Hyundai builds vehicles for Waymo: hoping autonomous taxis will offset the impact of slowing EV demand

Zhihu Finance APP has learned that Hyundai Motor is viewing autonomous taxi operators as a significant new source of demand for its electric vehicles, planning to manufacture "tens of thousands" of Ioniq 5 Robotaxis for Waymo, a subsidiary of Alphabet (GOOGL.US). Hyundai Motor CEO José Muñoz disclosed this production target last Thursday at an event in San Jose, California. Hyundai and Waymo announced their collaboration in 2024, but had not previously revealed the expected number of vehicles.

These driverless taxis will be produced at Hyundai's manufacturing base near Savannah, Georgia. Commercial deliveries are expected to start in the fourth quarter, following an initial testing program.

For investors, orders for driverless taxis help Hyundai Motor keep its U.S. factories running efficiently even as U.S. consumer electric vehicle sales fall short of earlier industry expectations. Large fleet orders also provide more predictable sales than retail demand, although this opportunity depends on whether Waymo and other autonomous driving companies can expand their services as planned.

As sales growth slows and U.S. incentive and emissions policies shift, automakers have scaled back electric vehicle investments. Hyundai’s response is to adjust its Georgia plant to produce more hybrid models while seeking additional commercial customers for its electric models.

Muñoz stated that Hyundai's autonomous taxi manufacturing business is already profitable and is developing into a standalone operation. He also mentioned that other autonomous vehicle companies have expressed interest, which could allow Hyundai to expand beyond Waymo.

These Ioniq 5 vehicles will be delivered fully adapted for integration with Waymo’s sixth-generation autonomous driving system. This integrated factory modification simplifies the deployment process compared to vehicles that are largely retrofitted after assembly.

Waymo currently operates, or is preparing to operate, about 4,000 vehicles in 14 U.S. cities. As autonomous mobility companies place increasingly large orders for electric vehicles, this expansion positions the Alphabet subsidiary to become a highly valuable fleet customer for car manufacturers.

Rivian (RIVN.US), Lucid (LCID.US), and Stellantis (STLA.US) have also announced supply agreements with Uber (UBER.US) or other autonomous mobility partners. These deals indicate that driverless taxis are becoming a significant outlet for electric vehicle production capacity—even though the sector is still developing.