Apple on the way to collaborating with Kia – Global Markets

The slightly older ones among us still remember the commercial on Channel 2, in which a nervous Japanese man plucks his hair, bangs his head against the wall and shouts “Kia! Kia! Kia!”. The witty advertisement was a teaser for the entry of the South Korean car manufacturer and then unknown to Israel. It is likely that at the end of the last trading day, the management of Kia (000.270.KS) did just like that Japanese from the advertisement, only in a positive section.

Why? That was reported today in the South Korean press Shappel

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(AAPL), which recently announced its entry into the electric vehicle field, is expected to partner with the automaker. You are probably wondering what the result is: then a 9.7% increase in daily trading in the stock and reaching a value exceeding $ 24 billion and the stock has been at a peak since 1997. Kia! Kia! Kia!

According to the report in South Korea, the two companies are expected to sign a contract in two weeks and start working on Apple’s autonomous electric cars at the Kia plant in Georgia USA. The goal is to introduce an Apple car by 2024, with the goal of starting production of 100,000 cars a year The initial amount Apple will invest is $ 3.6 billion.

Last month, Hyundai shares rose nearly 20% on the trading day, until the company withdrew from the announcement that it was in discussions with Apple regarding the electric vehicle. Given that setting up a car manufacturing plant costs billions of dollars, while developing working methods and accumulating knowledge also takes considerable time, it is no coincidence that Apple is looking for a partner with knowledge and capabilities in the field.

What’s more clear is that from the schedule Apple has set for itself, it’s not really in a hurry, so it’s not in a hurry to jump into bed with any girlfriend and start work right away.

In any case, Apple, which is known for its premium products, is entering a field that is relatively in its infancy, but even now it is becoming very crowded with players such as Tesla (TSLA), NIO (NIO), Expeng (XPEV), Google (GOOG), Volkswagen (VW) , As well as the other major players in the market.

Apple’s competitors have a lot more experience in relative terms, but with all due respect Apple is not the Chinese manufacturer, it is not a traditional car company, and it is not Tesla, it is much more than all of them together. The advantages of Apple are clear, first the strongest brand in the world alongside a fanatical fan base that will line up to buy any product with an apple bitten on it, and probably the I-CAR, which allows the company to generate about $ 40 billion in cash per quarter, and even though there are about $ 200 billion. Apple Dollar has raised an additional $ 14 billion, raising when possible, not when needed.

But Apple’s significant advantage lies on the logistical side, that the company’s supply chains are among the best in the world, with factories around the globe producing most of the parts, including advanced technologies, and in particular some of the best chips in the industry. While traditional automakers have struggled in recent years to produce some kind of growth, and young electric vehicle companies are making money mostly from offerings that they will invest in logistics, Apple is next in line with dream resources.

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Announces tonight that over the next week it will halt vehicle production at four factories due to a global shortage of chips. The company added that the plant in Korea will also work at half capacity, and that the main damage will be to vehicles with the highest profitability rate, however the company has not revealed how much volume it is expected to lose but it is estimated that there are about 10,000 vehicles each week.

“Despite our many efforts, the shortage of semiconductors will affect the production of GM vehicles during 2021,” General Motors stated tonight.

But GM is the latest to report difficulties in supplying car chips: Volkswagen, Ford, Subaru, Toyota, Nissan and Mazda have reported cuts in vehicle production due to similar issues. Mazda is expected to reduce some 34,000 vehicles during February and March, and Nissan has halted truck production for several days. The shortage of chips is expected to cause a decrease of about 672,000 vehicles during the first quarter, which is expected to reach about 960,000 during 2021.

The gap between the production of classic vehicles and next-generation vehicles is heaven and earth. The production of advanced technologies such as chips is done under high sterile conditions from an operating room, while a car factory is a factory. Therefore, all companies outsource everything related to technology and stay with the profit margin on the “piece of tin” they produce. Apple has everything it needs, it only needs someone to build the chassis, congratulations Kia.