Hyundai and Aptiv are partnering in a $4 billion deal that will create a fleet of robotaxis.
Hyundai Motor Group has launched a new joint venture with autonomous vehicle development company Aptiv aimed at bringing to market “production-ready” autonomous vehicles by 2022, the two companies announced on Monday.
The 50/50 partnership, valued at $4 billion, will target “robotaxi providers, fleet operators and automotive manufacturers,” Hyundai and Aptiv said in a joint statement. The primary focus on commercial users echoes the approach taken by a number of other players in the self-driving vehicle industry and reflects, among other things, the anticipated high cost of the technology when it first comes to market.
“The new joint venture marks the start of a journey with Aptiv toward our common goal of commercializing autonomous driving,” said Euisun Chung, executive vice chairman, Hyundai Motor Group. “The combined capabilities of Aptiv, a leading global technology company, and our Group, a global OEM, will create invaluable synergy to lead the autonomous driving landscape.”
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The Hyundai Motor Group – which includes the Hyundai and Kia car brands and the Hyundai Mobis car parts company – was a relatively late entry into the world of autonomous vehicle development. Many analysts believe the technology will become commonplace within the next decade or two, particularly in commercial applications.
That includes ride-sharing services, like Uber and Lyft, that hope to use to slash costs by eliminating the most costly aspect of their business – the drivers. In May 2018, Aptiv formed a separate alliance with Lyft to field a fleet of self-driving prototype robocabs. It has also partnered with Hertz, among others.
Euisun Chung, Hyundai executive vice chairman, said the new venture with Aptiv is the beginning of a journey toward autonomous driving.
Along with robocabs, the commercial trucking industry is expected to put a high priority on driverless technology.
As part of the new joint venture, Hyundai and Aptiv say they will target Levels 4 and 5 autonomy. The lower level would allow completely driverless operation, albeit within “geo-fenced” areas. Level 5 technology, however, would permit a driverless vehicle to operate anywhere at any time. Industry experts question how soon that more advanced technology will be ready.
Both Level 4 and Level 5 systems are expected to cost in the tens of thousands of dollars, limiting their appeal to all but the most affluent consumers. But, over time, experts anticipate costs could come down to the point where such systems can go mainstream.
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Aptiv was formed several years ago when Delphi, the one-time parts subsidiary of General Motors, split its business in two, Aptiv the name chosen for the more high-tech portion of Delphi’s ventures.
It plans to contribute to the new joint venture its autonomous driving technology, intellectual property and approximately 700 employees working on that technology. Hyundai will put $1.6 billion in cash into the pot, along with another $400 million in vehicle engineering services, intellectual property and R&D resources.
“This partnership further strengthens Aptiv’s industry-leading capabilities in the development of advanced driver assistance systems, vehicle connectivity solutions, and Smart Vehicle Architecture,” said Kevin Clark, president and chief executive officer, Aptiv. “Hyundai Motor Group’s cutting-edge engineering and R&D capabilities make them our partner of choice to advance the development of a production-ready autonomous platform.”
What was then Delphi was an early pioneer in autonomous driving technology. It was one of the handful of participants in the 2007 DARPA Challenge, a competition staged by the U.S. military’s research arm.
The Hyundai-Aptiv joint venture is just one of the many alliances being formed in the autonomous vehicle space, in large part due to the hefty development costs. Ford invested $1 billion in Pittsburgh-based Argo and, as part of its growing relationship with Volkswagen, the German automaker is also teaming up with Argo. Honda last year joined a partnership with General Motors and its self-driving subsidiary, Cruise Automation.
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In many cases, auto manufacturers are partnering with more than one partner. Hyundai also is working with Silicon Valley start-up Aurora, as well as Tencent and Russia’s Yandex.