Hyundai Motor Group will invest $1.6 billion in a joint venture to develop self-driving vehicle technologies with auto supplier Aptiv, the biggest overseas investment by the South Korean automaker to catch up to rivals in the AV market.
Global automakers and their suppliers are forging alliances to develop autonomous vehicle technologies partly due to the need to share the huge financial and technical burdens.
Hyundai has lagged global rivals who have invested heavily into developing new technologies for electrified an autonomous vehicles. For example, BMW Group and Daimler announced earlier this year that they would join forces on automated driving technology.
Hyundai Motor, Kia Motors and Hyundai Mobis will collectively contribute $1.6 billion in cash and $400 million in research and development resources and others, valuing the joint venture $4 billion, Hyundai Group and Aptiv said in a joint statement.
Aptiv, which will own 50 percent of the joint venture, will contribute its autonomous driving technology, intellectual property, and approximately 700 employees focused on the development of scalable autonomous driving solutions.
Aptiv CEO Kevin Clark in a joint interview with Hyundai Executive Vice Chairman and heir apparent Euisun Chung on Monday said the joint venture at this point would not get involved in running ride-hailing, data or network services of its own.
Instead, the new firm will begin testing fully driverless systems in 2020 and have a production-ready autonomous driving platform available for self-driving taxi providers, fleet operators and automakers in 2022.
"Uber is developing its own technology, but potentially our technology could be better than theirs and then they could also become our customers," Chung said through a translator.
Clark said the alliance would initially focus on self-driving technology for passenger vehicles. But Chung said the Aptiv partnership could ultimately also help Hyundai speed up automation for commercial vehicles, such as long-haul trucks.
The executives said their technology will be tested and developed across Asia, Europe and the United States to offer products tailored to the regulatory and driving environment in all major markets. They said they would discuss additional alliance members going forward.
In a statement Monday, a Hyundai spokeswoman said the automaker will continue to develop Level 3 technology for commercial models internally, while the joint venture’s main focus will be level 4 and 5 technology. The software for autonomous driving will also be developed through the joint venture, but Hyundai will continue to work on the map, cloud and sensor technologies.
"Hyundai Motor Group’s goal has been to begin full-scale mass production of autonomous vehicles by 2024, and we believe the newly established JV will help accelerate our effort toward this goal,” the spokeswoman said.
She said the announcement will not impact any existing partnerships, such the one with Aurora.
Aptiv, which manufactures vehicle components and provides technology for self-driving cars, was formerly known as Delphi Automotive, which was split into Aptiv and Delphi Technologies in 2017.
Aptiv was created as a way for the company to focus more on future technologies. Prior to the split, the former Delphi Automotive had worked with BMW, Intel, Continental and Fiat Chrysler Automobiles on a jointly developed automated driving platform. The company also previously partnered with BlackBerry for development of its turnkey automated driving platform.
Since the Delphi Automotive spinoff, Aptiv has been working on autonomous technology development both with partners and independently. Clark told Automotive News in July that autonomous driving was one of the company’s focus areas.
Clark said the company expected $500 million in revenue from Level 4 autonomous driving, and that this forecast would be made possible with “non-traditional automotive companies.”
Go it alone strategy
Market research firm Navigant Research put Aptiv at No.4 among automated driving system companies, following Waymo, General Motors and Ford. Hyundai is not among the top 10 vendors, according to Navigant.
Aptiv said in its 2018 annual report that Hyundai Mobis was one of its competitors in advanced safety and user experience segment, along with Robert Bosch Group and Denso Corp.
Its major customers include GM, Volkswagen and Fiat, according to the annual report. Hyundai Motor is also one of its customers, a Hyundai spokesman said.
The latest investment is another sign that Hyundai has abandoned its strategy of developing technology in-house, a strategy which previously raised investor concerns that it may be left behind in the race for future mobility.
Hyundai has lagged global rivals who have invested heavily into partnerships and developing new technologies for electrified and autonomous vehicles.
For example, BMW and Daimler announced earlier this year that they would join forces on automated driving technology.
Though General Motors has been developing its own semi-autonomous technology internally, the automaker has found advantages to investing in ride-hailing company Lyft, which has been focusing on self-driving technologies. It also announced a partnership with Honda in 2018, in which Honda would invest $2.75 billion in GM’s autonomous tech unit Cruise over 12 years.
Volkswagen expanded its alliance with Ford to develop AV technology in July, in which Ford will develop battery-powered cars based on Volkswagen’s MEB electric platform in Germany, and VW will invest $2.6 billion in Ford's Argo AI self-driving unit.
In 2017 Volvo and Autoliv, automotive safety systems company, created joint venture Zenuity, an autonomous driving software company, to develop AVs and address concerns with safety.
Following this trend, Hyundai and affiliate Kia Motors have joined rivals in making a series of investments in technology firms, including self-driving car tech startup Aurora, especially after heir apparent Euisun Chung was promoted a year ago.
Hyundai and Aurora have been collaborating on self-driving vehicles since 2018, and Hyundai deepened its funding into the company in June. Hyundai has said it intends to commercialize autonomous technology in robotaxi fleets in select global cities starting in 2021.
Hyundai Mobis and Yandex, a Russian self-driving company, announced a joint agreement in March, in which the two companies made plans to present a driverless prototype vehicle based on a standard Hyundai or Kia production model cars before the end of the year, a Yandex spokesman said.
Hyundai Motor said in February that it will invest 14.7 trillion won ($12.3 billion) in future technologies such as self-driving, connectivity and car sharing areas by 2023.
In March Hyundai Motor Co. and Kia Motors Corp. announced a plan to invest $300 million in Indian ride-hailing platform Ola, following the the $275 million that the pair invested in Singapore-based ride-hailing firm Grab last year.
In November, Hyundai Motor Co invested $250 million in Singapore’s ride-hailing firm Grab, raising its stakes in growing Southeast Asian markets.
The new joint venture will be led by Karl Iagnemma, president of Aptiv Autonomous Mobility and headquartered in Boston, with technology centers across the U.S. and Asia, including Korea.
Aptiv, headquartered in Ireland for tax purposes, ranks No. 20 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $12.87 billion in 2018.
The transaction is subject to regulatory approval and is expected to close early in the second quarter of 2020.
Alexa St. John contributed to this report.