After weeks of speculation, people close to the companies say Apple is near finalising a deal with Hyundai-Kia to build an Apple-branded autonomous electric vehicle at the Kia assembly plant in West Point, Georgia, according to a CNBC report.
The report also mentioned that no agreement has yet been reached between the two companies, but tentatively the so-called “Apple Car,” is scheduled to go into production in 2024. Recently, a Korean paper also reported that the two companies may sign a deal on February 17th, with plans to build an electric car as soon as 2024. According to CNBC, the appeal of Hyundai is using an established automaker to provide an electric vehicle platform built in North America while Apple controls the hardware and software in the car, as developed by its “Project Titan” effort.
Sources familiar with Apple’s interest said that Apple may ultimately decide to partner with another automaker separately or in addition to working with Hyundai.
However, spokespersons for both Apple and Hyundai-Kia declined to comment when reached by CNBC.
When the news broke, Apple shares rose more than 2%.
For the tech giant, the decision to build a car opens the potential to tap a global auto and mobility market valued at USD10 trillion. According to Morgan Stanley analyst Katie Huberty’s research note, smartphones are a USD500 billion annual TAM. Apple has about one-third of this market. The mobility market is USD10 trillion. So Apple would only need a 2% share of this market to be the size of their iPhone business and that is where the profit potential for Apple is.
According to one source familiar with Hyundai-Kia strategy, working with Apple is being driven by the company’s new chairman, Euisun Chung, who took control of the Korean automaker last October. The new chairman has made it clear, mobility is the future of the company.
Currently, Hyundai is collaborating with Aptiv in a joint-venture developing autonomous vehicle technology, including robotaxis. By working with Apple, leaders of Hyundai-Kia believe they will accelerate development of their own autonomous and electric and vehicle plans.
While it is still unclear exactly what the first Apple Car will look like, those familiar with the plans say there are a couple of notable features – the first Apple Cars will not be designed to have a driver. These will be autonomous, electric vehicles designed to operate without a driver and focused on the last mile which could mean Apple cars, at least initially, could focus on package food delivery operations and firms incorporating robotaxis.
This deal could bring Apple into direct competition with Tesla, which is rolling out self-driving features for its vehicles.
It was previously reported that Tesla CEO Elon Musk once attempted to start talks with Apple about acquiring his electric car company, but Apple CEO Tim Cook rejected his invitation to meet.