FAR EAST: SOUTH KOREA REPORT
Hyundai Motor Company is getting serious about developing the software needed for automated driving, etc. It has decided to invest $14.7 billion by 2030 and has begun building a development structure and embarking on M&A.
Hyundai Motor Company has achieved record profits through a shift in strategy in conjunction with a generational change. The company plans to further improve profitability in the software field, where customers can add functions to their cars after purchase. But acquiring human resources will be an immediate challenge for Hyundai.
The “Over the Air (OTA)” function, which updates the latest software via the Internet, will be standard on all new models released in 2023 and after. The plan is to establish a system that allows users to be charged according to function updates. The company will first introduce content such as car navigation systems, audio, lighting, and remote-control functions, and then expand into peripheral areas such as auto insurance policies, to diversify and upgrade services in response to customer needs.
The challenge is to secure software engineers. In South Korea, major companies such as Samsung Electronics, NAVER, and Kakao are competing for talented engineers, offering high compensation. Hyundai Motor, with its strong labor union influence and uniform compensation, has been unable to recruit enough.
Source: The Nikkei
PSR Analysis: This is a move that will further accelerate the smartphoneization of automobiles, which is in a sense inevitable for self-driving and CASE. While Tesla is already ahead of the curve with its software-based subscription business model, other automakers are following the trend in their own ways. The major players are:
| Hyundai | Invest $14.7 billion in software by 2030. Building a billable business model |
| Toyota | Increase group-wide software engineers to 18,000 |
| Honda | Invest approximately $38.7 billion in software and electrification by 2030 |
| VW | Connect 40 million vehicles to in-house software infrastructure by 2030 |
| Stellantis | Invest 6-9 billion Euros in software by 2025 |
| GM | Earn about 30% of the target $280 billion in sales by 2030 from software |
To speed up the development process, companies must secure human resources, but it is not so easy to do so. The mainstream of software development is a system called “agile development,” which aims to improve quality by fixing problems frequently. This approach does not fit well with the traditional pyramid structure of car manufacturers, which is based on a hierarchy of superiors and subordinates. Hyundai Motor Company urgently needs to create such a new environment.
The time will soon come when software quality will determine the value of an automobile. This is a new experience, and it will mean the emergence of a new evaluation metric separate from specifications, design, and price.
From the user’s point of view, the question is who will be responsible for any accidents or problems caused by software. It is likely that legislation on this aspect will be developed in many countries. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
