Hyundai will spend $12.6 billion to dive into software-defined vehicles

TOKYO — Fast-moving Hyundai Motor Group says it will plow billions of dollars into developing software in a move to speed product development and boost revenue, including the creation of a new operating system for over-the-air updates in all Hyundai, Kia and Genesis vehicles by 2025.

The sweeping initiative will usher in a wave of “software-defined vehicles” armed with technology that performs at “blazing speeds” and bolsters each car’s resale value, according to the automaker.

It will see the establishment of a Global Software Center, the introduction of a Level 3 autonomous driving system, and the launch of two new electric vehicle platforms from 2025, as the South Korean juggernaut jumps into the accelerating race to release “programmable cars.”

“Our holistic approach will empower Hyundai Motor Group to lead the transformation in the mobility paradigm,” Chung-Kook Park,president of the company’s R&D Division, said while announcing the massive investment Oct. 12. “Creating visionary vehicles empowered with the ability to evolve through software will enable customers to keep their vehicles up to date with the latest features and technology long after they have left the factory.”

Hyundai said it will invest 18 trillion won ($12.6 billion) through 2030 to develop and deploy these software-defined vehicles.

It is joining such rivals as Volkswagen AG, Toyota Motor Corp. and General Motors in creating new operating systems that will run the software-centered cars of tomorrow. Automakers say their future profitability will hinge on the software and services packaged in their products, not their steel, rubber and glass.

“Constantly upgradeable software will provide diverse, stable revenue streams while offering fresh functionality and features to keep customers’ vehicles up to date,” Hyundai said.

By developing software in conjunction with hardware, Hyundai is pledging to “significantly reduce the time required for all mass-production processes, including planning, design and manufacturing.” That, in turn, will deliver more efficiency, lower costs and fatter margins.

The industry’s advance into software comes as traditional players try to fend off challenges from tech-savvy startups such as Tesla and digital-native stalwarts such as Apple.

Volkswagen has said all of its new models will run on a new vw.os operating system by 2025. The German giant has unified its once-fragmented information technology units into an $8 billion subsidiary called Cariad that is tasked with developing such computer systems in-house.

Toyota spinoff Woven Planet wants to introduce its own automotive operating system, called Arene, in the middle of this decade. Woven Planet says Arene will be as groundbreaking for cars as Microsoft Windows and Apple iOS were for personal computers and smartphones.

GM, for its part, plans to launch its Ultifi software platform next year in a bid to double its annual subscription-service revenue by selling digital products to customers.

Expertise in innovative software has made Tesla Motors a darling of Wall Street investors, but nailing the technology can be tricky for old-guard metal benders.

Software problems marred the launches of two important Volkswagen models: the eighth-generation Golf and the first-generation ID3 electric car. VW boss Herbert Diess was ousted over the summer, partly due to ballooning budgets and product delays at Cariad.

At the same time, Toyota has been slow to offer over-the-air updates. Toyota only introduced its first vehicles capable of over-the-air updates in early 2021, the Lexus LS500h and Mirai fuel cell sedan. Japan’s No. 1 automaker has also been reluctant to talk about Level 3 autonomous driving.

GM has meanwhile been on a hiring binge to get the new kind of know-how it needs.

Hyundai Motor Group’s ramp up is part of Chairman Euisun Chung’s bid to transform the Korean carmaker into a purveyor of next-generation electrified technologies that leverage artificial intelligence and pioneer new areas, such as robotics, self-driving taxis and urban air mobility.

The coming blitz channels an urgency epitomized by the Korean expression “pali pali,” which means “hurry up.” It is an unofficial company slogan of sorts in the halls of Hyundai Motor Group.

On tap are two new electric vehicle platforms in 2025, eM and eS. They follow the e-GMP architecture that underpins the company’s new wave of EVs, such as the Hyundai Ioniq 5, Kia EV6 and Genesis GV70.

The eM platform is for EVs across all segments.

Hyundai says eM will deliver a 50 percent increase in driving range over current EVs. It will also support Level 3 and higher autonomous driving. Hyundai said it will start rolling out Level 3 technology in a new version of its Highway Driving Pilot system for the Genesis G90 later this year.

The eS architecture is designed as an EV skateboard for purpose-built vehicles, or PBVs. These commercial fleet vehicles, tailored for delivery and ride-hailing, are a key element of Kia’s strategy.

These new platforms will spur further standardization and modularity of the company’s electric vehicle components, including batteries and motors, helping drive scale up and costs down.

Part of the cost cuts will come from reducing the number of electronic control units needed in a car. In the future, an integrated controller will oversee a wider array of vehicle systems. This new generation of controllers will enable the auto group’s upcoming mass-produced Level 3 autonomous vehicles and support the commercialization of Level 4 and Level 5, it said.

Meanwhile, over-the-air updates will be available for all vehicles from 2025 — both pure electric and internal combustion offerings. The updates will keep a car’s software current throughout the life of the vehicle, enhancing its resale value, Hyundai Motor Group said.

Over-the-air updates will be supported by an internally developed Connected Car Operating System, or ccOS. Using this system, Hyundai plans to start offering Feature on Demand services next year. This will allow customers to buy digital features and functions tailored to their cars.

Hyundai said the customizable connectivity technology will operate at “blazing speeds.” And the company expects some 20 million vehicles to be registered with the service by 2025.

To process all the data coursing through Hyundai Motor Group’s new software-centric vehicles, the company will use Nvidia Drive high-performance semiconductors.

By migrating this new technology to robotics, ride-hailing, autonomous fleet vehicles and air mobility networks, Hyundai sees the potential to expand beyond its four-wheeled auto business.

“This will place the Group at the forefront of providing entirely new mobility solutions as society changes, transportation means evolve, and software-defined vehicles become commonplace,” Hyundai said. “The Group foresees a future where the mobility industry paradigm is entirely transformed, enabling people to enjoy convenient, seamless travel, even if they don’t own a car.”