Hyundai managers divided over alliance with Apple

Photo: AP

The senior executives of South Korean carmaker Hyundai Motor are divided over a potential alliance with Apple, with some mounting concerns over becoming a contract manufacturer for the US tech giant, slightly worsening the outlook for a potential deal, Reuters reported. Hyundai confirmed earlier this month it was in early talks with Apple, but declined to elaborate. Some local media speculated the firms were discussing an electric car and battery tie-up.

Apple has never confirmed tentative talks with the automaker about building vehicles, and it was unclear whether any such contacts are still active. The iPhone maker typically insists on strict confidentiality from its potential partners and suppliers about future plans or unreleased products. In an earnings call this week in which it reported its best quarterly profit in over three years, Hyundai did not give any updates on talks with Apple or indicate whether they remain active. “We are agonizing over how to do it, whether it is good to do it or not,” said a Hyundai executive aware of the internal discussions on the tie-up with Apple. “We are not a company which manufactures cars for others. It is not like working with Apple would always produce great results.”

Few details are known about the talks between the two companies. But people close to the discussions say the options considered included Hyundai or Kia acting as a manufacturer for vehicles designed by Apple and sold under its powerful, ubiquitous brand.

Hyundai is traditionally known for its reluctance to work with outsiders, making engines, transmissions and even its own steel in-house under its vertically integrated supply chain as South Korea’s second-largest conglomerate. Although shares in Kia and Hyundai have surged because of the talks, there is considerable opposition to becoming an Apple contract manufacturer, which could hold up any deal with the American giant.

Apple and Hyundai first started talks over a car partnership in 2018, when Apple’s effort, known as “Project Titan,” was headed by Alexander Hitzinger, who is now a Volkswagen executive, said a person familiar with the matter. But progress was hampered by the South Korean automaker’s reluctance to work with outsiders, the person said. The South Korean car manufacturer, however, has excess capacity. Contract manufacturing would help it secure production volume.

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