Reuters has tabulated just how much damage Hyundai and partner company Kia recently took in the market after it was announced the automakers were no longer planning a deal with Apple to produce a much-buzzed-about Apple car or its components.
And it was sizable. In early January, Hyundai had confirmed a report that the company was in talks with Apple over potential plans to develop self-driving cars and/or electric vehicles batteries at U.S. Hyundai or Kia factories. At the time, the news caused Kia shares to jump more than 60 percent and the gains remained because reports continued to suggest that talks were ongoing and a deal imminent.
But in a pure example of “the bigger they are, the harder they fall” both Hyundai and Kia took dramatic hits to their market value this week when Hyundai announced to shareholders that they were, in fact, not in talks with Apple on autonomous vehicle development. The fallout from the surprise shift sent Hyundai’s shares tumbling 6.2 percent and Kia’s 15 percent. All told, the loss of market value between the two companies combined was a reported $8.5 billion.
Hyundai acknowledged that they are in some early stage talks on autonomous and electric vehicle component development, but went out of their way to say that these parties were not Apple.
According to Reuters, Hyundai’s traditional approach to manufacturing, using a vertically integrated supply chain to produce many of its components and materials, means it’s often been reluctant to work with outsiders. Reports suggest that there was internal opposition to becoming what they considered a contract manufacturer for Apple, especially when Hyundai may have been more interested in a true, strategic partnership versus a supplier relationship.
The alternate theory, laid out by some analysts, is that talks might have collapsed due to leaks of the partnership plan to the media, something that might hold water when you consider that after Hyundai confirmed the rumors in January, they almost immediately backtracked, pulling Apple’s name out of any statements relating to the potential tie-up.