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Hyundai Motor-Aptive JV Plan Causes Concern among Korean Component Producers
Impact on Auto Parts Companies
Hyundai Motor-Aptive JV Plan Causes Concern among Korean Component Producers
  • By Yoon Young-sil
  • September 30, 2019, 13:27
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Hyundai Motor Group's plan to establish a joint venture with Aptiv of the United States is causing concern among South Korean component producers.

Hyundai Motor Group's plan to establish a joint venture with Aptiv of the United States, the third largest autonomous driving technology developer in the world, is causing concern among South Korean component producers.

The self-driving joint venture is expected to help Hyundai Mobis secure future technologies and become a top-tier player in the autonomous driving market, according to auto industry sources on Sept. 29. As the joint venture will focus on levels 4 and 5 autonomous driving technology, it will provide Hyundai Mobis with opportunities to secure future technologies without hurting its business.

Hyundai Mobis currently develops hardware and software of the levels 1, 2 and 3 technology. It means that the company is developing cognitive functions, including sensors, and control functions, including actuator, and has strengths in mass production of products in levels 2 to 2.5 technology. In particular, industry watchers expect that Hyundai Mobis will be able to continue to be in charge of hardware in levels 4 and 5 technology as it believes that the self-driving market will be divided by region or segment.

It is also positive that Hyundai Mobis will be able to package sensors, recognition functions and actuators and offer total autonomous driving solutions by receiving solutions from the joint venture if the company deals with automakers in the future. The company’s equity investment is also one of the favorable factors. Hyundai Mobis, which owns a stake in the joint venture, can continuously maintain the relationship with the joint venture as the producer and supplier of full self-driving or mobility components as well as secure the global platforms through Aptiv.

However, Aptiv, which now competes in the advanced driver assistance system (ADAS) sector, presented a clear means of checks with expectations that Hyundai Mobis will have a growing presence through the joint venture. Hyundai Mobis holds 399,999 shares, or 9.99998 percent stake, in the joint venture with an investment of 476 billion won (US$396.87 million). The industry thinks that Hyundai Mobis’ stake in the joint venture falls short of 10 percent by a single share due to Aptiv’s containment.

Unlike Hyundai Mobis, domestic part manufacturers, such as Mando, are anxious about Hyundai Motor setting up the joint venture with Aptiv. They are concerned that they can fall behind in car technology as the group is forecast to separate the autonomous driving technology into the joint venture and Hyundai Mobis. An official from an automobile company said, “South Korean component companies, including Mando, focus on hardware in the self-driving technology, so they can be excluded in the advanced market.”

Currently, Mando owns hardware technology in automatic emergency brake systems, automatic lane keeping systems, radars, cameras and ultrasonic sensors and has a lack of software technology. However, the industry believes that domestic part firms will be able to gain enough opportunities as Hyundai Motor is pushing ahead with internalization of autonomous driving technology. It expects that Hyundai Motor will produce hardware even in the level 4 and 5 technology with Hyundai Mobis and Mando at the same time and the joint venture to be led by Aptiv will develop software.

Meanwhile, Hyundai Motor decided on Sept. 23 that it would set up a joint venture with Aptiv in Boston by 2020 to develop self-driving vehicle technologies. The joint venture is planning to complete the development of autonomous driving platforms to be supplied to automakers and robo taxi service providers and commercialization by 2022. The group is also considering whether to jointly build a new research and development center with Aptiv in South Korea.