Aptiv, the auto parts maker announced its stake reduction in the autonomous vehicle joint venture, Motional after incurring millions in losses.
Motional is a joint venture between Aptiv and Hyundai Motor Company, which uses the IONIQ 5 electric car as its robotaxi. The EV is used in Las Vegas through Uber and Lyft.
“While our Motional joint venture continues to make progress on their technology road map, we’ve decided to no longer allocate capital to it,” Aptiv CEO Kevin Clark said during the earnings call.
Aptiv’s 2024 profit forecast of US$5.55 to US$6.05 per share includes a non-cash equity loss of about US$340 million, or US$1.20 of earnings per share, related to Motional’s losses. The company joins Ford Motor, Volkswagen and General Motors in cutting down or backing out of the technology, which is often touted as the future of mobility.
Reuters heard from Evangelos Simoudis, an investor, author and corporate adviser, who said: “Companies are realising that attaining level 4 of autonomous driving is way more difficult and expensive than the industry predicted.”
Level 4 autonomous driving refers to the vehicle moving automatically in longitudinal and lateral axes and the driver does not have to keep their eyes on the road or supervise the vehicle. Last October, GM found itself in hot water after an accident involving a pedestrian with its robotaxi. It resulted in General Motors’ Cruise recalling 950 driverless cars from the roads across the United States and slapped with federal investigations.
The exit from Argo came after three years of joint efforts to develop automated driving systems and more than US$3 billion in investments, highlighting the cost pressure and safety hurdles automakers face. Meanwhile, Aptiv beat Wall Street expectations for fourth-quarter profit, fueled by an uptick in demand for auto parts and tech-related products from global automakers.
It reported adjusted earnings of US$1.40 per share for the quarter ended 31 December 2023 compared with expectations of US$1.33, according to LSEG data. Aptiv’s shares were down about 4% amid a weak broader market.
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