- Apple and Kia Motors, seriously?
- And what about Ford and Google?
- What are the goals of automotive and IT companies?
- How did the market react to this news?
- Summing up the results
Apple and Kia are very close to an agreement, and Ford and Google have already signed it. Yes, you read everything right – your vision did not disappoint you. Do you want to understand what is happening and what kind of cooperation we are talking about? We, too. Let’s figure it out.
Apple and Kia Motors, seriously?
At the end of 2020, the Cupertino-based company announced its intention to enter the automotive market in 2024 by releasing an unmanned passenger vehicle. It was immediately said that the electric car will be produced in cooperation with a large automobile concern.
Later it became known that Apple is seriously considering the South Korean automaker Hyundai Motor as a partner. However, the Asian conglomerate, fearing that cooperation with the IT giant could lead to a loss of weight and significance of its own brand in the global market, gave way to a subsidiary, Kia Motors.
According to CNBC, the parties are close to signing an agreement, and Bloomberg, in turn, has already announced the specific date of the deal – February 17. According to the agreement, the automaker will receive $ 3.6 billion from the technology corporation for the development and production of the so-called Apple Car.
The electric car will be produced at the American Kia Motors plant. However, it will be released under the Apple brand and will be equipped with the most advanced Apple software and hardware.
And what about Ford and Google?
On February 1, it became known that the companies signed a six-year agreement, according to which the automobile concern will integrate Android software and services such as Google Maps, the Google Assistant voice assistant and the Google Play market into its cars.
In addition, Ford Motor will use the tech corporation’s cloud services, data collection and analysis tools, machine learning and artificial intelligence technologies.
What are the goals of automotive and IT companies?
Morgan Stanley analyst Katy Huberty believes Apple has been tempted by the $ 10 trillion a year global auto market. For comparison: the smartphone market reaches $ 500 billion a year. So why not take the risk and create a product that, by occupying only 2% of the segment, will provide the same amount of income as selling iPhones?
As for Ford Motor, the company is not only carrying out the planned reorganization and optimization of production, analytical and logistics processes, but also creates an additional source of income.
Car sales are great, of course. But why not provide your customers with paid additional services? For example, subscriptions for access to advanced functionality and service. Adam Jones, also an analyst and also at Morgan Stanley, suggested that Ford Motor, selling subscriptions at $ 10 a month, could earn $ 5 billion a year.
New source of income – new perspectives. According to the expert, the value of securities of the American automaker due to cooperation with Google may increase to $ 25 per share. Now the price tag is barely over $ 11.
How did the market react to this news?
The most violent reaction can be safely called the explosive growth in the value of Kia Motors shares. On February 3, against the background of information about the possible receipt of $ 3.6 billion of investments from Apple, the securities rose by 9.65%, to 97.7 thousand South Korean won. The positive trend continues: at the time of writing, the shares rose to KRW 101,500.
The growth of quotations of other companies appearing in the news is inferior in scale: Apple (APPL) rose in price by 2.58%, to $ 137.39, Alphabet (GOOGL) – by 3.6%, to $ 1,893.07, Ford Motor (F ) – by 2.85%, to $ 10.83.
Summing up the results
We are witnessing an incredibly large-scale convergence of large representatives of the automotive industry and the IT sector. Ford Motor has signed a six-year agreement with Google, according to which all new Fords and Lincolns will be equipped with Google software and services, and the achievements of cloud and AI technologies will be integrated into the company’s workflows.
And Kia Motors, if the deal does not fall through, will produce an unmanned electric car for Apple. The corporation has already announced its readiness to allocate $ 3.6 billion in investments to partners from South Korea.
Oh, this 2021 already! Pleases with cool news. Do you agree?
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