GM and Hyundai joining forces to cut costs, co-produce new tech

General Motors and Hyundai are exploring opportunities to collaborate across a variety of “key strategic areas” including vehicles, eco-friendly technologies and internal combustion engines.

Driving the news: Earlier this morning, General Motors and Hyundai signed a memorandum of understanding to pursue partnerships with the goal of reducing costs, improving efficiency, and bringing products to customers faster. The agreement, outlined in a short press release, focuses on two areas:

• The first is production, with both automakers agreeing to co-develop passenger and commercial vehicles leveraging everything from ICE to hydrogen technology.

• The second is material sourcing, which includes raw materials for electric vehicle batteries.

Zooming in: This is a particularly exciting moment for Hyundai, which, according to a company spokesperson, has never participated in a partnership of this scale. General Motors, on the other hand, has frequently collaborated with overseas brands like Honda.

Why this matters: Partnerships between competing manufacturers are nothing new, but the last two years have seen global automakers show increased interest in strategic alliances. Brands are likely more motivated to partner than before due to the arrival of new threats and years of overspending on new technologies.

• Some of this interest is in response to the appearance of Chinese competitors like BYD.

• Earlier this year, both General Motors and Ford said they would be open to exploring collaborations with other companies specifically due to China’s car industry.

• On the other hand, some automaker alliances are created in response to other partnerships.

• For instance, Honda, Mitsubishi and Nissan announced their own collaboration in response to a pact between Japanese competitors Toyota, Mazda, and Subaru.

Bottom line: As the number of collaborations continues to grow, pressure is likely to mount on unallied brands to join forces to reduce costs and preserve their own competitiveness. This means that more strategic coalitions are almost certainly on the horizon. With new sides taking shape, it remains to be seen how this shift will transform the industry’s competitive makeup.

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