An Apple car, if ever launched, would be a big deal. But the potential benefits for manufacturers come with a spear.
Shares in Hyundai Motor Company rose 9% Monday after a Korean newspaper reported that the carmaker intends to sign an agreement for Apple for an autonomous electric vehicle. The stock had jumped 19% on Friday, when Hyundai said it was in early talks with the iPhone’s designer.
Apple began work on a vehicle in 2014, but the project has progressed smoothly and the company has rarely been publicly acknowledged. A Reuters report last month said that they were aiming for the launch of 2024, which would be very ambitious for anything with a significant degree of independence. Hyundai would likely be a production partner, similar to the role Taiwanese electronic giant Foxconn is playing in the iPhone assembly.
For all the glamor – and potential manufacturing volumes – associated with an Apple – branded car, it’s hard to confirm that Hyundai ‘s market value is worth nearly $ 15 billion since closing Thursday. . Aside from the risks that the negotiations will come to nothing, or that any project will drain money longer than expected, contract manufacturing is not a very attractive business.
Canadian supplier Magna International, which is also seen as a potential partner of Apple, will assemble vehicles under other brands, most notably the Jaguar I-Pace, an all-electric sports utility vehicle. This activity had not been very profitable. Magna’s “complete vehicles” segment reported operating margins of 2.1% and 1.1% in 2019 and 2018, respectively, lower than that of its parts industries.