EV companies battle to best each other in smart software

With the electric vehicle (EV) market already crowded and cutthroat, the next battleground is how smart companies can make their software.

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With the electric vehicle (EV) market already crowded and cutthroat, the next battleground is how smart companies can develop their software.

Tesla hopes to make its car a human-like robot that can work to pay off its own price, and global automakers are upping investment in software development to build the so-called software-defined vehicles (SDVs), or what the industry calls "smartphones on wheels."

An SDV is equipped with an over-the-air (OTA) system, or wireless technology that drivers can use to update their cars' software and add the latest features.

"EVs represent more than a change in the powertrain. They are smart devices on wheels," Esther Yim, a researcher at Samsung Securities, said.

"The competitiveness of EV software lies in firmware OTA updates and autonomous driving technology," Yim added. "Investors have already realized that software can provide a technological moat and profitability in the EV market."

42dot’s self-driving buses run near the Cheonggyecheon area in central Seoul. The vehicle is equipped with Level 4 autonomous technology, which is able to operate on its own but may need human intervention. [YONHAP]

Hyundai Motor and Kia recently announced they will together invest 1.05 trillion won ($790 million) in 42dot, a Seoul-based autonomous mobility firm, bringing their combined shares to 93.2 percent.

It marks their third round of investment as the two Hyundai companies invested 47 billion won in 2020 and another 477.2 billion won in August last year.

The daring decision of the country’s two largest automakers came despite the start-up recording consecutive losses since its establishment in 2019.

42dot’s net loss doubled to 61.2 billion won last year. It has been testing three self-driving buses near the Cheonggyecheon area in central Seoul and another three self-driving taxis in Sangam-dong of Mapo District, western Seoul. The vehicle is equipped with Level 4 autonomous technology, which can operate on its own but may need human intervention.

42dot CEO Song Chang-hyeon speaks at an event celebrating the running of its self-driving cars in central Seoul in November 2022. [NEWS1]

The vehicles are reported to cost multiple billions of won each.

Over 20,000 people have already used autonomous vehicles in downtown Seoul. The Seoul Metropolitan Government plans to add Gangnam, southern Seoul, and Sinchon, western Seoul, to the test-run areas.

The series of investments are in line with Hyundai chief Euisun Chung’s determination to shift all Hyundai and Kia cars to SDVs from 2025. Chung committed to investing 18 trillion won in software development by 2030.

The Interior of an autonomous bus [YONHAP]

Chung appointed Hyundai Motor President Song Chang-hyeon as the CEO of 42dot. Song also serves as the head of the automaker’s Transportation-as-a-Service division that oversees mobility planning, development and operations.

“Hyundai Motor Group’s investment in 42dot shows its will to develop software related to its new businesses in future mobility,” Song Sun-jae, a Hana Financial Investment researcher, said.

Hyundai’s efforts come as global automakers are making big strides in the same direction.

Ford Motor in March established Latitude AI, a wholly owned subsidiary focused on developing a hands-free, eyes-off-the-road automated driving system.

The BlueCruise system is already being test-run on highways. It ranked No. 1 with an overall score of 84 by Consumer Reports, beating General Motors, Mercedes-Benz and Tesla.

Volkswagen vowed to invest 30 billion euros ($32.6 billion) into its software subsidiary, Cariad, and hire 10,000 employees.

42dot's self-driving taxi [YONHAP]

The German carmaker also formed neocx, a 50:50 joint software company with TraceTronic, last year. The company provides scalable development and testing tools in response to the exponential increase in the size of software packages and data volume in fully networked vehicles.

General Motors, in 2016, acquired Cruise, a start-up that owns autonomous driving technology. Cruise introduced Origin robotaxi four years later with Level 5 self-driving technology. Level 5 automation technology, the highest classification of driving automation, means a vehicle can drive itself anywhere in all conditions without any human interaction.

Stallantis acquired aiMotive, a self-driving technology company, while Mercedes-Benz has been co-developing SDVs in collaboration with Santa Clara-based Nvidia.

Japanese carmakers, which are already latecomers in the shift to electrification, have been diligent in software development.

Toyota established its self-driving subsidiary Woven Planet Holdings in 2018 and has been developing automobile software with the goal of marketing it by 2025.

Honda established a joint venture with Sony, Sony Honda Mobility, with the goal of utilizing the electronics maker’s software technology in electric vehicles.

BY SARAH CHEA [chea.sarah@joongang.co.kr]