Hyundai Motor Group's valuation thesis is expanding from a recovery in complete vehicles to SDVs, Atlas robots, and ownership restructuring

Overview

The report initiates coverage of Hyundai Motor, Kia, and Hyundai Mobis and uses a three-stage framework to describe Hyundai Motor Group's transition from a traditional automaker into a software-based mobility platform and Physical AI ecosystem: from 2026 to 2028, production recovery, product cycles, and hybrids drive earnings improvement; around 2028, SDV and Atlas commercialization begin to contribute; after 2028, external robot sales, L4 autonomous driving, a potential Boston Dynamics listing, and group restructuring drive long-term value realization.

Core views

Bernstein divides the Hyundai Motor Group investment thesis into three stages. The first stage spans 2026–2028 and focuses on resolving temporary production disruptions caused by incidents such as supplier and factory fires, restoring sales through product cycles including new Tucson, Elantra, and Genesis hybrid models, and improving revenue and margins through rising HEV penetration at Hyundai Motor and Kia. Hyundai Mobis, meanwhile, benefits from the higher value of electrification components required per xEV. During this stage, Boston Dynamics continues Atlas pilot programs, targeting the start of testing at HMGMA in 2027 and commercialization in 2028. The second stage begins around 2028, when software and robotics are expected to make more substantial contributions to performance. The group's SDV foundation consists of the unified CODA hardware architecture and its proprietary Pleos Vehicle OS, supported by Hyundai Mobis through IDELINK, M.LINK, cloud connectivity, and OTA-related technologies. The roadmap includes highway NOA in 2027, urban NOA and Kia's first mass-produced SDV in 2028; the report also lists an urban NOA capability milestone in 2029 and places L4 Robotaxi commercialization in the 2030s. Partnerships or internal assets including NVIDIA, 42dot, Motional, Waymo, Uber, Avride, and Samsung supplement autonomous-driving computing, AI, software, and semiconductor capabilities, with Hyundai Motor having more direct investment exposure because it controls 42dot and Motional. The third stage unfolds after 2028, as Atlas moves from internal group factory demand into external commercial markets and autonomous driving, robotics, and capital restructuring gradually converge. The report expects HMG and related entities to effectively own 100% of Boston Dynamics after acquiring SoftBank's remaining stake; if the remaining shares are allocated in proportion to existing shareholders' interests, Hyundai Motor would have the most significant Atlas ownership exposure because it is the largest shareholder in HMG Global. The group plans to deploy up to 25,000 robots at Hyundai Motor and Kia plants, while Boston Dynamics targets annual Atlas production capacity of 30,000 units in 2028, creating a commercialization path from internal validation to scaled production and then external sales. Hyundai Mobis, as the exclusive supply partner for Atlas actuators, will gain exposure to both equity value and component revenue. The report's Boston Dynamics base case assumes Atlas shipments increase from 1,800 units in 2028 to 180,000 units in 2035; revenue rises over the same period from USD 477 million to USD 14.9 billion, representing a CAGR of 45.9%. The report believes the humanoid robot market could expand 23-fold between 2028 and 2035, far faster than the automotive market, and estimates Boston Dynamics' equity value could reach KRW 125.7 trillion in 2030. It also expects Hyundai Mobis' related new robotics revenue to grow approximately 75-fold by 2035 compared with 2028. Consequently, Hyundai Motor receives the greatest ownership benefit, while Hyundai Mobis benefits from both its shareholding and the per-unit actuator content value. The traditional automotive business remains the cash flow and earnings foundation for the transition. Hyundai Motor and Kia sold a combined approximately 2.3 million vehicles in 2000, representing a 4.1% global share; by 2011, sales had reached approximately 6.6 million vehicles and share had risen to a historical high of 8.8%. Deterioration in the Chinese market and the impact of China–South Korea relations in 2017 caused the group's sales to decline 8% year over year and its global share to fall to 7.4%; thereafter, the group shifted from pursuing volume to improving