The Comeback of Legacy Automakers
As the automotive sector is shaken by the parallel rise of EV brands like Tesla, and Chinese automakers making strong progress overseas, the legacy manufacturers are often dismissed by investors as un-innovative dinosaurs.
However, this is not true for some of the strongest global brands, like #1 by number of cars sold Toyota (TM +0.12%) and #2 Volkswagen (VWAGY +0.37%) (follow the links to find a dedicated investment report about the innovations from these companies).
The same can be said of the world’s #3 largest car manufacturer, Hyundai Motors Company.
Hyundai Motor Company (HYMTF +0%)
Hyundai is not only a leading automaker but also ahead of most of its competitors on electric and hydrogen powertrains. Since its 2021 acquisition of Boston Dynamics, Hyundai has also been a global leader in robotics.
So, it is in a good position to rebound and become a leading force in the automotive and robotic sectors despite being currently valued as a declining legacy fuel car manufacturer.
History of Hyundai
The company was founded in 1947 under the name Hyundai Engineering and Construction Company (Hyundai Togun), with a focus on construction projects and materials, including highways.
The group would enter the automotive market in 1967 with the creation of the Hyundai Motor Company, and the company’s first model, the Cortina, sold in cooperation with Ford Motor Company a year later. The company would progressively, over the next decade, develop its own models, in part through the hiring of top British car engineers and designers.
Hyundai released the first South Korean car entirely designed domestically in 1975, the Pony, although it used a Japanese powertrain technology from Mitsubishi Motors.
Source: Road And Track
The company would pass the 1 million car build mark in 1985, with growing exports to Europe and Canada. It started selling cars in the USA in 1986, where its affordable modern design met with great success.
In the 1990s, the company become fully autonomous from other automakers, developing its own transmission and gasoline engine. It also worked on improving its image from “cheap” to “quality”, notably with a 10-year (or 100,000-mile – 160,000 km) warranty for cars sold in the US.
Following the the 1997 Asian financial crisis, Hyundai Motors would spin off from the Hyundai Group, separating it from Hyundai Heavy Industries Group (064350) with activities in oil, banking, and power generation.
During the same crisis, the other South Korean car company, Kia, was hit even harder and filed for bankruptcy, leaving Hyundai to acquire 51% of the company for $6B. Today, Hyundai owns 34.16% of Kia, making it by far the company’s largest shareholder.
The Hyundai Motors Company
The company is currently mostly formed of 3 subdivisions:
- The car-making activity, including electric cars.
- Robot maker Boston Dynamics, to not be confused with Hyundai Robotics, an industrial robot producer now part of the independent company (but closely collaborating with Hyundai Motors) HD Hyundai / Hyundai Heavy Industries.
- Hyundai Rotem, active in railroad & military equipment, and hydrogen energy.
Hyundai Motors By The Numbers
By far, the car manufacturing activity is the core of the business, producing the large majority of its revenues. Sales for 2025 are expected to reach 4.17 million cars, for a 3-4% revenue growth, after a 7.7% growth between 2023 & 2024.
Source: Hyundai
Hyundai’s largest market by far is in non-Western countries (half of total sales), including China, Russia, India, South America, etc.
To this day, sales in Korea represent a significant part of the business despite the smaller size of the country, with sales in Korea almost as numerous as for the entirety of Europe.
Source: Hyundai
When looking in further detail, Hyundai sales in the “Other” regions are strongly driven by India (1/4th of the non-Western, non-Korean sales), South America, and the “rest of the world” excluding Russia and China.
This puts the company in a position to be very protected against the risk of retaliation or sanctions by Russia and China in the context of elevated global tensions.
Source: Hyundai
The large sales to the USA leave it however potentially vulnerable to tariffs created by the Trump administration, especially as South Korea produces 8.6% of the cars sold in the USA, slightly more than Japan’s 8.2%.
Hyundai sales by model show a domination of SUV models, making up more than half of total sales. This is both an advantage, as SUVs are very popular and relatively high-margin models, and a potential future issue, as SUVs are also often accused of being too big and heavy, leading to a larger environmental footprint.
Source: Hyundai
The company has maintained a very consistent payout ratio of 25% for its dividends, which combined with a quickly growing net income has translated into a steady growth of dividends payment to shareholders.
Source: Hyundai
Hyundai EV & Hybrids
Hyundai’s Energy Mix
Like many legacy automakers, Hyundai has been relatively slow in turning toward EVs, having to preserve its existing customer base familiar with ICE cars (Internal Combustion Engines).
For this reason, EVs and hybrids are only a fraction of total sales, less than 20%. This is also a segment of Hyundai’s sales mostly dominated by hybrid-electric-vehicles (HEV) more than pure EVs or even plug-in hybrids.
