Hyundai Executives Said to Be 'Divided' Over Prospect of Apple Car Partnership

Rumors that Apple is in negotiations with Hyundai about developing an Apple Car have been in the air over the last few weeks, and a new Reuters report today provides further details on the state of play between the two companies.

According to the report, the outlook for a deal has dimmed because Hyundai executives are divided over the prospect of working with Apple. Hyundai's main concern is that it could become a contract manufacturer for another brand.

"We are agonizing over how to do it, whether it is good to do it or not," said a Hyundai executive aware of the internal discussions on the tie-up with Apple. "We are not a company which manufactures cars for others. It is not like working with Apple would always produce great results."

According to the report, Apple and Hyundai first started talks over a car partnership in 2018, when Apple's car project was headed by Alexander Hitzinger, who now works for Volkswagen. However, progress in the talks has been hampered by Hyundai's historical reluctance to work with other companies.

"It is really difficult (for Hyundai) to open up," this person said, adding that the South Korean company would likely to have to replace some executives to avoid a culture clash under any partnership with Apple.

"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 person said.

Despite its reluctance, Hyundai is said to have excess capacity, therefore contract manufacturing would help it secure production volume.

Apple reportedly wants to source major components of its own design – frames, bodies, drive trains, and other parts – from a variety of places and rely on Hyundai or Kia, a Hyundai Motor Group affiliate, for a final assembly site. Previous reports also suggested that Kia's Georgia plant in the U.S. could become the production base, which would suit Apple better.

Rumors that Apple is in negotiations with Hyundai first surfaced earlier this month‌, suggesting that Apple is planning to work with the automaker to produce electric vehicles and develop batteries due to the high costs of the technology and the necessary production facilities.

Hyundai initially confirmed its electric vehicle discussions with Apple in a statement to CNBC, but the statement was revised hours later with no mention of Apple. Apple has not commented on reports of the negotiations.

Reuters last month reported that ‌‌Apple Car‌‌ production may begin around 2024. However, a report from Bloomberg last week said that the ‌‌Apple Car‌‌ is "nowhere near production stage" and could be ready in around five to seven years.

Apple and Hyundai reportedly want to reach a partnership agreement for the upcoming Apple Car by March, although today's report seems to cast doubt on any deal being signed off anytime soon.