Hyundai Motor to buy Korean self-driving startup 42dot

South Korea’s top carmaker Hyundai Motor Group is set to purchase autonomous driving startup 42dot, intensifying the automaker’s competitive edge in self-driving, a key part of its future business model.  

The group is in the process of buying the most 42dot shares, including a 36.19% stake owned by Song Chang-hyun, the startup’s CEO and the largest shareholder. The transaction will be completed by August, sources said on Thursday.   

Hyundai already holds a 20.36% stake in 42dot. In addition to CEO Song, the startup’s key stakeholders include car rental firm Lotte Rental Co., defense company LIG Nex1 Co., Shinhan Financial Group, and VC firms STIC Ventures Inc., IMM Investment Corp. and We Ventures Co.

Hyundai is planning to incorporate the startup as an affiliate after the equity acquisition. Meanwhile, 42dot CEO Song will stay in the business, sources said.  

42dot was valued at around 600 billion won ($461.2 million) during the sell-off negotiations, slightly higher than its valuation of 510 billion won for the Series A funding round last October. Hyundai is understood to be injecting around 400 billion won into the acquisition deal.

42dot CEO Song founded the startup in 2019 after building his career at Apple, Microsoft and Korean online portal giant Naver. The autonomous driving startup is centered on Transportation-as-a-Service (TaaS), all the services for on-demand rides and vehicle sharing, in the self-driving arena.

The startup is developing a smart platform that provides car-hailing and logistics services through its urban mobility operating system UMOS. The system enables efficient transport services by using driverless vehicles, drones and delivery robots.

The deal will be Hyundai’s second buyout deal since Chairman Chung Euisun took office in October 2019. In 2020, the group made its first buyout by purchasing US robotics firm Boston Dynamics Inc. from SoftBank Group for around 1 trillion won.

Hyundai earmarked 95.5 trillion won of investment for future business including electrification and software capabilities innovation by 2030, the group said in March.

Hyundai and 42dot already have a unique partnership – the carmaker set up a TaaS division in April 2021 and named CEO Song the division head to lead the group’s future mobility service-related businesses. Hyundai is said to have suggested the buyout deal to 42dot last month.

Hyundai will bolster its autonomous driving software to compete with global self-driving players Waymo LLC, under Google parent Alphabet Inc. and Cruise LLC within General Motors Co.

Write to Chae-Yeon Kim at why29@hankyung.com
Jihyun Kim edited this article.