profitability and brand value, expanding its SUV, Genesis, and EV offerings. Combined sales recovered to approximately 7 million vehicles in 2025, with a global share of 7.6%, making the group the world's third-largest automaker. North America accounted for 30% and 36% of Hyundai Motor's and Kia's respective 2025 sales, while China accounted for only 3% for each; India has high strategic importance. This geographic mix reduces the group's dependence on Chinese sales, although it still faces competition from Chinese automakers in Europe and other regions. Hyundai Motor and Kia have complementary positioning: Hyundai Motor emphasizes technology, quality, and new mobility fields, while Kia focuses on design, brand experience, affordable BEVs, and PBVs. Over the past five years, Kia's revenue CAGR was 14.0%, higher than Hyundai Motor's 12.4%; its 2025 operating margin was 8.0%, also above Hyundai Motor's 6.2%. However, Hyundai Motor enters a new product cycle in the second half of 2026 and expands the Genesis HEV lineup, leading the report to expect its earnings and margins to gradually catch up. In 2025, Hyundai Motor generated KRW 186 trillion in revenue and sold 4.1 million vehicles globally; Kia generated KRW 114 trillion in revenue and sold 3.1 million vehicles; Hyundai Mobis generated KRW 61 trillion in revenue and KRW 3.4 trillion in operating profit. On electrification, the report emphasizes that the group is not betting exclusively on pure EVs but is simultaneously developing HEVs, PHEVs, BEVs, EREVs, and FCEVs to accommodate uneven transition speeds across regions. Hyundai Motor's xEV share is expected to rise from 23% in 2025 to 55% in 2030, with HEVs increasing from 15% to 30% and BEVs from 7% to 18%; Kia's xEV share is expected to rise from 24% to 52%, with HEVs increasing from 15% to 28% and BEVs from 8% to 18%. The report believes HEVs will remain the primary source of medium-term growth because demand is strong in markets such as North America while BEV adoption remains gradual. Hyundai Mobis supplies battery systems, power electronics, and SDV components and will benefit as the group's electrified-vehicle production and component content per vehicle increase, while also pursuing more non-group customers. Approximately 80% of Hyundai Mobis' revenue comes from Module/Core Parts and approximately 20% from A/S, but earnings are primarily contributed by the A/S business, which holds exclusive rights to supply global OEM replacement parts for Hyundai Motor and Kia. Module/Core Parts drives revenue growth but still needs to improve profitability by scaling electrification products and increasing non-group customers. Mobis' value therefore derives both from stable aftermarket earnings and from operating leverage in electrification, software, and robot actuators. Group governance represents another independent rerating path. Hyundai Motor, Hyundai Mobis, and Kia remain at the center of a circular shareholding structure. The report envisions a merger of Hyundai Motor and Hyundai Mobis, the separation of Mobis' A/S and Module/Core Parts businesses, and the eventual unwinding of the circular relationship created by Kia's stake in Mobis. Its framework indicates that the relevant arrangements could unlock approximately 31% in value for Hyundai Motor and Hyundai Mobis shareholders, respectively, and provide Kia with funds equivalent to approximately 16% of its market capitalization. A potential Boston Dynamics IPO could also provide financial flexibility for inheritance-related obligations of the Chung family and group restructuring, thereby promoting simplified ownership and improved corporate governance. For valuation, the report uses P/B multiples to assess the core automotive businesses and separately includes the value of Boston Dynamics and other robotics assets. Hyundai Motor's target price is KRW 570,000, implying 39% upside, with an Outperform rating; Hyundai Mobis' target price is KRW 640,000, implying 37% upside, with an Outperform rating; Kia's target price is KRW 150,000, implying 14% upside, with a Market-Perform rating. Hyundai Motor's core attractions are earnings recovery, robotics ownership exposure, and restructuring optionality; Hyundai Mobis offers leveraged exposure to Hyundai Motor's and Kia's electrification growth, robot actuators, and restructuring; although Kia has solid profitability and xEV execution, the report believes it has fewer incremental catalysts than the other two.

