Hyundai bets on Canoo to supercharge electric vehicle plans

Hyundai bets on Canoo to supercharge electric vehicle plans
Hyundai will unveil its latest electric vehicle, Prophesy, at the Geneva International Motor Show on March 3. (Hyundai)

Hyundai Motor Group has struck a deal to develop electric vehicles with Los Angeles-based startup Canoo.

Under the terms of the agreement, Hyundai and its Kia affiliate will gain access to Canoo’s engineers and technology as the two South Korean automakers look to expand production of electric vehicles (EV).

Hyundai and Kia both recently announced plans to invest heavily in electric technology over the next six years, including a $110 million joint investment in U.K. startup Arrival, which counts United Parcel Service Inc. as an investor, to build electric commercial fleets.

Canoo, founded in 2017 by a pair of former BMW executives, plans to sell electric vehicles by subscription starting in 2021 in Los Angeles and San Francisco. In September it unveiled its first model, a seven-seat van that co-founder Ulrich Kranz calls “a loft on wheels.” Canoo uses a modular “skateboard” architecture: The powertrain, batteries and suspension are contained within a slim platform that can support different cabins and exteriors, or “top hats” in the industry parlance.

Hyundai and Kia plan to use the Canoo platform for private cars and commercial fleets. Hyundai said it expects Canoo’s skateboards will allow for the standardized development and assembly of a range of vehicles and for a flexible design that can respond quickly to customer preferences.

Hyundai Kona is one of its current Electric Vehicle (EV) models. (Anindito Mukherjee/Bloomberg)

“We were highly impressed by the speed and efficiency in which Canoo developed their innovative EV architecture, making them the perfect engineering partner for us,” said Albert Biermann, Hyundai’s head of research and development.

Canoo and Hyundai declined to disclose financial terms. The agreement expires later this year but can be extended if Canoo meets milestones. Kranz said Canoo remains open to working with other automakers. The company is using an undisclosed contract manufacturer to build its vehicles.

While Hyundai and Kia have introduced all-electric offerings in the past few years – the Kona and Ioniq from Hyundai, the Niro and Soul from Kia – they remain small players, especially in the U.S. market. Kia said it plans to offer 11 electric vehicles by 2025, with 25% of sales coming from “eco-friendly” vehicles. Combustion-engine SUVs, including the new three-row Hyundai Palisade, are the main source of profits for the company.

Hyundai Motor Manufacturing Alabama produces the Sonata and the Elantra sedans and the Santa Fe SUV at its plant in Montgomery. It has announced it will add the Santa Cruz pickup, or what it is calling a “crossover” vehicle, next year following a $410 million expansion. The plant doesn’t produce electric vehicles.

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