Hyundai chairman Euisun Chung – central to the company’s transformation from conventional carmaker to mobility giant promoting flying cars and hydrogen-fuel cells – had his first, very public, stumble this week.
On Monday, after a month of intense speculation around who may team with Apple to help develop its much-vaunted self-driving electric car, Hyundai and its affiliate Kia were forced in separate exchange filings to say they weren’t in any talks with the tech behemoth, backing away from an earlier Hyundai statement that confirmed they were in discussions.
That January 8 initial disclosure, along with other reports of talks, no doubt infuriated Apple, which keeps development projects secret for years and controls relationships with suppliers with ruthless efficiency. It’s unclear if – or when – discussions between the two might resume.
Hyundai "might have learned some lessons through this issue", said Koh Tae-bong, head of research at HI Investment & Securities in Seoul. "Keeping internal discussions internal is important."
The fracas – which saw Hyundai edit and dial back its January statement twice – is an embarrassment for Mr Chung, who took over from his father Mong-Koo Chung as chairman of South Korea’s second-largest conglomerate in October after two years as executive vice chairman. And if talks with Apple never restart, it’s a small disappointment, considering there are only a handful of global automakers with the capacity and capability to mass manufacture vehicles.
It’s also an unfortunate setback in what has been a relatively smooth run for Mr Chung thus far. In his four months at the helm, and during his previous tenure, Mr Chung has demonstrated his deal-making prowess and set Hyundai on a course that noses it toward a cleaner, greener future.
There have also been tie-ups with Uber and Aptiv for the development of flying and autonomous cars, with plans to debut the former as soon as 2028. Hyundai hydrogen fuel-cell trucks are already on the roads in Switzerland.
Mr Chung has also sought to improve profitability at Hyundai, adding more sport-utility vehicles to the line-up and plowing money into the carmaker’s electric-vehicle ambitions. Hyundai Motor will start selling the Ioniq 5, its first EV assembled on the company’s dedicated EV platform, next month in Europe.
In December, Hyundai scored a coup after it struck a deal to buy 80 per cent of Boston Dynamics, a transaction that valued the mobile robot firm at $1.1 billion. The broader Hyundai empire is exploring practical uses for industrial robots, with the aim of one day developing them for sophisticated services like caregiving for patients at hospitals.
There have been other, earlier, wins too.
Mr Chung gained investor support in March 2019 when he successfully derailed Elliott Management’s bid to overhaul the board, a year after the activist hedge fund blocked an $8.8bn merger of the chaebol’s two units. That enabled Mr Chung to move ahead with his push to invest billions of dollars in future technologies, as well as embark on a wholesale restructure.
The 50-year-old has since been working to improve the company’s culture, communicating more frequently with staff and encouraging employees to leave their suits and ties at home and come to work in more casual attire, an edict once hard to imagine at a big Korean firm where social etiquette is important. That same year, Mr Chung held townhall meetings and took selfies with staff.
"We need to transform the group from being a follower into a leader in the industry with innovative ideas," Mr Chung said in his speech to staff in January 2019. "We have to shift away [from] a culture where failures are avoided and criticised to a culture where we embrace failures and learn from them."
While a lesson in how to play the big leagues, the Apple car experience may turn out to be a good thing for Mr Chung and Hyundai, by re-focusing its ambitions, according to Kim Jin-woo, analyst at Korea Investment & Securities, which rates Hyundai a buy.
"Hyundai has the know-how on how to manage supply chains with its experience of more than four decades," Mr Kim said. "The Apple news could have become a catalyst for stock prices, but Hyundai has been developing its own projects for future mobility."
Investors have already started to listen. Shares in Hyundai jumped almost 60 per cent in 2020 while stock in Kia rose 41 per cent – an impressive result in a year many automakers would rather forget as the coronavirus pandemic weighed on sales. Hyundai gained 2 per cent on Tuesday, bringing gains since January to 24.5 per cent.
Kia last month rebranded with a new, sleeker logo, scrapping its oval shaped badge and announcing a fresh slogan ‘Movement that inspires’ to replace its older 'Power to surprise' mantra.
"Hyundai’s ultimate goal isn’t to become an Apple car supplier," said Kim Joon-sung, an analyst at Meritz Securities in Seoul, who also rates Hyundai a buy. "It would want to be the next Tesla."
