After car production plants closed in late spring due to COVID-19, some in the industry worried that auto innovation and research would stall for years.
Actually, that doesn’t seem to be the case.
Auto plants started re-opening in June, although it wasn’t clear then whether long-term research and development work on autonomous vehicles would suffer.
As of December, however, some automakers and auto chipmakers, hope to take advantage of the pandemic to redouble their long-term innovation strategy even when their R&D budgets are kept at the same level for a couple of years. In many cases, automakers are moving to a broader mission than one of making cars; some want to expand to other forms of mobility, including with robots.
Friday’s announcement by South Korean automaker Hyundai to buy an 80% stake in robotics maker Boston Dynamics from SoftBank offers a case in point. SoftBank had bought the robotics company from Google in 2013 after the company was spun out from MIT in 1992.
Hyundai hopes to leverage robotics technology to expand automation at car factories and to help design autonomous vehicles, including self-driving cars, drones and delivery robots, according to analysts. Both SoftBank and Boston Dynamics have struggled to stimulate demand for their various robots and could benefit from the acquisition, said Glenn Sanders, robotics analyst at Omdia.
The deal values Boston Dynamics at $1.1 billion. Hyundai said in a statement that its decision to acquire the robotics companies was based on its “growth potential and wide range of capabilities” which includes key technologies for high-performance robots equipped with perception, navigation and intelligence. “Hyundai’s…AI and Human Robot Interaction expertise is highly synergistic with Boston Dynamic’s 3D vision, manipulation and bipedal/quadruped expertise,” Hyundai added.
The robotics firm will gain access to Hyundai’s in-house manufacturing as well as Hyundai’s customers, the companies said.
Hyundai plans to invest in logistic robots and service robots for commercial uses that include public security and safety. Also, the carmaker sees the potential for robots to be used for freedom of mobility for disabled or elderly, the company said.
For its part, Boston Dynamics announced in June that its four-legged service robot named Spot first unveiled in 2016 would be available to US customers for $74,500. It can be used for dangerous jobs and can climb stairs.
The company also has under development a mobile warehouse robot with computer vision capabilities named Pick to expand Hyundai into logistics. Hyundai said it also plans to expand in the humanoid robot market for services such as caregiving at hospitals. SoftBank has backed a humanoid robot named Pepper for five years, but it isn’t clear what will happen to Pepper. SoftBank retains 20% of Boston Dynamics.
Hyundai’s interest in Boston Dynamics comes after Hyundai Chairman Euisun Chung said recently that future car-production would only be half of Hyundai’s future business, while robotics would be 20% and urban air mobility (such as flying taxis) would be 30%. Chung personally will own a 20% stake in Boston Dynamics, with Hyundai and affiliates owning 60% and SoftBank owning 20%.
Chung’s focus on making Hyundai a mobility provider and not only a carmaker shows the level of innovation going on in the auto industry despite the impact of COVID-19. Tesla, GM, Ford, Audi, Mercedes-Benz and many others are in the bidding.
“Automakers are in an innovation race,” mobility consultant Cha Doo-won said in a report in Business Insider.
“Tesla and other tech companies have shaken up the old-line auto companies and made them think a little differently related to the speed of innovation and rollout of new features,” said Kevin Anderson, an analyst at Omdia. “Car companies are looking to branch out beyond building vehicles as mobility-as-a-service schemes play out.”
Generally, auto chip suppliers have not slowed down R&D, Anderson added. “Demand [for auto chips] is high and there are in fact shortages of components, so the business outlook is good.”
Anderson said the Hyundai purchase of Boston Dynamics is likely to bring more AI and robotics IP in-house for future autonomous driving plans and possibly moving into last mile delivery as well as service robots. “Vehicle production is already highly automated,” although an articulated robot could possibly improve automation levels.
Enthusiasm for full autonomous driving has waned from a high point two years ago due to high profile accidents with assisted driving vehicles, Anderson warned. “Full autonomy on a wide scale will need better V2x connectivity, which is still a ways away as it needs 5G speeds to make it work. Until vehicles can have better situational awareness, I think full autonomy will remain limited.”
In one example of what may still be coming, Hyundai at CES in 2019 introduced Elevate, a “walking car” concept that features a vehicle with four wheels where each wheel can be extended like a leg to navigate rugged terrain. Hyundai’s acquisition of Boston Dynamics “makes a lot of sense” related to that Elevate concept, Sanders at Omdia said.
Jack Gold, an analyst at J. Gold Associates, said Hyundai faces robotics rival Samsung in South Korea, but noted that the robotics market should grow dramatically over the next five years to accommodate players. “Hyundai is already a major industrial equipment supplier. The combination of the industrial need for robots where they already have a presence and the consumer side where Boston Dynamics has a presence and merging with autonomous vehicle tech and AI presents a pretty big opportunity,” Gold said.
Even though COVID-19 closed down many auto plants early in late spring, the resulting pandemic is now being viewed by some analysts as a boost to robotics and automation.
“Robotics and automation stands to benefit from unprecedented demand as a result of the COVID-19 crisis,” said analyst firm Cowen in a recent report. The company noted that the market is fragmented with private companies and “ripe for consolidation” across many vertical markets.
“COVID-19 should act as a catalyst for adoption of supply chain/warehouse automation and robotics,” Cowen added. In 2022, Cowen forecasts a $9.2 billion market for auto-related automation revenues, a $22.5 billion market for warehouse logistics and $9.1 billion for medical robots. The market for electronics related to robotics and automation will reach $27.5 billion in that year, Cowen added.
One driver for warehouse logistics adoption is the shortage of labor, Cowen said, but also a trend toward digitization of the work.
More generally, Cowen found that 89% of 163 companies surveyed in June said they plan to accelerate digital transformation spending as a result of the pandemic.
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