Hyundai pledges $21bn for car technology

Hyundai Motor plans to invest about Won23tn ($21.56bn) over the next five years in electric cars, autonomous vehicles and related technology as the South Korean automaker pushes to catch up in this critical emerging technology. 

The plan comes amid a downturn in business for the country’s second-largest conglomerate. Hyundai and affiliate Kia Motors, which together rank as the world’s fifth-largest auto group, missed their 2017 sales target for a third straight year and forecast only a modest sales increase for this year, amid faltering China demand. 

Hyundai, a latecomer to self-driving technology, also announced a plan to hire 45,000 people for the next five years. The pledge came during as Kim Dong-yeon, the finance minister, visited Hyundai’s research centre for environment-friendly cars to encourage vehicle development.  Earlier this month, it announced a strategic partnership with Aurora, a Silicon Valley company with strong self-driving technology, to develop autonomous cars. It has already joined forces with Cisco Systems and Baidu to develop internet-connected cars. 

“Global trends are changing so fast. We will actively invest in new technologies and hire more talents to establish a virtuous circle,” Chung Eui-sun, Hyundai’s vice-chairman, said in a statement released by the finance ministry. 

Analysts said Hyundai trails rivals badly in investment in autonomous driving, and risks being left behind. “At the moment, its competitiveness in this new area is almost zero and it will face an existential threat in the self-driving era,” said Lee Hang-koo, researcher at the Korea Institute for Industrial Economics & Trade. Last week, Mr Chung visited the Consumer Electronics Show in Las Vegas, where Hyundai debuted its Nexo hydrogen fuel cell vehicle that it believes will be well suited to autonomous car technology thanks to its stable power supply. Under the partnership with Aurora, Hyundai aims to bring self-driving vehicles to market by 2021. 

Hyundai hopes to rev up sales by launching more eco-friendly electric vehicles and connected cars. Hyundai and Kia plan to launch about 38 green cars in the next seven years. Last year, Hyundai’s sales fell sharply in China and the US, its biggest markets, amid a diplomatic row about a US missile shield and lower consumer appetite for its sedans. The company will announce its fourth-quarter results on January 25. 

After being hit hard by China’s consumer backlash over the missile defence system installation in South Korea, Hyundai is trying hard to diversify its export markets, eyeing Southeast Asia. This month, it announced a plan to invest in Grab, a regional ride-hailing operator, to strengthen its foothold in the market. Under the partnership with the Singapore-based company, Hyundai will explore joint use of its Ioniq electric cars to develop ride-hailing services. The company is also considering building a car factory in Southeast Asia, probably in Indonesia or Vietnam, to increase sales in those countries.

Source: Financial Times

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