Analysis framework

The report first compares the three companies' historical sales volumes, global shares, geographic mixes, brand positioning, growth rates, and margins to establish the earnings foundation of their traditional automotive businesses. It then breaks down the electrification path through 2030 by HEV and BEV share and analyzes Hyundai Mobis' component content and segment earnings structure. For new businesses, it builds phased forecasts based on the SDV technology stack, an explicit commercialization timetable, internal Atlas deployment, external shipments, and revenue growth. Finally, it values the core automotive businesses using P/B separately from robotics assets such as Boston Dynamics, then incorporates the capital-structure effects of unwinding circular shareholdings and a potential IPO to derive target prices and relative preferences for the three companies.

Methodology notes

• Valuation MethodPB valuation

  P/B valuation of the core automotive businesses

  The report values the three companies' mature automotive businesses using share-price-to-book-value multiples and uses these to derive the value of their core businesses.

• Valuation MethodSOTP Valuation

  Separate valuation of the core automotive businesses and Physical AI assets

  The report separately values and then sums the mature automotive businesses, Boston Dynamics, and other robotics-related assets to prevent new-business optionality from being obscured by traditional automotive valuations.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Projecting robotics revenue based on Atlas shipment volumes

  Starting from the assumption that Atlas shipments increase from 1,800 units in 2028 to 180,000 units in 2035, the report projects Boston Dynamics' revenue to rise from USD 477 million to USD 14.9 billion over the same period.

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Industry Chain Transmission

  Transmission of complete-vehicle electrification and robot production to Hyundai Mobis

  Higher xEV production by Hyundai Motor and Kia increases demand for Mobis' batteries, power electronics, and other components, while mass production of Atlas translates into new revenue for Mobis through its exclusive actuator supply relationship.

• Event Strategy and Behavioral FinanceEvent-driven analysis

  Boston Dynamics IPO and unwinding of circular shareholdings

  The report treats a potential IPO, business separations, corporate mergers, and the unwinding of circular shareholdings as capital-structure events and estimates the shareholder value they could unlock.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hyundai Motor (005380.KS)

  The group's flagship automaker, with the most direct exposure to earnings recovery, SDVs, Boston Dynamics ownership, and group restructuring.

  Strengths

  A broad technology roadmap covering HEVs, PHEVs, BEVs, EREVs, and FCEVs; entry into a new product cycle in the second half of 2026; significant robotics and restructuring optionality.

  Weaknesses

  Its 2025 operating margin of 6.2% was below Kia's 8.0%, and it experienced production disruptions caused by supplier and factory incidents in 2026.

  Comparison

  Compared with Kia, it currently has a lower margin but greater recovery potential and more incremental catalysts; compared with Hyundai Mobis, it has greater direct Atlas ownership exposure.

  Risks

  If production disruptions persist, the recovery in sales and earnings could be delayed.

• Kia (000270.KS)

  A design-driven automaker advancing electrification through HEVs, affordable BEVs, and PBVs, which may also receive funds from the unwinding of circular shareholdings.

  Strengths

  Revenue CAGR of 14.0% over the past five years, a 2025 operating margin of 8.0%, and strong product competitiveness, brand design, and xEV execution.

  Weaknesses

  The report believes it has fewer incremental upside drivers than Hyundai Motor and Hyundai Mobis.

  Comparison

  Its revenue growth and margins are superior to Hyundai Motor's, but it is rated Market-Perform while the other two companies are both rated Outperform.

  Risks

  Intensifying competition in key markets could affect its sales and industry-leading profitability.

• Hyundai Mobis (012330.KS)

  The group's core component supplier, benefiting from higher xEV component content, demand for Atlas actuators, and potential group restructuring.

  Strengths

  The A/S business provides a stable, high-margin foundation; capabilities span electrification, automotive electronics, autonomous driving, connectivity, semiconductors, and SDV technologies; it has an exclusive supply partnership for Atlas actuators.

  Weaknesses

  Module/Core Parts contributes approximately 80% of revenue, but earnings depend primarily on A/S; the core components business still needs to improve profitability through scale and non-group customers.

  Comparison

  Compared with the automakers, it has operating leverage to Hyundai Motor's and Kia's electrification growth through components, along with additional robot-actuator exposure.

