Automakers sign agreement to collaborate on vehicles, supply chain and clean energy tech.

Two leading automotive companies have joined forces to target improved efficiencies and increased competitiveness through collaboration along lines of manufacturing and clean energy technologies.

General Motors and Hyundai Motor Company have signed a memorandum of understanding (MOU) to explore future collaboration across these key strategic areas as leading global OEMs – leveraging their complementary scale and strengths to reduce costs and bring a wider range of vehicles and technologies to customers faster.

Hyundai Motor Group Executive Chair Euisun Chung and General Motors Chair and CEO Mary Barra signing an MOU to explore future collaboration across these key strategic areas.

General Motors is focused on advancing an accessible all-electric future, at the heart of which is GM's battery platform, which will power everything from mass-market to high-performance vehicles. GM, its subsidiaries and its joint venture entities sell vehicles under the Chevrolet, Buick, GMC, Cadillac, Baojun and Wuling brands.

Based on its brand vision, 'Progress for Humanity,' Hyundai is accelerating its transformation into a smart mobility solution provider, tackling real-world mobility challenges around the globe. The company invests in advanced technologies such as robotics and advanced air mobility to bring about revolutionary solutions while pursuing innovation and continuing efforts to introduce zero-emission vehicles equipped with industry-leading hydrogen fuel cell and electric vehicle technologies.

Potential collaboration projects between the two powerhouses center on co-development and production of passenger and commercial vehicles, internal combustion engines, electric and hydrogen technologies. The duo will also take advantage of opportunities along the supply chain, seeking out reduced costs by combined sourcing in battery raw materials, steel and other areas.

The agreement was officially signed by Hyundai Motor Group Executive Chair Euisun Chung and GM Chair and CEO Mary Barra.

"GM and Hyundai have complementary strengths and talented teams. Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently," said Barra, who believes a partnership between the two companies has the potential to boost the efficiency and scale of vehicle development and strategic capital allocation.

The global automakers are also looking into opportunities for combined sourcing in battery raw materials and steel, which could lower the costs for both.

"This partnership will enable Hyundai Motor and GM to evaluate opportunities to enhance competitiveness in key markets and vehicle segments, as well as drive cost efficiencies and provide stronger customer value through our combined expertise and innovative technologies," added Chung.

Morningstar auto analyst David Whiston said this partnership can be a way to reduce costs of new vehicle development for both parties in terms of raw materials, shared engineering and manufacturing, where cost reduction is critical to GM's success.

"How it turns out is probably still fluid and can change from the original terms, as we've seen with GM and Honda's EV collaboration," Whiston said, though efforts ended without results. "It's such a competitive industry, and I think incumbent (automakers) are worried about the rise of Chinese automakers beyond China, so anything you can do to help costs whether its partnerships, job reductions, exiting certain markets, it will be done."

"Hyundai is a very strong EV player with global penetration in the U.S. and Korea among other key markets," Dan Ives, managing director and senior equity analyst at Wedbush Securities told the Detroit Free Press. "This will give GM another path to growth and the partnership makes a ton of strategic sense."

With the non-binding MOU considered by some as a purely symbolic gesture, partnerships have continued to be a big part of Barra's agenda this year. In May, she told investors at the Bernstein Strategic Decisions Conference that "I think there's many more opportunities where (automakers) can collaborate and reduce, at a minimum your research and development or your engineering expenses."

Following the signing of the MOU, collaboration and progression toward binding agreements begins immediately.