Hyundai Motor Group and General Motors have joined forces to explore collaboration in vehicle development, supply chain and clean energy technology, officials announced Thursday.

According to the announcement, the top leadership from each auto giant — including Hyundai Motor Group Executive Chair Chung Euisun and GM CEO Mary Barra — recently met at Genesis House New York and signed a memorandum of understanding to seek future collaboration across key strategic areas.

Hyundai Motor and GM — the world’s third and fifth largest auto brands by sales last year, respectively — said they will look for ways to leverage their complementary scale and strengths to reduce costs and bring a wider range of vehicles and technologies to customers faster.

Hyundai Motor and GM sold 7.34 million cars and 6.18 million cars, respectively, across the globe last year. Their combined sales of about 13.5 million would easily exceed No. 1 Toyota Group’s 11.23 million vehicles sold.

“This partnership will enable Hyundai Motor and GM to evaluate opportunities to enhance competitiveness in key markets and vehicle segments, as well as drive cost efficiencies and provide stronger customer value through our combined expertise and innovative technologies,” said Chung.

The automakers noted that potential collaboration projects are expected to be centered on the co-development and production of passenger and commercial vehicles, internal combustion engines and clean-energy as well as electric and hydrogen technologies.

Barra said this partnership between the two companies has the potential to make vehicle development more efficient by driving greater scale and supporting disciplined capital allocation.

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

Hyundai and GM explained that their flexibility and agility will allow both companies to explore the development of their shared capabilities.

The two major global original equipment manufacturers, or OEMs, in the auto industry, added that they also will review opportunities for joint sourcing in areas such as battery raw materials, steel and other areas.

Following the signing of the non-binding MOU, the two sides plan to assess opportunities and progress toward binding agreements.

As an unprecedented move in the global auto industry, the partnership announcement came at a moment when Chinese EV brands and battery makers such as BYD and CATL are surging as they look to expand their presence beyond their home turf.

According to the data from Yiche, one of the largest automobile information companies in China, BYD sold 315,600 vehicles across the world in July this year to become the third largest-selling auto brand just behind Toyota and Volkswagen. In the same month, Hyundai and Kia were ranked in sixth and ninth places as they sold 245,900 cars and 199,000 cars, respectively. GM’s top-selling brand — Chevrolet — came in 10th place by selling 198,600 cars.

Auto industry watchers said the collaboration between Hyundai Motor and GM will put every other major player in the global auto sector on notice as their partnership could have massive impacts on the landscape of the auto industry, particularly in the EV race.

“A Hyundai Motor-GM alliance would have a lot of implications for the US EV industry,” said an automotive engineering professor who wished not to be named.

“Both are competing against Tesla. They have been doing so separately but a partnership between them could mean troubles for auto brands in the US EV race including Tesla.”

According to market tracker Motor Intelligence, Hyundai Motor accounted for 10 percent of the US EV market through the first seven months of this year and GM took up a 6.3 percent share during the same period while Tesla’s US EV market share dipped below 50 percent for the first time in the second quarter.

Asia News Network (ANN)/The Korea Herald