Apple electric car speculation fuels rally in Japanese automakers

Speculation that Apple Inc is seeking partners to develop its own electric vehicle spilled over to Japan, where shares of major car companies jumped after a local paper reported that they were in talks with the maker of the iPhone.

Apple is reportedly going to finalise a deal with Hyundai to build its own electric car. (Photo courtesy: YouTube)
Apple is reportedly going to finalise a deal with Hyundai to build its own electric car. (Photo courtesy: YouTube)

Apple was in discussions with at least six automakers, the Nikkei newspaper reported Friday, citing an unidentified executive at a supplier. South Korea’s Kia Motors Corp and Hyundai Motor Co, which controls 34% of the smaller carmaker, emerged since late last year as possible candidates to work with Apple, with local media reporting on talks over potential collaboration. On Friday, Dow Jones reported that Kia has approached partners about building cars in the US.

The big question is how serious Apple is about taking on Tesla Inc and other electric-vehicle makers and whether it has determined it will need an established manufacturer to be able to roll out its own product. The Cupertino, California-based company is said to have a small team of engineers developing drive systems, as well as designers, but with development work at an early stage, any roll out probably won’t happen for another five years.

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Tatsuo Yoshida, a senior analyst at Bloomberg Intelligence, said that Japanese automakers are usually too busy with their own development, manufacturing, sales and customer service to take on a task like working with Apple. However, Nissan Motor Co or Mitsubishi Motors Corp. “don’t have much work and are somewhat idle, so they might sign up," he said.

(Read more: Apple Self-Driving Electric Car Is at Least Half a Decade Away)

When asked if they were approached, Honda Motor Co and Mazda Motor Corp said they couldn’t comment, the Nikkei said. Mitsubishi Motors said it was not contacted and Nissan Motor Co declined to comment, according to the report.

Kia Motors Corp shares jumped earlier this week on a local media report that Apple would invest 4 trillion won ($3.6 billion) as part of a collaboration with the automaker on making EVs. In December, Hyundai Motor Co, an affiliate of Kia, backed away from a statement that said it was in talks with Apple.

This week, CNBC reported that Apple is close to finalising a deal with Hyundai-Kia to build an autonomous EV at Kia’s assembly plant in the state of Georgia. No agreement has been reached, but they are tentatively scheduled to go into production in 2024, the news channel said.

In Japan, the report fuelled gains among automakers, which in turn boosted the benchmark Topix, with Toyota Motor Corp, Mitsubishi Motors, and Nissan gaining. Mazda shares also surged as much as 19%, the most in 12 years, after the company boosted its operating income forecast for the full year.

Among Japan’s automakers, Nissan probably has the right solution for a non-automaker seeking to enter the EV market. The Japanese automaker has developed with French partner Renault SA a common EV platform that can be used by to develop distinct, branded products for their global automaking alliance, which also includes Mitsubishi Motors.

Nidec Corp., a major Japanese supplier of electric motors, is also seeking to offer nearly complete EV platforms. Jun Seki, the company’s chief operating officer, said in a recent interview that new entrants in the sector would prefer to focus on a vehicle’s interior and styling.

“Any new company entering into the realm of electric vehicles is a chance for us," Seki said. “Our expectations of Apple are quite high. Apple is our important customer in other fields as well."

“Shares are moving on speculation from the Apple report," said Shoichi Arisawa, an analyst at Iwai Cosmo Securities Co. “That being said, it’s unclear whether orders from Apple will be beneficial for these companies if they were to get the contract. The share rally won’t last long."

First Published Date: 05 Feb 2021, 11:46 AM IST
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