Hyundai stock is down nearly 14% today after the Korean auto manufacturer announced its new air mobility division to develop flying cars.
Hyundai Motor Company (OTCPK:HYMTF) announced the creation of the new division on Sunday, which will be led by former NASA aeronautics engineer Dr. Jaiwon Shin. “The new team at Hyundai will develop core technologies that will establish the company as a driving force in urban air mobility, a sector that is expected to grow into a market worth $1.5 trillion within the next 20 years,” Shin said of his appointment over the new mobility unit. Despite the huge potential of the sector, investors in Hyundai stock have greeted the announcement with skepticism.
Shin most recently led the Aeronautics Research Mission Directorate at NASA, where he oversaw a $725 million USD program of aeronautics research initiatives, such as a supersonic X-plane, the electrification of aircraft, UAS traffic management, and urban air mobility. Hyundai is not the only firm making moves into the air mobility market, with companies such as Uber (NYSE:UBER), Terrafugia, and Volocopter also seizing on the potential trillion-dollar industry. Hyundai shares are currently valued at $30.0 on the OTC Pink market.
While Hyundai did not offer any details on what form its flying car division will take, it is assumed that it will focus on air taxis in an attempt to alleviate congested city traffic. This is the area of research that Uber and Kitty Hawk, supported by Google’s Larry Page, have been investing in. Shin is perhaps the ideal candidate for Hyundai’s air division given that he oversaw a multimillion-dollar research initiative into urban air mobility during his time at NASA.
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One major barrier to Hyundai stock really capitalizing on this market is the level of red tape the company must get through before urban air mobility becomes a reality. Currently, there is no regulation in place that would allow for low flying traffic in cities, and also, no air-traffic control system that would ensure such a system would be safe for use in highly populated areas. Nevertheless, this market still represents a huge opportunity, and Hyundai look to have placed their plans in very capable hands.
The announcement comes after a week that saw shares in other innovative automotive companies, such as Tesla Inc (NASDAQ:TSLA) and NIO Inc (NYSE:NIO), drop on the back of legal scrutiny and poor financial results.
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