From Apple Car Collaboration Collapse to LG-SK Litigation... Increasing Volatility in Electric Vehicle Stocks

Hyundai Motor, Kia Motors, and Affiliates' Stock Prices Plunge... 'No Apple Car Collaboration' Disclosure Dampens Rally
Short-Term Correction Expected as Fundamentals Like Earnings Remain Strong
Full-Scale Electric Vehicle Market Attack with Ioniq 5 in March
Battery Leaders LG Chem and SK Innovation Stocks 'Shake' Ahead of Lawsuit

[Asia Economy Reporter Minwoo Lee] Investor anxiety is growing following news that the electric vehicle collaboration between Apple and Hyundai Motor has fallen through. With the lawsuit results between secondary battery manufacturers LG Chem and SK Innovation also expected on the 10th, volatility is increasing among electric vehicle-related stocks, which are considered next-generation leaders. However, since the companies' earnings and fundamentals remain solid, analysis suggests this will be only a short-term adjustment.

Hyundai Motor Affiliates' Stock Prices Plummet Following Apple Car Collaboration Collapse

As of 11 a.m. on the 8th, Hyundai Motor's stock price fell 5.61% from the previous trading day to 235,500 KRW. During the session, it dropped as much as 8.42% to 228,500 KRW. Kia Motors' stock price also declined, recording 88,000 KRW, down 13.30% from the previous day at the same time. Hyundai Mobis and Hyundai Glovis, among other affiliates, also saw their stock prices fall by about 8%.

On the 5th (local time), foreign media including Bloomberg reported that discussions between Hyundai and Kia Motors and Apple regarding autonomous electric vehicle production had been temporarily suspended, sparking growing concerns. Adding to this, Hyundai Motor and Kia Motors stated that "while receiving collaboration requests related to autonomous electric vehicles from multiple companies, these are at an early stage with no decisions made," and "we are not currently in talks with Apple regarding autonomous vehicle development," shaking investor sentiment.

Earlier, Hyundai Motor's stock price surged in early last month on news of pursuing autonomous electric vehicle production with Apple, rising nearly 30% in two days. On the 11th, it reached an all-time high of 289,000 KRW during trading. Kia Motors also broke the 100,000 KRW barrier for the first time on the 3rd, hitting 102,000 KRW during trading, following news of Apple Car production discussions at its Georgia plant in the U.S. Since the beginning of this year until the 5th, individual investors have net purchased Hyundai Motor and Kia Motors stocks worth 895.1 billion KRW and 937.3 billion KRW respectively, ranking 7th and 5th in the KOSPI market by scale.

Strong Fundamentals... "Short-Term Adjustment Only"

Since earnings and fundamentals are already solid, the Apple Car controversy is expected to result in only a short-term adjustment. Kim Gui-yeon, a researcher at Heungkuk Securities, said, "The stock price rise due to the Apple Car issue is driven by expectations of ‘valuation expansion’ through collaboration with overseas IT companies," adding, "The short-term earnings impact is limited, and Hyundai Motor, Kia Motors, and Hyundai Mobis have entered a phase where profitability is growing and their strength is being reinforced through new car cycles and improved product lineups and sales region combinations."

Hyundai Motor Company unveiled the first teaser image of the exterior of Ioniq 5, the first model of its dedicated electric vehicle brand Ioniq, on January 13th last month. (Source=Hyundai Motor YouTube capture) [Image source=Yonhap News]

In particular, the Ioniq 5, launching in Europe next month, is expected to be a turning point in Hyundai Motor's electric vehicle strategy. It is a vehicle utilizing Hyundai's dedicated electric vehicle platform 'E-GMP,' and this is the first time Hyundai is releasing a global sales model overseas before domestically. Given the strong carbon emission regulations and the rapid expansion of the electric vehicle market in Europe, securing competitiveness there is expected to boost momentum in other major markets such as the U.S.

In this case, it is anticipated that Apple may regret the loss of collaboration with Hyundai Motor even more. Apple wants to have decision rights over design, software (SW), and parts, while also wanting to utilize the mass production platform of a finished car manufacturer. It is considered difficult to find a collaboration partner better than Hyundai Motor, which has an electric vehicle platform and a production plant secured in the U.S.

However, the possibility of a dual relationship similar to that with Samsung Electronics remains a concern. Kim Jang-yeol, head of the research center at Sangsangin Securities, explained, "From Apple's perspective, while smartphones are competitors, they maintain a cooperative supplier relationship in semiconductor and display businesses, and they may form a similar dual relationship with finished car manufacturers. Apple will likely choose a partner that is easier to control in various aspects, even slightly," adding, "On the other hand, candidates for finished car collaboration, including Hyundai Motor Group, will try to address shortcomings and strengthen their market position until they can pursue independent market expansion strategies, using successful Apple Car supply as a reference."

Battery Stocks Shaken by LG Chem and SK Innovation Lawsuit

Chung Eui-sun, Vice Chairman of Hyundai Motor Group (right), and Chey Tae-won, Chairman of SK Group, are shaking hands in front of the 'Niro EV' equipped with SK Innovation batteries at the SK Innovation battery plant in Seosan, Chungnam, on July 7 last year. [Image source=Yonhap News]

The outcome of the electric vehicle battery trade secret infringement lawsuit between leading secondary battery companies LG Chem and SK Innovation is also a factor increasing volatility. The International Trade Commission (ITC) issued an early loss ruling against SK Innovation in February last year but is currently reviewing the decision following SK Innovation's appeal. The final ruling was initially scheduled for October 5 last year but has been postponed three times, with a final conclusion expected on the 10th. Both LG Chem and SK Innovation saw their stock prices surge on secondary battery expectations, so the ruling result could cause significant stock price fluctuations. As of 11 a.m. on the day, SK Innovation's stock price was 292,500 KRW, down 3.95% from the previous trading day, having fallen to as low as 279,000 KRW during the morning session. LG Chem's stock price also dropped 3.02% to 997,000 KRW compared to the previous day.

View of LG Twin Towers in Yeouido, Seoul [Image source=Yonhap News]

However, since the government also desires an agreement between the two companies, analysis suggests that the scale of the settlement will be the key after an agreement is reached. Earlier, Prime Minister Chung Sye-kyun urged at a Korea Broadcasting Journalists Club forum on the 28th of last month, "As the future of K-battery is truly opening up greatly, I hope that instead of fighting over a small pie, the issue will be resolved quickly so that we can actively enter the global market."

This content was produced with the assistance of AI translation services.