Hyundai is spending nearly $1 billion to keep self-driving startup Motional alive

Hyundai has agreed to spend about $1 billion on Motional, an investment that will give the automaker a majority stake while providing the self-driving startup with the capital needed to continue operations.

The Korean automaker invested $475 million directly in Motional as part of a broader deal that also includes buying joint venture partner Aptiv. As part of the deal, Hyundai will spend another $448 million to buy 11% of Aptiv’s common equity interest in Motional, according to information revealed in Aptiv’s first-quarter earnings report Thursday.

Aptiv also shared that it expects to reduce its common equity interest in Motional from 50% to about 15% by March 31, leaving Hyundai with the remaining 85% control. Aptiv Chairman and CEO Kevin Clark said in January that the company would reduce its ownership interest in Motional. The company said at the time that it would stop allocating capital to Motional due to the high costs of commercializing the robotaxi business and the long path to profitability.

Aptiv on Thursday cut its full-year net sales forecast for 2024 to between $20.85 billion and $21.45 billion, down from $21.3 billion and $21.9 billion.

Motional confirmed the new funding round and increased stake from Hyundai. The company did not respond to TechCrunch’s inquiries regarding the accuracy of Aptiv’s figures. Hyundai also could not be contacted for confirmation.

Image Credit: Aptiv Investor Relations

Motional started out as Boston-based autonomous vehicle startup Nutonomy in 2013, before being acquired by Delphi for $400 million. Delphi later divested its business with the Aptiv unit absorbing Newtonomi. The unit became operational in 2019 under the $4 billion Hyundai-Aptive joint venture. While it’s clear from Apt’s earnings report that the company is trying to manage risks and optimize finances amid a less positive outlook, the company’s comeback and Hyundai’s upside have been boosted. Questions about the future of Motional.

In March, TechCrunch reported that Motional secured a bridge loan for an undisclosed amount as a lifeline while the AV startup secured its next round of long-term funding. While it’s likely that this funding round from Hyundai fits that bill, Motional did not respond to TechCrunch’s request for more information on whether it will need to acquire more investors in the future.

Motional is testing its autonomous vehicles with a safety driver behind the wheel in Boston, Pittsburgh, Las Vegas, Los Angeles and Singapore. The company’s go-to-market strategy includes partnering with existing ride-hailing platforms like Uber, Lyft and Via to deliver rides to customers. Motional has stated its aim to launch a robotaxi service using driverless Hyundai Ioniq 5 vehicles in 2024.

Motional and Hyundai announced plans to co-develop production-ready versions of the all-electric Ioniq 5 robotaxi at the automaker’s new innovation center in Singapore, Hyundai Motor Group Innovation Center Singapore (HMGICS), in November 2023. During CES 2024, Motional also announced plans to work with Kia on a next-generation vehicle that will enter commercial operations later this decade, with initial development phases beginning this year.

The financial changes at Motional come as the robotaxi industry faces uncertainty. The startup is slowly moving toward commercialization, launching pilots in at least five cities. Importantly, Motional has not yet started charging for rides or deliveries. Meanwhile amid competition, Waymo continues to expand its fully driverless, paid robotaxi service in San Francisco, Los Angeles and Phoenix, with plans to reach Austin later this year. GM’s Cruise is still largely off the roads following an incident in October 2023 in which a pedestrian was trapped and dragged by one of its robotaxis, but the company has planned a slow, deliberate reintroduction to public roads. As part of this, mapping has started again in Phoenix.

Then there’s Tesla. CEO Elon Musk has shaken up his company, laying off thousands of people and increasing investment in AI, in a stated goal of going “balls to the wall for autonomy” and delivering a robotaxi in August.