Hyundai Motor mulls Motional capital boost

[Photo by Lee Chung-woo]

Hyundai Motor Group is preparing to participate in a capital increase for its U.S. autonomous driving joint venture, Motional, while its competitors are either reducing or halting investment in autonomous driving ventures.

According to industry insiders on Tuesday, three arms of the Hyundai Motor Group—Hyundai Motor Co., Kia Corp., and Hyundai Mobis Co.—are reportedly preparing for an ad hoc board meeting to decide on joining a capital increase for Motional.

Motional was established in 2020 as a 50-50 joint venture between Hyundai Motor Group and U.S.-based vehicle software developer Aptiv Plc. With Aptiv opting out of the current capital increase round, however, Hyundai Motor Group‘s stake in Motional is expected to surpass 50 percent after the capital increase.

With the costs associated with autonomous driving technology development increasing rapidly, many players in the information technology (IT) and automotive sectors are scaling back or discontinuing investments in this area. Apple Inc. recently shelved its “Project Titan,” an autonomous driving initiative into which it invested over 13 trillion won ($9.9 billion) in development expenditure over the past decade. General Motors Co. initiated a downsizing of investments in its autonomous driving technology subsidiary, Cruise, in 2024 while Ford Motor Co. and Volkswagen AG announced the discontinuation of their autonomous driving startup, Argo AI, in 2023.

[Courtesy of Motional]

In contrast, Hyundai Motor Group is maintaining its commitment to investing in autonomous driving technology development. Executive Chair Euisun Chung has identified autonomous driving, urban air mobility (UAM), and robotics as key future business sectors for the group since assuming the chairmanship in 2020.

Despite immediate losses, the automaker group also remains committed to other forward-looking ventures such as UAM and robotics. According to Hyundai Motor’s audit report and Kia‘s business report, Motional, Hyundai Group’s UAM business Supernal, and Boston Dynamics incurred an operating loss of 1.38 trillion won in 2023. The cumulative operating loss for these three businesses, which primarily focus on research and development (R&D), has been mounting annually to hit 790.8 billion won in 2021 and 952.2 billion won in 2022. The combined cumulative operating losses at these three businesses over the past three years amount to 3.12 trillion won, with Motional alone recording a loss of 2.72 trillion won during this period.

Meanwhile, Hyundai Motor’s luxury brand Genesis is expanding its presence in the Korean auto market despite a sluggish demand environment. According to industry sources on Tuesday, Hyundai Motor‘s Korean sales, including Genesis, totaled 47,653 units in February 2024, down 26.7 percent from the 65,015 units sold in February 2023. In contrast, Genesis saw an increase in sales to 10,582 units from 9,696 units in the same period, an increase of 9.1 percent. Genesis accounted for 22.9 percent of Hyundai Motor’s total Korean sales in February 2024, up from 14.9 percent in February of the previous year.

On the other hand, sales of imported luxury cars, which compete with Genesis in the luxury car market, totaled 16,237 units in February 2024, down 24.9 percent from the same period during the previous year.