Boston Dynamics Becomes Focus of Hyundai Chairman Chung's Succession Stra...

Hyundai Motor Group May Use Robot Unit To Fund Governance Restructuring

Hyundai Motor Group Chairman Euisun Chung takes the stage at CES 2022, the world’s largest IT and consumer electronics show held in Las Vegas in 2022, alongside Spot, a four-legged walking robot, to present the group’s robotics vision. (Photo provided by Hyundai Motor)

Market attention is turning toward the humanoid robot company Boston Dynamics concerning the resolution of Hyundai Motor Group’s cross-shareholding structure and the strengthening of Executive Chair Euisun Chung’s control. As the company’s corporate value is being discussed at up to 50 trillion won (approximately $33.3 billion), its future initial public offering (IPO) is emerging as a key variable in securing funds for Executive Chair Chung’s succession.

According to industry sources on May 20, Hyundai Motor Group is the only one among major domestic large business groups to maintain a cross-shareholding structure. The structure leads from Hyundai Motor Company to Kia, to Hyundai Mobis, and back to Hyundai Motor Company. At the center of the group’s corporate governance is Hyundai Mobis. Hyundai Mobis holds a stake of more than 21% in Hyundai Motor Company, but Executive Chair Chung’s stake in Hyundai Mobis stands at a mere 0.33%.

The business community estimates the funds required for future corporate governance reorganization and succession processes at approximately 13 trillion won ($10 billion). Under these circumstances, analysts suggest that the presence of Boston Dynamics, in which Executive Chair Chung holds a stake of about 22%, is gaining prominence as its value surges. If the corporate value of Boston Dynamics reaches 50 trillion won, the value of Chung’s stake could grow to around 10 trillion won ($7.69 billion).

Industry watchers interpret that such calculations also lie behind Hyundai Motor Group’s recent successive emphasis on Boston Dynamics’ vision on the global investment stage.

Hyundai Motor Group continues to emphasize the vision of Boston Dynamics at recent global investment events. With the expiration of the put option held by major shareholder SoftBank scheduled on June 20, market interest is also heightening.

At the time of acquiring Boston Dynamics in 2021, Hyundai Motor Group granted SoftBank the right to sell its 9.5% stake to Hyundai if the company is not listed on the US stock market by June this year.

Initially, this provision served strongly as a safety net for SoftBank, but recent assessments suggest the atmosphere has changed. As the value of Boston Dynamics has jumped significantly in a short period, the incentive for SoftBank to hastily liquidate its stake has decreased.

Hyundai Motor Group executives are also actively unveiling blueprints for their robotics business at various global investment events recently. At the JP Morgan Technology Conference held in the United States, they emphasized a plan for a humanoid robot mass production platform with an annual capacity of 30,000 units. Following this, at Kia’s corporate briefing sessions held in Singapore and Hong Kong, they disclosed plans to deploy the robots at the Hyundai Motor Group Metaplant America (HMGMA) in 2028 and the Kia Georgia plant in 2029.

The industry views that Hyundai Motor Group is accelerating efforts to boost the value of Boston Dynamics by simultaneously presenting a commercialization roadmap and its own sources of demand.

An industry official familiar with Hyundai Motor Company and Kia said, “It is difficult to view the recently repeated unveiling of the robotics blueprint as unrelated to the impending expiration of the put option,” adding, “As several months have passed since CES, actual technological progress will become more important than future visions going forward.”

The industry is placing weight on the possibility that SoftBank will choose a long-term investment strategy over short-term capital gains. Analysts say that since the corporate value, which was around 1.2 trillion won at the time of the acquisition, is now discussed at 30 trillion to 50 trillion won, it is more advantageous to expect additional profits after a future Nasdaq listing rather than an early recovery.

Some raise the possibility that even if SoftBank exercises its put option, Hyundai Motor Group could utilize the relevant stake as a strategic partnership card with global artificial intelligence big tech companies such as Nvidia and Google. This is interpreted as a means to build an AI and robotics ecosystem beyond simple financial investment.

Hyundai Motor Company and Kia are maintaining a cautious stance regarding the timing of Boston Dynamics’ IPO. Kia President Ho-sung Song said at the recent JP Morgan Technology Conference, “Internally, we have not yet decided on the timing of the IPO or whether to raise external funds,” adding, “It is somewhat at an early stage to mention specifically.”

However, market observers speculate that if SoftBank does not exercise its put option next month, the timeline for pushing the IPO could also accelerate significantly.

Lee Jong-wook, an emeritus professor of economics at Seoul Women’s University, said, “From Hyundai Motor’s perspective, it is in a situation where it must secure future investment resources while simultaneously solving the issue of control,” adding, “A strategy of continuing a long-term cooperative relationship will be advantageous for both parties.”

He added, “Since SoftBank is also not a simple financial investor but an entity investing in the AI and robotics ecosystem, the AI, semiconductor, and autonomous driving networks held by Chairman Masayoshi Son can also be a significant strategic asset for Hyundai Motor Group.”

Michael Herh