Why Hyundai and GM are teaming up in latest auto industry partnership

The romance genre has enemies to lovers, but the automotive industry has its own familiar trope: rivals to friendly rivals.

In one of the latest examples of competing automakers making nice, General Motors and Hyundai earlier this month announced plans to collaborate on several “key strategic areas,” per a joint news release.

The specific areas of collaboration were not immediately clear, though “codevelopment and production of passenger and commercial vehicles, internal combustion engines and clean energy, electric and hydrogen technologies,” were noted, and GM and Hyundai plan to look into combined sourcing of components and raw materials.

“It begs the question: What is the larger plan between these two companies?” Sam Fiorani,VP of global vehicle forecasting at AutoForecast Solutions, told Tech Brew. “There are a lot of items that could be there for the picking between these two companies, and it could result in big changes for both companies.”

The automakers said the partnership aims to take advantage of both companies’ “scale and strengths to reduce costs and bring a wider range of vehicles and technologies to customers faster.”

“GM and Hyundai have complementary strengths and talented teams. Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently,” GM CEO Mary Barra said in a statement.

Cost efficiencies are especially relevant to the auto industry as it navigates a tricky time in the EV transition. Some automakers are delaying electrification plans amid slower demand and growing competitive pressures. Cost is a key factor, as development and production of new electrified vehicles requires massive investments even as automakers are struggling to turn profits on EVs.

“The current EV transition, where volumes are not where you would want them to be to make money, finding a partner to source batteries, potentially motors, and definitely software engineering—it makes a lot of sense, coinvesting in those products,” Fiorani said.

Despite the highly competitive nature of the industry, there’s a long history of rival automakers teaming up on specific initiatives.

To name just a few:

• On Sept. 5, BMW and Toyota said they were using a long-standing partnership to support development of a fuel cell electric vehicle, or FCEV, powertrain system that both would use in their vehicles. In a news release, the automakers said that working together on FCEVs would help “drive down the costs of fuel cell technology.”
• Speaking of fuel cells: GM and Honda have long worked together on various initiatives, including codeveloping and producing FCEVs, though they scrapped an EV collaboration.
• Earlier this year, Volkswagen and Rivian unveiled plans for a joint venture under which VW would invest billions of dollars into a joint effort to develop software-defined vehicle platforms that both companies would use.
• On Sept. 18, BMW, Ford, and Honda announced that operations had begun for a joint venture they announced last year. The venture, ChargeScape, is a software platform that integrates EVs into the power grid.

A supergroup of automakers formed a joint venture earlier this year to establish an EV charging network together, part of a bid to create more reliable, accessible charging infrastructure so that more consumers feel comfortable going electric. And Tesla is in the process of opening up its charging network to other brands.

Fiorani pointed to an example of a successful auto partnership: a long-standing alliance between Renault and Nissan.

Industry collaborations have “been hit or miss in the past, but when it works, it works really well,” he said. “And for decades, Renault and Nissan were saving billions of dollars by sourcing their parts together.”