GM, Hyundai sign deal to discuss future collaboration on vehicles, technology

General Motors and Hyundai Motor Co. have agreed to look into areas where the two automakers might collaborate in the future.

On Thursday, the companies announced they will study ways to use their complementary scale and strengths to lower costs and bring a wider range of vehicles and technologies to customers faster. The deal, which was signed by Hyundai Motor Group Executive Chair Euisun Chung and GM CEO Mary Barra, comes about two weeks after GM and South Korea-based Samsung SDI finalized the joint venture they announced a year ago. GM confirmed in that deal the parties are investing $3.5 billion to build an electric vehicle battery plant in northern Indiana.

GM said the potential collaboration with Hyundai could include co-development and production of both passenger and commercial vehicles. It could also include gasoline-powered engines and clean-energy, electric and hydrogen technologies.

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

The automakers will also review areas where they can work together for combined sourcing in battery raw materials, steel, and other areas to leverage scale and lower costs.

After signing the nonbinding memorandum of understanding, GM said the companies will assess what projects they can collaborate on and progress toward binding agreements.

Morningstar auto analyst David Whiston said this initial agreement between GM and South Korean-based Hyundai is a way to develop new vehicles that could be cheaper for both parties in terms of the cost of raw materials, shared engineering and manufacturing. He said cost reduction is critical to GM’s success.

“How it turns out is probably still fluid and can change from the original terms, as we’ve seen with GM and Honda’s EV collaboration ,” which was ended last year without results, Whiston said. “It’s such a competitive industry, and I think incumbent (automakers) are worried about the rise of Chinese automakers beyond China, so anything you can do to help costs whether its partnerships, job reductions, exiting certain markets, it will be done.”

Dan Ives, managing director and senior equity analyst at Wedbush Securities, said a partnership with Hyundai would benefit GM.

“Hyundai is a very strong EV player with global penetration in the U.S. and Korea among other key markets,” Ives told the Detroit Free Press. “This will give GM another path to growth and the partnership makes a ton of strategic sense.”

But other observers said all of this could have been done without having to sign anything.

"It sounds like an agreement to talk about possibly doing things they always could talk about possibly doing," said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. "They will explore future opportunities to collaborate in a list of potential areas. You don't need an agreement to do that."

But partnerships are a big part of Barra's agenda in recent months. In May, she told investors at a Bernstein's 40th Annual Strategic Decisions Conference that one of the things that's "frustrated me in being in this role for 10 years … I think there’s many more opportunities where (automakers) can collaborate and reduce, at a minimum your research and development or your engineering expenses."

She listed, for example, aspects of a vehicle that are important, but not a "distinguisher."

"I don’t buy a vehicle for its HVAC system," Barra said. "I want it to work: blow cold air at the right amount of time and blow hot air. But I’m not going to compete on that. So internal combustion engines are going to exist around the world for a long period of time, but how do we do that more economically? There are opportunities to partner.”

At the time, Barra said GM did not have any partnerships to announce, but Barra said the company is "certainly very open to how we take cost out. I think it'll be an important part of that equation to how we compete globally."

Hyundai, which makes a mix of cars, SUVs and EVs, reported it sold 214,719 vehicles in the United States during the second quarter, up 2.2% compared with the year-ago quarter. For the first half, the automaker sold 399,523 total vehicles, a 1.2% increase compared with the first half of 2023. It said SUVs comprise three-fourths of its retail sales mix.

By comparison, for the second quarter, GM reported a gain of 0.6% to 696,086 million vehicles sold. For the first half, GM reported its U.S. new vehicle sales declined 0.4% to 1,290,319 million new vehicles sold. GM also sells a broad mix of cars, SUVs, pickups and is launching several new EVs this year.

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Contact Jamie L. LaReau : jlareau@freepress.com . Follow her on Twitter @ jlareauan . Read more on General Motors and sign up for our autos newsletter . Become a subscriber .

This article originally appeared on Detroit Free Press: GM, Hyundai sign deal to discuss future collaboration on vehicles, technology