Hyundai to set up $4-billion joint venture to develop driverless cars
Almost two years ago, the heir apparent to South Korea’s massive Hyundai Motor Group, Euisun Chung, paid a visit to the driverless-vehicle hotbeds of Pittsburgh and Detroit, wanting a look under the hood of the best technology from companies both places had to offer. It turned out to be quite the productive trip.
Hyundai announced Monday it’s setting up a $4-billion autonomous-driving joint venture with Aptiv, the company spun off from what used to be the parts division of General Motors. The two companies will join forces to develop the technology needed to put robotaxis on the road by 2022.
If the deal sounds familiar, it could be because Hyundai announced a similar partnership in January of last year — less than two months after Chung’s U.S. visit — with Aurora Innovation Inc., the start-up fronted by a driverless dream team of former chiefs for Google’s self-driving car project and Tesla’s Autopilot.
To Chung, who’s expected to take over from his 81-year-old father, Chung Mong-Koo, as Hyundai’s chairman, Aptiv was the ideal company to join forces with in the first place.
“We did meet with many other companies, but we were confident that Aptiv was really the best partner for us,” the executive vice chairman said of his visit to the U.S. in November 2017. Because of the confidential nature of Hyundai’s deal with Aptiv, Chung said he hadn’t had the chance yet to personally explain the partnership to Chris Urmson, Aurora’s chief executive, before his interview for this article.
There’s room for Hyundai to work together with both Aptiv and Aurora, Chung said. When the carmaker and Aurora announced their development deal in January 2018, the two said they’d bring self-driving Hyundais to market by 2021.
An Aurora spokeswoman said Hyundai remains both a partner and investor in the Palo Alto, Calif.-based company, and that the two have teams working together on self-driving vehicle development.
Hyundai is doubling up on partnerships as several of the perceived leaders in the autonomous-vehicle field have struggled to safely take human hands off the steering wheel. In July, GM’s Cruise unit backed off plans to deploy robotaxis by the end of this year. Before that, Alphabet Inc.’s Waymo — which planned to be the first to start a driverless ride-hailing service before the end of last year — chose to keep human safety drivers in the Chrysler minivans it’s deployed in suburban Phoenix.
“We always viewed this as highly complex, as very challenging,” Kevin Clark, Aptiv’s CEO, said in an interview. “It’s an extremely complex solution that you need to develop, and the wider the use cases, the more complex it actually becomes.”
Aptiv will take a 50% stake in the venture, while Hyundai Motor Co., parts maker Hyundai Mobis Co. and Kia Motors Corp. will contribute a combined $1.6 billion in cash and $400 million worth of services including research and development, the companies said in a joint statement. The venture will begin testing fully driverless systems in 2020 and have a production-ready autonomous driving platform available for robotaxi providers, fleet operators and manufacturers in 2022.
Hyundai Motor and its affiliate Kia aim to commercialize autonomous vehicles in some cities from 2021 and have a goal of launching fully driverless vehicles by 2030.
Under the agreement, Hyundai Motor Group will contribute engineering services, R&D resources and access to intellectual property, while Aptiv will provide autonomous driving technology and about 700 of its employees. The companies will appoint an equal number of directors to the venture, which will be based in Boston and led by Karl Iagnemma as president. He used to be CEO of nuTonomy, the start-up Aptiv acquired in 2017 for $450 million.
Hyundai said in February it plans to invest 14.7 trillion won ($12.3 billion) by 2023 in growth areas such as autonomous-driving technologies, vehicle electrification and mobility services. The company’s shares are up 12% in Seoul this year, while Aptiv’s have surged 43% in New York.
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