In the future of transportation, what would you get if you mixed the business models of Tesla Inc., Google and Samsung Electronics Co. with the budget of the world’s fifth-biggest automaker? Youngcho Chi is about to find out.
Hired from Samsung, Chi has assembled a team of 200 strategists and researchers at Hyundai Motor Co., the 50-year-old South Korean carmaker that fought its way to the top echelon of the auto world and is now struggling to stem flagging sales in some of its biggest markets. His job is to catapult Hyundai into the forefront of technologies that are upending transportation.
Late to the game, Hyundai is developing vehicles and software systems for a planned driverless taxi service to compete with both its traditional rivals like Nissan Motor Co. and General Motors Co., and tech companies such as Waymo, the
unit of Google’s parent Alphabet Inc., which has vowed to offer fully autonomous cars for public use soon.
“The most urgent task for us is the mobility service,” said Chi, 58, chief innovation officer and executive vice president in charge of Hyundai’s Strategy & Technology Division, in an interview in Seoul. “We’re a bit late, but the opportunity has not been completely shut down.”
He has the backing of one of the world’s biggest industrial enterprises. Hyundai has said it will step up spending on research and development and expand cooperation. It opened a data centre in Guizhou province in China and a technology development center in Silicon Valley in 2017 and plans to set up units to invest in startups in Israel and Berlin this year.
Chi’s division will coordinate their activities, creating a blueprint to integrate everything from artificial intelligence to robotics to energy storage. In a break from its traditional go-it-alone strategy, the automaker has stitched up partnerships with Cisco Systems Inc. and Baidu Inc. for connected cars, and teamed up with SK Telecom Co. and Hanwha Asset Management Co. to set up a $45 million fund to invest in AI, smart mobility and fin-tech.
As the industry shifts away from conventional gasoline-powered vehicles with drivers, software and vehicle-related applications are becoming key to the future for automakers.
McKinsey & Co. estimates revenue from mobile and data-driven services in transportation will jump to $1.5 trillion by 2030, fuelled by shared mobility and data connectivity services.
While Chi declined to say when the robot taxis will be ready, Koh Tae-bong, a senior analyst at Hi Investment & Securities Co. said Hyundai may not be able to commercialise a self-driving shared mobility service before 2021.
“In order to start a robotaxi business overseas, it is essential for them to have strategic partnerships with ICT companies such as telecommunications, map and big data firms, and have testing periods before rolling self-driving taxis on the road,” Koh said.
To hasten its efforts, Hyundai may buy companies around the $50 million to $100 million scale that could bring in more expertise, said Chi, who previously led Samsung’s strategic planning team. Still, he ruled out an acquisition spree. “M&A looks cool on the surface and may boost a firm’s value in the short term, but we are not at that stage,” Chi said, adding Hyundai still needs to learn better integration.