Hyundai Execs Are Nervous That Assembling the Apple Car Would Hurt Their Image: Report
“We are not a company which manufactures cars for others,” said one executive wary of the deal.
Just like it does with its iPhones, Apple has been looking for a partner to help manufacture the infamous-before-it-exists Apple Car. Hyundai is currently in the lead for that potentially lucrative partnership, but the latest reports suggest that a Kia facility in Georgia would be picking up the Apple Car.
There could be a reason for putting it on Kia beyond logistics. According to a Reuters report, Hyundai executives are wary of being seen as the Foxconn of cars, as in, a mere manufacturer for someone else's products. As such, some Hyundai higher-ups are worried that the Apple Car deal could damage Hyundai's ambitions of moving upmarket through its Genesis brand.
“We are agonizing over how to do it, whether it is good to do it or not,” an unnamed Hyundai executive with knowledge of the Apple Car partnership talks told Reuters. That executive did not mince words at the prospect of Hyundai building a car that would be sold under the Apple brand, saying, “We are not a company which manufactures cars for others. It is not like working with Apple would always produce great results.”
“Apple is the boss. They do their marketing, they do their products, they do their brand. Hyundai is also the boss. That does not really work,” the Hyundai executive told Reuters.
Apple would likely source its Apple-designed components (including major items like drivetrain components, frames and bodies) from a variety of manufacturers, not just Hyundai, per another unnamed source familiar with the deal who spoke with Reuters. Hyundai or Kia would step in for the car's final assembly.
Some higher-ups at Hyundai are concerned that this kind of contract work would affect the brand's prestige, particularly in the case of Genesis, the automaker's newer premium brand.
"Tech firms like Google and Apple want us to be like Foxconn," explained another unnamed Hyundai executive who spoke with Reuters. Foxconn is a well-known (and controversial) supplier for Apple's phones. “A cooperation may initially help raise the brand image of Hyundai or Kia. But in the mid- or longer-term, we will just provide shells for the cars, and Apple would do the brains.”
Thus, a Kia facility in Georgia is the leading site in consideration for the Apple Car's assembly. Not only does it have the production capacity to take it on, but Reuters notes that Kia is making the most progress out of any of Hyundai's brands in the EV space and critically, it isn't one of Hyundai's more upmarket brands.
Part of this pushback is rooted in Hyundai's company culture. Reuters notes that Hyundai prefers to do things itself instead of work with outsiders, making its cars' components—even powertrains and steel—in its own vertically integrated supply chain. It has historically shied away from partnering with outsiders, which has led to them becoming South Korea's second largest business conglomerate.
Talks between Apple and Hyundai have been going on for much longer than previously reported—since 2018—and haven't resulted in much of anything for this reason, per another unnamed source familiar with the talks who spoke with Reuters.
One Hyundai executive who spoke with Reuters said that Hyundai would likely have to replace some executives just to avoid a major culture clash with Apple's leadership.
Not everyone sees this as a Genesis-tanking move, however. After all, Hyundai stock surged nearly 23% after a source at the company told Korea Economic Daily that Hyundai was in talks to build the Apple Car, although the company walked back from that statement afterwards and hasn't mentioned it since. Furthermore, South Korean battery expert Park Chul-wan told Reuters that Hyundai could get crucial access to Apple's autonomous vehicle tech out of the deal, and Apple would be able to access Hyundai's suppliers and electric car platform.
Apple has not commented on the deal, either, as it usually maintains strict secrecy around future products and partnerships, Reuters notes. The Drive reached out to both companies regarding these reports and both declined to comment.
Update: Tuesday, Feb. 2, 2021, 2:25 p.m.: Added in Apple and Hyundai's responses above.
[H/T Business Insider!]
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