Hyundai to shift gear toward software-centric cars from 2023

Hyundai Motor Group will introduce software-defined vehicles (SDVs) that receive wireless software updates for models to be released from next year, the South Korean group said on Wednesday.

As a first major step to becoming a software-driven mobility service company, the parent group of Hyundai Motor Co. and Kia Corp. will transform all its new models into SDVs by 2025.

By then, the number of Hyundai and Kia cars provided with over-the-air connected services will likely double to 20 million units by 2025 from 10 million units this year. 

To that end, the automotive group will invest 18 trillion won ($13 billion) by 2030 into related operations.

“We will redefine the concept of cars through new technology development and innovation,” Hyundai Motor Group’s R&D division head Park Chung-kook said on the group’s official YouTube channel.

“We will transform our products and business to be driven by data and software and to be at the forefront of the mobility paradigm shift.”

The announcement was issued to mark the second anniversary of Chung Euisun as the group chairman.

In a new year’s message delivered earlier this year, Chung said that software technology would be key to ensuring its competitiveness for future mobility.

A software-defined vehicle keeps updated with new features and functions anytime and anywhere. 

Hyundai expects the connected services will significantly enhance its profitability.

Since Chung took the helm of the Hyundai Motor Group in 2020, the South Korean conglomerate has risen to third place from fifth in the global automobile market after Toyota and Volkwagen by the number of cars sold.

In the January-August period of this year, the Korean automotive group, including Kia Corp., sold 4.2 million units, according to MarkLines, an automotive data provider.

It had remained the world’s No. 5 carmaker over the past 12 years.

To expand its footprint in the new mobility and logistics markets, Hyundai will set up a global software center. The center will develop software-driven mobility devices and solutions.

In the electric vehicle market, it is among the world’s top three brands, along with Tesla and Volkswagen.

Driven by Hyundai’s luxury brand Genesis, Hyundai and Kia reported their largest-ever first-half results combined. Their first-half operating profit reached 8.7 trillion won in aggregate on sales of 106.5 trillion won.

FIRST-MOVER STRATEGY

The 51-year-old chairman also drove the group’s swift shift toward electrification ahead of competitors.

Hyundai’s IONIQ 5 and Kia’s EV6, based on the group’s proprietary Electric-Global Modular Platform (E-GMP), are expanding their market share across the globe.

The group is making its inroads into advanced air mobility and robotics as well, shedding its image of a mechanical engineering company and shifting to become a smart mobility solution group.

In April, Chung was named the automobile industry’s Visionary of the Year by Newsweek. The weekly credited Chung with driving transformative change not only in his business group but in the entire automotive industry.

The magazine said Hyundai’s plan to combine robotics and virtual reality would connect users and their vehicles to the metaverse.

However, new challenges are awaiting Chairman Chung. The US Inflation Reduction Act, signed into law in August, pushes carmakers to source at least half of their battery components in the US or from its foreign trade partners, starting in 2024.

Chung is also dealing with poor results from the group’s Chinese operations and neglect of duties this week by Kia’s unionized workers demanding higher salaries.

Write to Il-Gue Kim and Han-Shin Park at black0419@hankyung.com
Yeonhee Kim edited this article.