Hyundai and Aptiv to set up $4 billion autonomous driving joint venture

Key Points
  • Headquartered in Boston, the joint venture will start to test fully driverless systems next year.
  • Will focus on developing autonomous technologies. 
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The Hyundai Motor Group and Aptiv are set to establish a $4 billion autonomous driving joint venture in which the firms will each have a 50% stake.

In an announcement Monday, the companies said the joint venture, which will have headquarters in Boston, would focus on advancing the "design, development and commercialization of SAE Level 4 and 5 autonomous technologies."

Five "levels" of driving automation have been defined by SAE International, a global association of engineers and technical experts. At Level 4, a vehicle can drive itself under limited conditions and "will not operate unless all required conditions are met." At Level 5, a vehicle's automated driving features can drive it under all conditions.

The joint venture will start to test fully driverless systems next year, the companies said. A "production ready autonomous driving platform" that can be used by fleet operators, robotaxi providers and autos manufacturers is due to be available by 2022, they added.

Under the agreement, Aptiv will contribute its autonomous driving technology and intellectual property. Hyundai Motor, Kia Motors and Hyundai Mobis will together contribute $1.6 billion in cash and $400 million in research and development resources, vehicle engineering services and access to intellectual property.

The deal between the two companies is subject to regulatory approval and other closing conditions. It is expected to close in the second quarter of 2020.

Egil Juliussen, director of research and principal analyst for automotive technology at IHS Markit, explained to CNBC via email that the joint venture was significant for both Aptiv and Hyundai but was one of many taking place.

"There are at least 10 important AV (autonomous vehicle) collaborations between start-up AV software companies, high-tech companies, auto manufacturers and suppliers," he said.

"These collaborations are needed because the software development is difficult and testing is extensive, with AI expertise being a crucial technology for success – the auto industry does not have the needed know-how."