Apple has been considering an EV partnership.
Jack Taylor/Getty ImagesShares of South Korean auto maker Hyundai Motor are soaring Friday because of Apple. Reports of a possible car partnership between the tech giant and auto world have had investors abuzz. This kind of deal could become a theme for investors in 2021.
Hyundai stock (ticker: 005380.Korea) jumped 19.4% in overseas trading Friday. That is the stock’s second-best daily jump since the 1980s, when shares jumped 45% on a day in 1988.
Today the spike is about Apple (AAPL) and plans for an Apple self-driving electric vehicle. Stories about an Apple car surfaced late last year. Apple declined to comment on its plans, but the company has been toying with the idea of an Apple-branded automobile since at least 2014.
“Over the last six years we have seen many twists and turns in Apple’s automotive ambitions,” wrote Wedbush analyst Dan Ives in a Friday research report. He believes the chances of Apple going it alone in the car business aren’t high. Cars require a lot of capital to build required scale—even more capital that it costs to build smartphones and computers. “We continue to strongly believe Apple ultimately announces an EV strategic partnership in 2021.”
Apple and Hyundai weren’t immediately available for comment. The idea of an Apple-Hyundai tie-up is only speculation at this point: Investors seemed to have made the leap to Apple on initial reports that Hyundai is in talks with U.S. companies about partnerships.
Hyundai’s target partner certainly doesn’t have to be Apple. There are other reasons to join with companies in the electric-vehicle, autonomous-driving age. XPeng (XPEV) announced a partnership with a laser-based-radar, or Lidar, supplier recently. Hyundai could be doing something similar as all global auto makers try to start businesses related to self-driving robotaxis.
Aptiv (APTV), Luminar Technologies (LAZR), and Veoneer (VNE) are three companies involved in self-driving tech. Aptiv integrates sensor data, and Luminar and Veoneer are both Lidar companies. Those are three firms that can benefit as the push for partnerships heats up.
Hyundai is a household name by virtue of its cars—it’s one of the largest car makers on the planet, with a market capitalization of about $50 billion. Hyundai also owns about 34% of Kia Motors (000270.Korea), which has a market value of about $25 billion. Kia, in a cross holding, also owns 21% of Hyundai stock. Together, Hyundai and Kia sell more than 5 million vehicles a year.
Those are impressive numbers for the car business, but they are dwarfed by Apple and the phone business. Apple’s market capitalization is roughly $2.2 trillion.
2021 will be an interesting year as the number of car makers proliferate—Xpeng, Fisker (FSR), and other EV companies with billion-dollar valuations weren’t around a decade ago—and as the new companies make decisions about supply, manufacturing, and technology.
Ives doesn’t cover a lot of car companies; he covers primarily tech firms. He rates Apple shares Buy and has a $160 price target.
Apple stock is up about 0.3% in early trading Friday. The S&P 500 was up 0.4% and the Dow Jones Industrial Average was up a mere 0.1%.
Write to Al Root at allen.root@dowjones.com
January 08, 2021 at 10:05PM
https://www.barrons.com/articles/apple-ev-hyundai-stock-car-partnership-51610118254
Apple EV Hopes Send Hyundai Stock Soaring - Barron's
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