Concerns are growing in the market over Hyundai AutoEver, which has emerged as a beneficiary of physical artificial intelligence (AI). Expectations have mounted that it will play a key role as Hyundai Motor Group moves to expand its Robotics business, but core business structures and monetization plans have not been detailed. With the stock price surging recently, some say market expectations are racing too far ahead.
According to the industry on the 27th, Hyundai AutoEver has recently been expanding into new businesses such as in-vehicle software (SW), robot control systems, and AI data center operations. It is a move following Hyundai Motor Group's shift toward Robotics and software-defined vehicles (SDV).
Originally, Hyundai AutoEver was a system integration (SI) and IT outsourcing (ITO)-focused company, responsible for building and operating group companies' IT systems. As of last year, about 4.09 trillion won (96%) of its 4.25 trillion won in sales came from Hyundai Motor Group affiliates, showing a high reliance on the group. As Hyundai Motor Group accelerates the expansion of its physical AI business centered on Boston Dynamics, a robotics specialist acquired in 2021, expectations have grown in the market that Hyundai AutoEver will also take charge of related businesses.
However, it remains uncertain how much market expectations will translate into actual results for now. Details such as when Hyundai AutoEver can generate revenue through the Robotics business and what the business scale will be have not been disclosed. Shin Yun-cheol, an analyst at Kiwoom Securities, said, "The size and timing of the new businesses Hyundai AutoEver will undertake, and the funding plans, have not been made concrete."
Another concern is that Hyundai AutoEver's business capabilities have not yet been fully verified. While expanding new businesses requires large-scale investment and personnel, its research and development spending and workforce are not large compared with competitors. Hyundai AutoEver's research and development expenses last year were about 80 billion won, roughly one-third of Samsung SDS's (about 220 billion won). The number of employees was 5,753 as of the end of last year, fewer than Samsung SDS (11,177) and LG CNS (6,762).
Even in this situation, market expectations are growing. Hyundai AutoEver's share price has surged 344.91% over the past year. By contrast, first-quarter operating profit this year stood at 21.2 billion won, down 20.8% from a year earlier, due to weaker profitability in automotive software and a decline in navigation adoption in the U.S. market. Hyundai AutoEver's price-earnings ratio (PER) has soared to about 97 times, far exceeding Samsung SDS (20 times), LG CNS (18 times), and even Hyundai Motor (21 times), a core group affiliate.
An industry official said, "Given that Hyundai AutoEver has so far handled internal volumes within Hyundai Motor Group, it seems the recent Robotics strategy being executed by Hyundai AutoEver has been priced into the stock."
Accordingly, as Hyundai Motor Group recently disclosed part of Hyundai AutoEver's role, some say the market's anxiety can be eased only if a concrete business roadmap and monetization plan are presented. At the JP Morgan conference held in Boston, the United States, on the 18th, Hyundai Motor Group unveiled plans to build a robot production system with an annual capacity of 30,000 units by 2028 and to introduce more than 25,000 robots into Hyundai Motor and Kia production sites. In this process, Hyundai AutoEver will be responsible for building the software infrastructure, from robot data collection and management to smart factory optimization.
Another industry official, regarding the disclosure, said, "The reason Hyundai Motor Group is introducing robots is ultimately to improve factory productivity," adding, "The key is how organically they connect with existing workers, equipment, and processes." The official went on, "Since Hyundai AutoEver is dedicated to Hyundai Motor Group's smart factories, it has been formalized that it will take on the role of building a robot control system linked to existing systems."