Source: Current EV
(As a reminder, HEVs focus mostly on improving the ICE range with an electric system, instead of relying solely on electric power for mobility, but cannot be directly charged like BEV and PHEV)
Hyundai’s Solid-State Batteries
The lag of Hyundai on EV could be attributed to both a slow decision move to electrification and a genuine lag in technology, especially on the central element of battery technology, usually most advanced by Tesla (TSLA -0.03%) and Chinese CATL and BYD.
This is why it was a shock to the entire industry when Hyundai revealed on the 10th February its progress on solid-state battery technology, often considered the “Holy Grail” of EV technology, solving at once range anxiety and costs & safety issues. They would be mass-produced by 2030 and replace the current supply provided by CATL, LG, and other automotive battery suppliers.
However, Hyundai will hold an opening ceremony for its next-gen battery research center in Uiwang, South Korea, no later than March 2025. A prototype using the batteries should also already be tested on the roads in 2025, making it possibly one of the first automakers to make such a move in the world.
Because solid-state batteries are so much more efficient, they can double the range of an EV for the same weight or divide the battery quantity and weight by half for a similar range.
Besides high-performance solid-state batteries, Hyundai is also developing lithium-iron-phosphate (LFP) and Nickel Cobalt Manganese (NCM) batteries, covering all the possible options to optimize for cost, range, price, and weight depending on the model.
Source: Hyundai
This push toward catching up and even taking the lead on EVs will require a lot of effort. This is made evident by the radical increase in R&D spending planned for 2025, almost double the 2021 or 2022 levels.
Source: Hyundai
Capex (capital expenditure) also increased, reflecting the need to modernize the production line and adapt them to EVs, as well as opening new factories to produce an extra 1 million cars more than the current capacity.
Source: Hyundai
This progress over EV technology should also strengthen the partnership signed between Hyundai and GM (GM +1%) over EV technology, reinforcing the position of the company as a key partner for Western brands lagging much more behind on battery tech.
“We are considering re-badging our commercial EVs and supplying GM. The deal would pave the way for our entry into the North American commercial vehicle market.”
Lee Seung Jo – Hyundai’s CFO
This could also boost the freshly established strategic partnership between Hyundai and Google’s Waymo. It will in the first phase integrate Waymo’s autonomous driving technology into Hyundai’s all-electric IONIQ 5.
This would also make it likely that while Hyundai already has level 4 of driving assistance using in-house technology, Waymo might provide full-autonomy systems to Hyundai in the future.
Hyundai and Waymo share a vision to improve the safety, efficiency, and convenience of how people move, Waymo’s transformational technology is improving road safety where they operate, and the IONIQ 5 is the ideal vehicle to scale this further.
The team at our new manufacturing facility is ready to allocate a significant number of vehicles for the Waymo One fleet as it continues to expand.
José Muñoz – President and global COO of Hyundai Motor Company
Hyundai’s Future EVs
The company is planning to release no less than 21 EV models in the next 6 years, covering the whole market range, from affordable EVs to SUVs, luxury models, and sports cars.
Source: Hyundai
If everything goes according to plan for Hyundai, this should grow 2024’s EV sales 8-fold, and bring EV to one-third of the company’s sales.
Source: Hyundai
This could put Hyundai in a solid position to challenge Volkswagen’s position as the second-largest automaker in the world, as well as limit greatly the damage done by cheap Chinese EVs to its sales in non-Western markets.
Hyundai Rotem & Hydrogen
Hyundai Rotem
Defense
Hyundai Motor owns 33.77% of Hyundai Rotem, a heavy equipment company.
The company produces defense equipment and is notably the only manufacturer of the main battle tank of South Korea, the K2.
Source: Hyundai
The K2 platform is one of the world’s most advanced tank systems, becoming massively popular in export markets, notably with the groundbreaking sales of 820 tanks to Poland in 2024 for $6.27B.
The defense segment of Hyundai Rotem is also producing autonomous ground drones and other combat vehicles.
Rail
Rotem is an important part of South Korea’s supplier of trains and trams and has provided another 38 countries with high-speed trains, EMUs (Electric multiple unit – self-propel carriages), and LRVs (light rail vehicles).
Source: Hyundai Rotem
Of these sectors, rail is by far the largest revenue source of Hyundai Rotem.
Source: Hyundai Rotem
Hydrogen
Hyundai Rotem is also present in the production of energy from hydrogen (Eco Plant), as well as in building trams using hydrogen as fuel.
Through its IP and production of hydrogen vehicles, fuel cells, as well as hydrogen production, charging stations, transformation into ammonia, and even turbines, Hyundai is one of the rare companies present in every point of the hydrogen economy. It now has 27 years of experience in hydrogen, with its first test hydrogen-powered vehicles built in 2000.
At the end of 2024, Hyundai revealed its INITIUM hydrogen fuel cell electric (FCEV) concept. Initium will aim for a targeted driving range of more than 650 km between refueling and is set to launch in the first half of 2025.
