By Shivansh Tiwary
(Reuters) -Aptiv will reduce its stake in self-driving technology joint venture Motional and will stop further funding after incurring millions in losses related to the investment, the auto parts supplier said on Wednesday.
Motional, a venture between the company and Hyundai Motor Co, uses the South Korean carmaker IONIQ5 electric car for its robotaxi. It has been offering the service in Las Vegas through Uber (NYSE:UBER) and Lyft (NASDAQ: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 $5.55 to $6.05 per share includes a non-cash equity loss of about $340 million, or $1.20 of earnings per share, related to Motional's losses.
The company joins Ford Motor (NYSE:F), Volkswagen (ETR:VOWG_p) and General Motors (NYSE:GM) in cutting down or backing out of the technology, which is often touted as the future of mobility.
"Companies are realizing that attaining level 4 of autonomous driving is way more difficult and expensive than the industry predicted," Evangelos Simoudis, an investor, author and corporate adviser, told Reuters on Wednesday.
On Tuesday, GM said it would cut about $1 billion in spending on its troubled robotaxi unit, Cruise, in 2024, while Ford and Volkswagen walked out of their self-driving startup Argo AI in 2022, saying the technology was a long way off.
The exit from Argo came after three years of joint efforts to develop automated driving systems and more than $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 $1.40 per share for the quarter ended Dec. 31 compared with expectations of $1.33, according to LSEG data.
Aptiv's shares were down about 4% amid a weak broader market.