Hyundai's prototype RM 19 represents one pillar of the group's strategy for the high-speed, high-value auto segment. News on Friday suggests a potentially massive tie-up with tech giant Apple. Photo: Hyundai Motor Group

SEOUL – Major gears shifted across corporate Asia on Friday as rumors in both South Korea and China talked up tie-ups between new-school tech players and-old school automakers to manufacture smart electric vehicles, or EVs.

News broke that South Korean auto giant Hyundai and US tech leader Apple may be in talks on the Apple Car, while a separate rash of reports stated that China’s Baidu would build EVs in partnership with local carmaker Geely.

Shares of Hyundai and Geely both soared more than 19% on the day, while Baidu was up 1.92%.

In an era when the old-fashioned motor car is transforming into a “smartphone on wheels,” the race to integrate, innovate and hit the highway is on. The investment darling of the moment is electric carmaker Tesla, and according to news reports, multiple cross-sector integrations are underway.

China Inc does not possess any big-branded auto exporters, but may be able to leap-frog into the EV sector, given ongoing tie-ups with tech firms. E-commerce giant Alibaba and China’s biggest automaker SAIC Motor Corp have created a joint venture to make EVs, while vehicle-for-hire company Didi Chuxing is making EVs for ride-hailing in partnership with vehicle-maker BYD.

Elsewhere, internet giants including Tencent Holdings Ltd, Amazon.com Inc and Alphabet Inc are developing in-house auto-related technologies, or investing in smart-car startups. Much scuttlebutt surrounds Apple’s secretive EV play.

It is a fecund space. The auto industry worldwide, stuck in developmental statis for decades, is accelerating into a state of flux driven by multiple macro-trends impacting the sector from within and without.

An electric vehicle being charged. Photo: AFP/Fatih Kurt/Anadolu Agency

Current generation cars offer sophisticated communication, navigation and entertainment systems built-in. These, combined with sensor technologies and integrated with 5G mobile telecommunication nets, such as those that already operate in China and South Korea, enable autonomous driving.  

Separately, drone technologies, originally developed by the military, are enabling a new, upward direction for cars: flying vehicles.

Both the above developments are technically feasible. What is awaited is regulation, consumer acceptances, network extensions and the subsequent mass production.

Elsewhere, it is regulation that is driving development. Environmental rules, backed by consumers, are demanding the adoption of cleaner fuels. Solutions include EVs, hybrid cars and the kind of hydrogen fuel cell vehicles South Korean and Japanese manufacturers are investing heavily in.

And personal car ownership is shifting as, under the “sharing economy,” ride-sharing becomes increasingly prevalent.

Still, despite the technical and manufacturing nous of East Asian economies – which, combined with their sophisticated ITC nets, offer major integration potential – transparency lags behind fast-spinning rumor mills.

C’mon, Apple – Magna or Hyundai?

Shares of Hyundai Motor Co soared Friday after news broke that the South Korean car giant was in talks with Apple to build the autonomous Apple EV and its batteries.

According to Bloomberg, Hyundai shares Friday saw their steepest appreciation since 1988. According to the KOSPI stock exchange, they closed the day at 246,000 won, up 19.42% from the previous day’s close.

The Hyundai and Kia plants in South Korea. Photo: AFP/Jung Yeon-Je

Amid the exuberance, Hyundai was speaking prudently.

“We’ve been receiving requests for potential cooperation from various companies regarding the development of autonomous EVs,” the company said in a short statement emailed to Asia Times that it had earlier filed to regulators. “No decisions have been made as discussions are in early stages.”

Friday’s story was broken by local media Korean Economy TV news at 8:30am and subsequently updated.

The first story, without citing a source, noted that Hyundai was in talks with Apple for the joint development of EV batteries, to be made at Hyundai or Kia factories in the US. Kia is a subsidiary of Hyundai Motor Group.

A follow-up piece in the same media stated that Hyundai might also work on the EVs themselves. That sparked a rash of articles in both local and global media.

In 2014, Apple began work on Project Titan, reportedly with more than 1,000 employees working on an electric vehicle near its Cupertino headquarters. Little information leaked out, but in 2017 Apple CEO Tim Cook made reference to an autonomous vehicle project.

According to the website MacRumors, experts don’t expect it to hit the roads before 2024 or even 2028.

The US electronics giant has remained silent on partnerships, but given its business model partners will almost certainly be required. Apple is noted for excellence in design and branding but outsources manufacturing.

Competition among automakers to partner with the US electronics giant appears to be heating up in 2021 with a Canada Inc-Korea Inc competition taking apparent shape.

The Apple logo. Rumors about the company building a car are gathering pace. Photo: Reuters/Mike Segar

Friday’s Korean news followed a story that had broken three days earlier, stating that a Canadian firm, Magna International Inc, which does OEM auto-making and auto parts supply, was in the running to build the Apple car.

The story, entitled, A $21-billion wager on who will build the Apple car – hint: it’s a Canadian company, ran in Canadian financial media on January 5.

A separate story, in specialist media Automotive News, that also ran on January 5, talked up Magna as a likely partner for Apple. Hyundai was not mentioned in either story.

Multi-directional potential

Given that South Korea’s industrial portfolio contains world-leading players in semiconductors, consumer electronics, electric batteries and autos, as well as a world-class IT backbone – including the world’s first nationwide 5G net – experts consider the likelihood of an Apple-Hyundai tie-up credible. 

Kang Song-jin, an analyst with KB Securities, suggested to News One that South Korea’s strengths in IT and battery manufacturing make it a highly attractive partner for foreign companies.

Moreover, Hyundai is already heavily invested in multiple future-focused sectors of the car industry – EVs, autonomous vehicles and ride-sharing, he noted.

Stating that partnership information would not normally leak out of Apple, Kim Joon-seung, an analyst with Meritz Securities, told E-Daily, a South Korean online media, that “the possibility is very high” for Apple and Hyundai to work together.

A Geely dealership in Yichang city in central China’s Hubei province. Photo: AFP

Meanwhile, across the Yellow Sea …

Similar rumors were swirling over a Baidu-Geely deal, a deal that looks far more imminent than Apple-Hyundai.

On Friday morning, newswire Reuters, citing two unnamed sources, reported that Baidu Inc plans to create a smart EV firm, with manufacturing carried out by Chinese carmaker Geely using the latter’s EV platform.

Baidu, the leading search engine company in China, has been developing autonomous driving and car-internet connectivity technologies. It will take a majority stake and have full voting power in the new entity, Reuters reported.

As was the case for Hyundai, shares leapt on the news. Geely’s stock closed up 19.60% in Hong Kong, while Baidu was up 1.92% on the NASDAQ.

Bloomberg reported – also citing an unnamed source – that an official announcement on the partnership could come as early as next week.

Baidu reportedly picked Geely after prior discussions with carmakers including WM Motor, Guangzhou Automobile Group and FAW group, the source said.

The timing of the partnership comes at a promising moment for Baidu. It is planning a second listing in Hong Kong this year and has chosen CLSA and Goldman Sachs to manage the deal, which could raise $3.5 billion, Bloomberg reported separately on Thursday.

Hong Kong has proven a rich spigot for the company, which raised more than $17 billion in the city last year.

Kim Tae-wook contributed to this report.