The deal is off.
There has been a lot of discussion in recent weeks over a proposed partnership between Hyundai Motor Group and Apple. The latter wants to proceed quickly with its long-anticipated electric vehicle though it has no prior auto manufacturing experience. Laptops and iPhones don't count. Enter Hyundai. Top executives at the South Korean automaker were reportedly split on whether to team up with the software and hardware tech giant. Talks proceeded and Kia was determined to be the better fit to lead Apple's project.
But today it appears the deal is completely off. Reuters reports the automaker has confirmed it has backed out of talks with Apple. "We are not having talks with Apple on developing autonomous vehicles," a company spokesperson said.
The stock market has already responded. Hyundai's shares have since dropped 6.2 percent, eliminating $3 billion from its market value. Kia's shares decreased by 15 percent, a $5.5 billion loss. The talks with Apple became publically known only a month ago and shares for Hyundai and Kia both quickly increased as a result. Apple apparently tried to push the deal forward by investing $3.6 billion in Kia as part of their hopeful electric vehicle cooperation. Hyundai preferred to focus on the launch of new electric vehicles, specifically the Ioniq 5, instead of Apple's EV.
In theory, Kia and Apple were a nice fit, partly because both are generally youthful brands with mutual histories of disrupting the design world. So why has Hyundai pulled the plug on what seemed like a mutually beneficial agreement?
The answer likely has to do with the automaker's internal culture. For years, Hyundai has opted for a "go at it alone" approach; it prefers to do as much as possible in-house. For example, it builds its own steel and has created its own domestic supply chain. Simply put, it's reluctant to work with outsiders. It also does not want to be treated by Apple as little more than a supplier or manufacturer.
As of this writing, Apple has not publicly commented though we expect it will shortly. This doesn't necessarily mean the end of the Apple car, but the tech giant will now have to find an alternative manufacturing partner.