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Future mobility

Hyundai mulls downsizing skyscraper for future mobility

By Dec 06, 2020 (Gmt+09:00)

Illustrated rendition of Hyundai global business center set for completion in 2026
Illustrated rendition of Hyundai global business center set for completion in 2026

Hyundai Motor Co. is at a crossroads over the construction of its $3.4 billion global business center, deliberating on whether to downsize the 105-story building to increase investment in future mobility or to carry on with its plans to build the tallest skyscraper in South Korea.

The supertall skyscraper construction began in May of this year, six years after the automaker won the 10.6 trillion won ($9.7 billion) tender for around 80,000 square meters of land in Samseongdong, a neighborhood in the upscale business district of Gangnam, Seoul. 

The building is set to accommodate offices, hotels, restaurants, concert halls and more. It is set to complete in 2026.

But recently a number of company officials have requested a revision to the construction plan, such as by building two or three buildings that stand at 50 to 70 floors instead of one single, supertall skyscraper, according to the construction industry on Dec. 6.

“Safety-related issues are more critical for skyscrapers with over 100 floors and about 1.5 times more expensive than constructing two 50-story buildings,” said a construction industry official.

The official explained that it would reduce time and cost while improving space efficiency if the automaker opted to forego a super high-rise building.

Hyundai Motor has been reaching out to external investors to arrange construction costs estimated to be around 3.7 trillion won ($3.4 billion), but progress has been stagnant.


Hyundai Motor's plans to build a supertall skyscraper was initially unwelcomed, with the share price plunging 9.18% on Sept. 18, 2014, following the announcement that the group had won the tender.

Investors rushed to dump their shares and analysts questioned why an automaker would invest so much in real estate. Hyundai Motor's share price dipped below 200,000 won for the first time in 16 months.

Also, the country's Ministry of Defense expressed concerns that placing a 569-meter-tall building in Samseongdong may impede military operations – a matter settled by Hyundai Motor when it offered to buy new radars. 

Such factors have added weight to the argument that the building height should be adjusted as it would save hundreds of millions of dollars that would go into purchasing new radars. Also, some of the hefty construction costs could be reinvested into future mobility, deemed a growth driver by the automaker.

Hyundai Motor electric vehicle models under the IONIQ brand 
Hyundai Motor electric vehicle models under the IONIQ brand 


“Over the past few years, new industries have emerged for global automakers to invest in, such as electric vehicles, self-driving cars and urban air mobility,” said an auto industry official. “Even foreign competitors are trimming costs in other areas to invest in future mobility,” the official added.

Hyundai Motor is no exception as it has been investing billions of dollars in future technology. In 2019, the Korean automaker joined forces with US-based mobility solution provider Aptiv, investing $2 billion each in the joint venture Motional to boost their positions in the global autonomous driving ecosystem. 

The company is also considering acquiring US-based robotics company Boston Dynamics in a deal worth as much as $1 billion to further increase its footing in future mobility.

Earlier this month, Hyundai Motor unveiled its new EV platform Electric-Global Modular Platform (E-GMP), which will serve as the core technology for the group’s next-generation EV line-up. Through the platform, the company aims to grab a greater share of the rapidly growing EV market.

"Hyundai E-GMP technologies such as the 400- and 800-volt charging capabilities are remarkable. E-GMP will play a key role in raising the domestic EV market share," said Shin Yoonchul, an analyst at Hi Investment & Securities.

Hyundai Motor plans to introduce 23 fully electric models and sell 1 million EV units a year globally by 2025.

"Hyundai Motor's EV market share is expected to climb to 9.3% in 2022," said Song Sun-jae, an analyst at Hana Financial Investment. "The company's increased focus on electric vehicles has put its share price in the limelight," he added. 

The enhanced EV portfolio is being reflected in Hyundai Motor's share price as its forward 12-month price-to-earnings ratio is 10.2 times, higher than global peers, including BMW (9.0), Ford (8.5) and Volkswagen (7.4).

Going forward, Hyundai Motor plans to invest over 100 trillion won in the future mobility area as well as existing engine vehicles.

Robots made by Boston Dynamics (Courtesy: Boston Dynamics)
Robots made by Boston Dynamics (Courtesy: Boston Dynamics)

Alongside the emergence of fresh growth drivers, business conditions for the Korean automaker have worsened compared to 2016 when the skyscraper was initially designed.

The global automobile market has been stagnant, in addition to the outbreak of the COVID-19 crisis. Also, Hyundai Motor's sales in China have been sluggish due to economic retaliation against Korea's decision to deploy the Terminal High Altitude Area Defense (THAAD).

The company's yearly operating profit, which exceeded 6 trillion won in 2015, is likely to hover in the 2 trillion won range this year.

Given the financial constraints, adjusting the skyscraper's height may appease foreign shareholders concerned about excessive construction costs. Between 2018 and 2019, US-based activist fund Elliott Management Corp. was entangled in a proxy battle against Hyundai Motor, insisting that  "investing in the global business center will hurt shareholders."


Others say that it may be difficult to overhaul plans that have been confirmed and are already in the works. Still, market watchers say that Hyundai Motor will consider changing the skyscraper design, and the securities industry predicts that the company will reduce its construction costs and use the money to invest in new businesses.

Hyundai Motor Chairman Chung Euisun
Hyundai Motor Chairman Chung Euisun

While nothing has been determined, the ultimate decision will remain in the hands of the group's Chairman Chung Euisun.

"Chairman Chung tends to prioritize practicality over upholding a cause, and he is likely to review all the possibilities, including making changes to the global business center," said an industry source.


On Dec. 4, Hyundai Motor closed at 196,500 won and reached an intraday high of 199,000 won for the first time in five years. 

In the second quarter, the company posted an operating profit of 590.3 billion won ($493 million), which is about 84.9% higher than the local brokerages’ estimated consensus of 319.2 billion won.

Although the company swung to a net loss in the third quarter, it was still considered favorable, as it reflected the 2.1 trillion won ($1.9 billion) in provisional expenses related to defective engines.

Write to Byung-uk Do and Yun-sang Ko at

Danbee Lee edited this article.

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