The competitive landscape of partnerships between Level 4 autonomous drive system developers and major automotive manufacturers has taken an intriguing turn, as discussed recently on The Drive. According to Reuters, Hyundai Motor Group has revealed a significant new joint venture with Aptiv, an automated drive system developer that originated from the Tier One supplier Delphi, amounting to $4 billion. This partnership marks a significant development in the autonomous driving sector.
Hyundai Motor, Kia Motors, and the parts and service division Hyundai Mobis are contributing approximately $1.6 billion in cash to the venture, as well as $400 million in research and development assets, engineering services, and intellectual property. On the other side, Aptiv’s investment comes entirely in the form of contributions, including its autonomous drive technologies and a workforce of around 700 employees. The joint venture will be led by Aptiv’s President for Autonomous Mobility, Karl Iagnemma.
The focus of the partnership will be on “the development of scalable autonomous driving solutions,” according to a press release from Hyundai. Testing of driverless technology is scheduled to commence next year, with the goal of having a “production-ready autonomous platform” available by 2022. This platform is expected to be accessible to robotaxi providers, fleet operators, and automotive partners, indicating that Hyundai does not intend to solely operate the resulting vehicles.
Hyundai Motor Group has also recently invested in a $600 million Series B funding round for Aurora, a self-driving startup. This collaboration has resulted in the integration of the Aurora Driver system into Hyundai’s hydrogen-powered flagship vehicle, the NEXO. Back in February 2018, five NEXO vehicles successfully traveled 190 kilometers from Seoul to Pyeongchang autonomously, without any driver involvement. Hyundai and Aurora are aiming to create a self-driving platform for a broad array of Hyundai and Kia models. While the specifics of the responsibilities between the Aurora partnership and the new Aptiv joint venture remain unclear, an Aurora representative told The Drive that
Hyundai is both a great partner to Aurora and an investor in the company. Our collaboration on developing self-driving platforms and services powered by the Aurora Driver is progressing as expected.
Aurora spokesperson
The creation of the Aptiv joint venture coincides with a trend among automakers and startups to consolidate their autonomous driving efforts, as global auto sales and investments in autonomous technology have begun to slow down. Rising cost projections for deploying autonomous vehicles and extending timelines for implementation have prompted companies to pool resources to develop the technology more economically. Partnerships have formed, with Ford and Volkswagen collaborating on Argo, General Motors and Honda investing in Cruise Automation (along with Softbank), and Toyota strengthening ties with Uber ATG. Meanwhile, Aurora is juggling partnerships with Volkswagen, Hyundai Group, and Fiat Chrysler, while the current joint venture elevates Aptiv into a prominent position within the industry.
A looming question in the evolving autonomous driving technology sector is how Softbank may reinforce its strategic position. With substantial investments in both Cruise and Uber ATG, Softbank has diversified its portfolio between two leading collaborations. Now facing constraints with its Vision Fund amidst ongoing challenges related to WeWork’s IPO, it may be compelled to commit to one side or attempt to merge them. Sources in the autonomous driving sector suggest that concerns about a Softbank-backed AV “supergroup” are fueling the current wave of consolidation efforts.
Even if Softbank chooses not to make further disruptions, consolidation is likely to persist, though potentially shifting from significant collaborations between developers and OEMs to a trend of smaller companies being “acquihired” by larger counterparts. With venture capitalists becoming more cautious about funding autonomous driving technologies, multiple sources indicate that several companies in the sector are facing financial constraints, leading to rampant speculation about possible deals. Competition for skilled talent remains a significant concern, prompting major players to focus on acquiring smaller but innovative firms to attract top talent.
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