Breakingviews - Robots drive Hyundai from humdrum to high tech

Hyundai Motor Group has gained a new high-tech best friend. The South Korean conglomerate and its chairman will take control of Boston Dynamics, the venture famed for Spot the robotic dog and other eerily lifelike designs.

Breakingviews - Robots drive Hyundai from humdrum to high tech

By Katrina Hamlin

The technology complements Hyundai’s diversification drive, and seller SoftBank will keep a stake. That endorses Chairman Euisun Chung’s ambitious vision to transform his staid autos-to-steel conglomerate.

Friday’s deal will value the robotics pioneer, which Google’s parent Alphabet offloaded to Masayoshi Son’s acquisitive group just three years ago, at $1.1 billion.

Financial terms were not disclosed, but SoftBank freely admits that animatronic canines going for $74,500 each aren’t a cash cow yet. Filings show the unit, which is loss-making overall, made just 50 billion yen ($481 million) in pre-tax profit on over 5 trillion yen of sales in the 12 months to March, implying a razor-thin 1% margin.

To compare, Japanese-listed peer Fanuc, known for giant robotic arms used in factories, reported a pre-tax profit margin of nearly 20% over the same period.

SoftBank will hang on to a one-fifth stake, suggesting Son sees potential in the new owners. Spot, made available for commercial sales in June, can be equipped with accessories such as sensors for surveillance and logistics in dangerous environments.

The likes of BP, Merck and Ford Motor have already put the biopeds to use. A partnership with Hyundai will offer new opportunities. The automaker, better known for its Hyundai and Kia family cars, has already developed wearable robotics to support manual labourers and the physically disabled, and is working on flying cars too. More know-how could improve existing designs and add new facets.

Hyundai scion Chung will need to navigate carefully. Commercial applications for robotics are still developing, and will require high upfront investments. Regulations are uncertain too, especially concerning technology that has military applications – as Boston Dynamics designs do.

Even so, Chung is moving in the right direction. He has promised to cut the conglomerate’s reliance on traditional car-making, and wants robotics and air mobility to account for half of its total top line in the future. Spot the dog could prove the right companion down the line.

Originally published at Reuters