  Risks

  If the scaling of electrification products or expansion among non-group customers is slower than expected, profitability improvement in Module/Core Parts could be constrained.

Key data

• Hyundai Motor xEV share of sales23% in 2025; 55% in 2030HEVs rise from 15% to 30%, while BEVs rise from 7% to 18%.
• Kia xEV share of sales24% in 2025; 52% in 2030HEVs rise from 15% to 28%, while BEVs rise from 8% to 18%.
• Atlas shipment forecast1.8k units in 2028; 180k units in 2035Gradually expanding from internal group deployment to external customers.
• Boston Dynamics revenue forecastUSD 477mn in 2028; USD 14.9bn in 2035Equivalent to a CAGR of 45.9% from 2028 to 2035.
• Boston Dynamics valuationKRW 125.7tn in 2030Equity value under the report's base-case valuation framework.
• Internal group Atlas deployment planUp to 25,000 unitsPlanned for deployment at Hyundai Motor and Kia manufacturing facilities.
• Atlas target production capacity30,000 units annually in 2028Boston Dynamics' target annual production capacity.
• Hyundai Motor five-year revenue growth and marginRevenue CAGR 12.4%; 2025 OPM 6.2%The report expects the new product cycle beginning in the second half of 2026 to support subsequent improvement.
• Kia five-year revenue growth and marginRevenue CAGR 14.0%; 2025 OPM 8.0%Both growth and profitability are higher than Hyundai Motor's.
• Hyundai Mobis business mixModule/Core Parts approximately 80% of revenue; A/S approximately 20% of revenueThe A/S business contributes most of the operating profit.
• Estimated value unlocked by restructuringApproximately 31% for Hyundai Motor and Hyundai Mobis; approximately 16% of market capitalization for KiaThe former represents shareholder value uplift under the report's framework, while the latter represents the amount of funds Kia could receive.
• Hyundai Motor target priceKRW 570,000Outperform, which the report says implies 39% upside.
• Hyundai Mobis target priceKRW 640,000Outperform, which the report says implies 37% upside.
• Kia target priceKRW 150,000Market-Perform, which the report says implies 14% upside.

Impact & implications

The report believes the group's near-term earnings will remain primarily driven by production recovery, new products, and HEV growth, but the valuation framework is expanding to include software, autonomous driving, and robotics. Hyundai Motor has the greatest Boston Dynamics ownership and restructuring exposure; Hyundai Mobis captures multiple transmission channels from electrification components, Atlas actuators, shareholdings, and governance improvements; Kia continues to maintain strong profitability and xEV execution but has relatively limited incremental rerating catalysts. If Boston Dynamics commercialization, an IPO, and the unwinding of circular shareholdings materialize in sequence, the group could shift from trading at a governance discount to a Physical AI-driven rerating.

Risks

• Production disruptions related to supplier and factory fires in 2026 depressed the group's output, and the pace of recovery remains a near-term operating risk.
• Competition from Chinese automakers is intensifying in Europe, China, Southeast Asia, and other markets, potentially pressuring sales, market share, or profitability.
• The pace of electrification varies across regions, requiring the group to manage product and capacity allocation across HEVs, BEVs, and other powertrain technologies simultaneously.

What to watch

• Monitor whether the new Tucson, Elantra, and Genesis HEV product cycle beginning in the second half of 2026 can drive Hyundai Motor's earnings recovery.
• Track whether Hyundai Motor's and Kia's HEV and BEV shares progress toward their respective 2030 xEV targets of 55% and 52%.
• Monitor highway NOA and the Atlas pilot at HMGMA in 2027, as well as urban NOA, mass-produced SDVs, and Atlas commercialization milestones in 2028.
• Track internal Atlas deployment, the target production capacity of 30,000 units in 2028, and subsequent progress in shipments to external customers.
• Monitor Hyundai Mobis' Module/Core Parts margin, sales to non-group customers, and Atlas actuator revenue.
• Monitor a potential Boston Dynamics IPO and progress on a Hyundai Motor–Hyundai Mobis merger, business separations, and the unwinding of circular shareholdings.
• Monitor the roadmap for L4 Robotaxi commercialization in the 2030s.