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Hyundai Bets on Canoo to Supercharge Its Electric Vehicle Plans

Ira Boudway

(Bloomberg) -- Hyundai Motor Group has struck a deal to develop electric vehicles with Los Angeles-based startup Canoo. Under the terms of the agreement, announced on Tuesday, Hyundai and its Kia affiliate will gain access to Canoo’s engineers and technology as the two South Korean automakers look to expand their production of EVs. 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 also 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 both private cars and commercial fleets. In a statement announcing the deal, 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.

“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,” Albert Biermann, Hyundai’s head of research and development, said in the statement.

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

While both 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.

To contact the author of this story: Ira Boudway in New York at iboudway@bloomberg.net

To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net

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