Traditional auto makers from Asia to Europe to the Motor City have been trying to catch up with Tesla, announcing scores of projects and billions of dollars of investment plans.

The challenge for many is balancing the costs for converting a fleet of cars to batteries, after generations of milking gas-powered vehicles, with investing in technology to some day deploy autonomous vehicles. That shift has led many companies to seek alliances.

Hyundai, for example, in 2019, announced a $2 billion investment to join with parts supplier Aptiv PLC. in a driverless vehicle joint venture, later dubbed Motional, with the aim of deploying robot taxis. Last year Hyundai said it plans to spend 100 trillion won ($91 billion) by 2025 to expand its electric vehicle lineup.

Auto industry executives have long looked at Apple's balance sheet and worried what kind of muscle it could bring to a business that has traditionally incinerated lots of cash and resulted in low margins. Apple had around $192 billion in cash and marketable securities on hand at the end of its latest financial year that closed in September.

Write to Elizabeth Koh at Elizabeth.Koh@wsj.com and Tim Higgins at Tim.Higgins@WSJ.com

 

(END) Dow Jones Newswires

January 07, 2021 23:39 ET (04:39 GMT)

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