Source: Hyundai
It is expected to be a component of HTWO Grid: “an end-to-end hydrogen energy solution that spans production, storage, transportation and utilization”.
The HWTO grid concept includes:
- Waste-to-hydrogen (W2H), producing hydrogen from waste sludge, manure, and food waste.
- Plastic-to-hydrogen (P2H), using the 91% of plastic wastes that are not recycled.
- Green hydrogen production, using megawatt-scale PEM electrolyzer and green energy.
- Hydrogen distribution and logistics.
- Ammonia production and distribution, including the 2 massive very large gas carriers (VLGCs) of Hyundai Glovis (which also transport LPG).
- Hydrogen utilization by fuel cells in trucks, trams, cars, and fuel cell generators.
This is part of a long-term strategy of Hyundai, making it one of the few companies with a presence in every level of the future hydrogen economy.
Source: Hyundai
This will also include the Fuel Cell Truck XCIENT, with a 400 km range, thanks to a tank of 31 kg of hydrogen, and the NEXO car.
Boston Dynamics & Robotics
Boston Dynamics Overview
The company is a spin-off of from the MIT going way back to 1992, which developed its first quadrupedal robot in 2004, and was acquired by Google in 2013.
It was later on sold to SoftBank in 2017; before Hyundai acquired an 80% stake from SoftBank in 2020 for $880M.
Boston Dynamics has long been generating viral videos with its robodog “Spot” and its humanoid robot “Atlas”, with quite a few other models produced over the years as well.
Source: Parametric Architecture
Currently, the company seems to focus on promoting Spot and Stretch, a warehouse robot.
Spot is more conceived as a sensor platform with a 14kg payload capacity, able to tirelessly patrol potentially dangerous factory floors and construction sites. It can be used to scan an entire facility to create a digital twin, detect hazards, and with the Spot Arm, add extra capacity for manipulation or detailed inspection to the platform.
Source: Boston Robotics
Stretch is a robot for manipulating packages and loads in warehouses, up to 50 pounds in weight. The key idea is to allow warehouses to automate tasks without having to be rebuilt with a dedicated infrastructure, and to be deployed fast.
“With the ability to move hundreds of cases an hour, Stretch ensures that daily goals are met even as order fulfillment demands soar.”
The humanoid Atlas is a more prospective platform without a clear use case yet, except that it is commonly understood that a humanoid form would be the best option to adapt to human-centric environments like healthcare facilities, homes, or offices.
So far, Boston Dynamics has managed impressive agility and reliability for Atlas. Its manufacturing with 3D printing and high-performance batteries has helped keep its weight low (89kg – 196 pounds) for a height of 1.5 meters, barely more than a human.
Boston-Hyundai Synergies
To Hyundai, Boston Dynamics is a strategic investment in the company’s core focus of mobility as a general concept not limited to only cars or trucks.
From that perspective, this expands not only to autonomous robots like Boston Dynamics’, but also to “wearable robotics” or exosuits to help injured people or workers, and service robotics for individual person carriage, last-miles delivery robots, mobile first-responder vehicles, etc.
Source: Hyundai
This is for now a niche activity compared to the millions of cars sold yearly. This could however be a key future element for Hyundai, with robots likely to take a growing importance in healthcare, logistics, security, etc.
However, the military market is likely off-limits for the company, following a 2022 pledge to not support any weaponization of its robotic creations. Boston Dynamics offered other robotics companies to join the pledge with many other firms signing as well.
Although one can question how Hyundai could avoid a polyvalent logistical robot repurposed for military uses, something fellow car marker Toyota often experimented with its pickup trucks being repurposed as light assault vehicles.
To Boston Dynamics, this arrangement provides it with the technical and financial support it needs to keep improving its technology, from the much larger Hyundai group, without the pressure of needing to generate a profit as soon as possible.
Conclusion
Hyundai is among the world’s largest automakers. It was until very recently considered lagging in the EV race, and at risk of disruption by much more aggressive companies in this sector like Tesla or BYD, or even Toyota.
However, if the plans for solid-state batteries from Hyundai bear fruit, it will instead have suddenly jumped at the forefront of developing very advanced EVs.
Combined with its experience and strong presence in hydrogen technology, this makes Hyundai one of the legacy manufacturers less likely to suffer from the electrification trend. If anything, its ability to sign deals with companies like GM indicates it could strongly benefit from other manufacturers lagging behind.
The same can be said for autonomous vehicle technology, as the deal secured with Waymo virtually guarantees that Hyundai will not be left behind regarding the other massive disruptions in mobility.
Lastly, the strategic acquisition of Boston Dynamics 4 years before the AI craze might prove extremely powerful and well timed; and maybe a strategic mistake from Google and then SoftBank to have sold it for less than a billion dollars. Having now some of the best “bodies” for artificial intelligence, Hyundai is well positioned for the progress in AIs’ “minds” to very quickly expand the applications and potential of its robots in the near future.