Hyundai builds cars for Waymo: hoping driverless taxis will offset the shock of electric vehicle demand

The Zhitong Finance App learned that Hyundai Motor sees autonomous taxi operators as an important new source of demand for its electric vehicles, and plans to manufacture “tens of thousands” of Ioniq 5 Robotaxis for Waymo, a subsidiary of Alphabet (GOOGL.US). Hyundai CEO José Muñoz (José Muñoz) revealed this production target at an event in San Jose, California last Thursday. Hyundai and Waymo announced a partnership in 2024, but the estimated number of vehicles has not been revealed before.

These driverless taxis will be manufactured at Hyundai Motor's manufacturing site near Savannah, Georgia. Commercial deliveries are expected to begin in the fourth quarter, prior to initial testing plans.

For investors, driverless taxi orders will help Hyundai maintain the efficient operation of its US plants when American consumer sales of electric vehicles fall short of the industry's previous expectations. Large fleet orders also provide more predictable sales than retail demand, although this opportunity depends on whether Waymo and other autonomous driving companies can expand their services as planned.

Following a slowdown in sales growth and changes in US incentives and emissions policies, automakers have cut back on investment in electric vehicles. Hyundai's response was to adjust its Georgia plant to produce more hybrid models while seeking more commercial customers for its electric models.

Muñoz said that the modern driverless taxi manufacturing business has been profitable and is developing into an independent business. He also said that other autonomous vehicle companies have also expressed interest, which may allow Hyundai to expand its business beyond Waymo.

These Ioniq 5 vehicles will be delivered with the modifications required to adapt to Waymo's sixth-generation autonomous driving system. This integrated factory-side integration can simplify the deployment process compared to vehicles that are assembled and then modified on a large scale.

Waymo currently has around 4,000 vehicles operating or ready to go into operation in 14 cities across the US. As orders for electric vehicles from autonomous mobility companies grow larger and larger, the Alphabet subsidiary is expected to become an automobile manufacturer's fleet customer with considerable potential.

Rivian (RIVN.US), Lucid (LCID.US), and Stellantis (STLA.US) have also announced vehicle supply agreements with Uber (UBER.US) or other autonomous mobility partners. These deals suggest that driverless taxis are becoming a significant outlet for electric vehicle production capacity — albeit still under development.