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February 5, 2024
Self-driving taxi company Motional is set to lose one of its big financial backers in what could be another major blow to the autonomous vehicle industry.
Automotive parts supplier Aptiv – part of the $4 billion joint venture with South Korea’s Hyundai Motor Group that saw Motional created – is no longer prepared to commit money towards the project.
The news was confirmed by Aptiv chairman and CEO Kevin Clark in an earnings call, in which he highlighted the need for the company to reduce costs and remain disciplined in what it was prepared to invest in.
“To that end, while our Motional joint venture continues to make progress on their technology road map, we’ve decided to no longer allocate capital to Motional and are pursuing alternatives to further reduce our ownership interest,” Clark said.
Chief financial officer Joe Massaro went on to provide a little more detail on how the decision would pan out. He added: “Working within the construct of the joint venture agreement, we will look to sell or otherwise reduce our holdings during 2024, reducing the dilutive earnings per share impact of the Motional losses on Aptiv’s earnings.”
As he explained, those losses are significant. “We have included the expected full-year impact of Motional’s losses in our current outlook: a non-cash equity loss of approximately $340 million or $1.20 of earnings per share.”
When pressed further in a Q&A session, Clark praised Motional’s progress so far and Hyundai’s input, but claimed returns on investment were a long way off.
“Commercialization of the technology, i.e., the cost related to delivering the tech principally in and around hardware, really makes it challenging from an adoption standpoint, in the mobility on demand market,” he said. “And as a result, it kind of pushes out ultimately the revenue stream and the earnings stream for the business.”
If the rationale sounds familiar, it’s very similar to Ford’s explanation when it pulled the plug on Argo AI in 2022. It then claimed: “The auto industry’s large-scale profitable commercialization of Level 4… systems will be further out than originally anticipated.”
Where this leaves Motional is not clear. The company has been operating its self-driving Hyundai Ioniq 5 taxis in Las Vegas over the past couple of years, albeit with safety drivers, and has formed partnerships with ride-hailing companies Uber and Lyft.
Just a matter of weeks ago at CES, another Hyundai Motor Group company, Kia, confirmed plans to develop its own self-driving taxi with Motional. And late last year Hyundai and Motional announced plans to build production versions of the Ioniq 5 robotaxi at a new facility in Singapore.
It is understood the company will continue to forge ahead with its commercialization plans, but behind the scenes, Hyundai will likely be looking to find a new partner and new investment.
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