Hyundai Motor’s tech bets face headwinds as core business loses steam

Hyundai Motor’s weakening auto profitability is raising questions about the sustainability of its costly investments in robotics and autonomous driving, as the technologies remain years away from generating significant earnings.

The company is betting on Boston Dynamics’ Atlas humanoid robot, its own software-defined vehicle (SDV) and autonomous driving capabilities as three core pillars for its future mobility.

Yet those businesses are far from generating tangible earnings, leaving Hyundai increasingly dependent on its conventional auto business which faces mounting earnings pressure from labor disputes at home, tariffs from the United States and intensifying competition from Chinese automakers in Europe.

The timing gap between its weakening core business and future growth engines is becoming harder for investors to overlook. Hyundai’s shares have fallen around 60 percent from their June 1 peak of 783,000 won ($587) to less than 320,000 won on Monday, reflecting fading enthusiasm for its robotics ambitions and growing doubts over its earnings outlook.

The pressure continues to be raised across the nation’s brokerages. Five brokerages — KB Securities, Shinhan Securities, Kiwoom Securities, Yuanta Securities and Hyundai Motor Securities — has recently lowered their target prices for the automaker. KB Securities cut its target to 700,000 won per share from 720,000 won, while Hyundai Motor Securities made a steeper reduction to 500,000 won from 630,000 won.

The revisions reflect expectations that Hyundai’s near-term earnings will remain under pressure, even as its long-term investment rests increasingly on technologies that have yet to prove their commercial viability.

KB Securities estimated Hyundai’s third-quarter operating profit at 2.55 trillion won, down 10.4 percent from the previous quarter. The brokerage attributed much of the weakness to production disruptions, estimating that labor strikes would reduce global shipments by about 50,000 vehicles.

The production losses come as Hyundai must defend its market position against competitors offering increasingly cost-competitive vehicles.

In Korea, Chinese automaker BYD registered 20,137 vehicles from January through September, ranking fourth among imported car brands for the year. Meanwhile, Hyundai’s domestic sales face pressure from shifting consumer demand, while its U.S. business must navigate trade policy uncertainty and the cost of localizing production.

The problem extends beyond the immediate impact of strikes and tariffs. Maintaining sales volumes in a more competitive market may require greater discounts and incentives, potentially squeezing per-vehicle profits just as Hyundai needs to fund its next wave of investment.

“Hyundai’s share price is being weighed down not only by deteriorating profitability in its automotive business, but also by growing doubts about its ability to establish an independent SDV business,” said Kim Pil-soo, a professor of automotive engineering at Daelim University.

The challenge is particularly acute in software and autonomous driving, where Hyundai is trying to move beyond its traditional role as a vehicle manufacturer and establish control over technologies that could determine future industry profits.

Hyundai has stepped up efforts to develop its own autonomous driving capabilities, including strengthening leadership at its software subsidiary, 42dot. But the business has yet to demonstrate that it can generate returns commensurate with the resources invested in it.

42dot has accumulated 705.5 billion won in operating losses between 2021 and 2025, clearly indicating the financial burden of developing proprietary software and driving technologies.

The auto expert said the appointment of new 42dot CEO Kim Min-woo late last year was intended to turn the business around, but the process would still take time.

“Hyundai Motor Group needs to become a tier-1 player in autonomous driving within the next several years for its share price to recover on a more stable basis,” he said.

The group’s reliance on Nvidia’s technology also presents a strategic question. Hyundai has moved to incorporate Nvidia’s artificial intelligence (AI) computing capabilities into its autonomous driving development, but greater dependence on an external technology provider could limit its control over a critical part of the future mobility business.

The distinction matters because Hyundai’s ambitions extend beyond cars. SDVs and autonomous driving are expected to underpin the group’s plans for robotics and other future mobility businesses.

Without stronger in-house capabilities in driving algorithms and vehicle software, the group could struggle to capture the full value of those investments, even if it succeeds in manufacturing competitive vehicles and robots, according to the expert.

Hyundai Motor Group also plans to introduce Boston Dynamics’ Atlas humanoid robot into manufacturing operations before gradually expanding its role.

However, deploying robots on factory floors is not the same as generating significant commercial returns. The scale of adoption, operating costs and productivity gains will determine whether Atlas becomes a meaningful profit contributor or remains a capital-intensive development project.

“Hyundai Motor needs to secure greater independence in autonomous driving AI before Atlas reaches full commercialization around 2029 to 2030, so it can ensure sustainable growth in an era of future mobility,” the professor said.

Hyundai is looking to strengthen its manufacturing and sales footprint in major markets to deal with the growing uncertainty its key sales territories — Korea, the U.S. and Europe. The latest inauguration of its Pune plant in India is part of its effort to expand production capacity and capture demand in a strategically important emerging market and reduce its strong sales reliance on the U.S. and Korea.