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(Yonhap News)

The official suspension of autonomous vehicle (AV) talks between the Hyundai Motor Group and Apple is having major repercussions.

In the space of one day, over 9 trillion won (US$8.06 billion) in Hyundai Motor and Kia market capitalization evaporated as market disappointment translated into plummeting share prices. Some analysts are speculating that the talks may have been called off completely.

On Feb. 8, Hyundai Motor, Kia and Hyundai Mobis each announced that they were “not going forward” with discussions with Apple on AV development. For the Hyundai Motor Group, this was an abrupt reversal from its previous acknowledgement of the Apple talks.

The cooler stance is even more apparent when compared with their previous enthusiasm. When related reports first surfaced on Jan. 8, Hyundai Motor and Hyundai Mobis both volunteered announcements that they had received “co-development cooperation requests from multiple companies concerning autonomous electric vehicles (EVs).” On Jan. 20, Kia went even further with its announcement that it was “exploring cooperation with overseas companies.”

In contrast, Apple consistently declined to comment, with CEO Tim Cook only saying that he “can’t comment on rumors and so forth.”

That’s why more observers are speculating that Apple moved first to back out of the talks.

On Feb. 5, Bloomberg reported that Apple and the Hyundai Motor group had recently paused their discussions. The article explained that Apple, which emphasizes secrecy, was miffed about Hyundai Motor going public about the talks.

If this is the case, Apple could well decide to return to the table now that the Hyundai Motor Group is adopting a more aggressively tight-lipped approach. The situation may turn into a more sustained affair as each company flexes its muscles.

Some observers are predicting the talks are likely to eventually break down even if they start up again. Experts have long anticipated that the two companies would have difficulty coming to a “win-win” arrangement.

To date, Apple has sought to build an insular ecosystem where it plays the sole guiding role in hardware, operating systems and services. It’s also thought that the Apple Car would likely be integrated into this value chain.

The problem is that the Hyundai Motor Group has adopted much the same strategy. It has been working to internalize all software for the AV era, including operating systems and cloud computing. This is why the two companies are seen as having more areas where they are in competition than areas where they stand to collaborate.

Industry observers said the companies are certain to suffer a blow to their credibility if the talks are deemed to have collapsed. In effect, they will have proven the industry right in its assessment that they both lack the ability to cooperate on a horizontal footing.

This development has major implications for the future of the auto industry. While the internal combustion engine vehicle (ICEV) industry allowed for some ecosystem monopolies, horizontal technology cooperation will become increasingly crucial in the era of EVs and AVs. The new technology areas are too diverse — and the development costs too enormous — for any one company to cope with. It’s a factor that explains the growing number of strategic partnerships recently among heavyweights in the automobile industry.

“If [the Apple talks] really have broken down completely, that will be a major blow for the Hyundai Motor Group’s status in the industry,” predicted Lee Hang-gu, a senior analyst at the Korea Automotive Technology Institute.

“They need to try to turn things around by quickly producing an example of successful strategic partnership,” he advised.

Kia finished the day at 86,300 won (U$77.30) per share on Feb. 8, down 15.0% from the previous day of trading. Shares of Hyundai Motor and Hyundai Mobis were down by 6.2% and 8.7%, respectively.

Please direct comments or questions to [english@hani.co.kr]

By Lee Jae-yeon & Song Chae Kyung-hwa, staff reporters