Technology at the Wheel: Strengthening Resilience in South Korea’s Auto Industry Amid Market Shifts

From hardware-based to software-defined vehicles

Across the global automotive industry, vehicles are increasingly being driven by software, giving rise to so-called software-defined vehicles (SDVs). As the name suggests, SDVs are automobiles that manage and enhance their operations — such as adding functionalities and updating features — partially or entirely through software, without requiring changes to the underlying hardware. This shift is accelerating worldwide, with researchers estimating that around 90% of all cars produced by 2029 will be software-defined [2].

South Korean automakers are already embracing this transformation, with more manufacturers seeking to accelerate the integration of software-defined development into their vehicles. Hyundai Motor Group, one of South Korea’s major automakers, plans to convert its entire lineup into software-defined vehicles by 2025, offering over-the-air (OTA) capabilities and personalized services such as software updates and subscription-based features [3].

Hyundai Motor Group and Kia have also partnered with Samsung Electronics to develop solutions that connect their vehicles with the smartphone ecosystem via Samsung’s SmartThings platform. This integration allows the two carmakers to introduce services such as vehicle location verification, enabling customers to check the location of their vehicles through the SmartThings app [4].

However, the transition to SDVs demands more than strategic vision — it requires substantial investment and robust software foundations. Many early adopters tried to build in-house platforms to gain a technological edge, but these bespoke systems often resulted in fragmented development, limited scalability, poor reusability, and weak integration capabilities. Such inefficiencies have fueled global calls for standardized approaches to automotive software.

 

One key framework that has gained significant traction is AUTOSAR (AUTomotive Open System ARchitecture). By promoting standardized software development and an open E/E system architecture, AUTOSAR-compliant solutions, regardless of their original producers, are highly reusable and compatible across different systems. This compatibility allows automakers to reduce development costs and accelerate time-to-market. Nevertheless, building AUTOSAR-compliant solutions remains a considerable challenge for automakers that lack deep technological expertise and experience.

 

To overcome these hurdles, global automakers are not only embracing AUTOSAR but also shortening their time-to-market by partnering with experienced technology providers. For instance, a Swedish automaker has selected MaaZ, FPT Corporation’s AUTOSAR platform, to develop safety and security solutions for its vehicles, including Watchdog Safety, vector MICROSAR SMI, and ECU cybersecurity controls. FPT delivered end-to-end services for the automaker, covering consulting, solution development, and implementation of AUTOSAR-compliant components.

Within this project, FPT engineers supported the Swedish automaker across key areas of safety and security engineering:

• Functional safety solutions: FPT refined safety concepts and created safety cases, then performed analysis and configuration activities to enable effective tracking, optimization, and compliance with safety requirements.
• Cybersecurity solutions: Through MaaZ, FPT provided a range of security services, including Testing and Secure platform and Secure in-vehicle communication. The team supported component TARA, revised security requirements, built security cases, and implemented ECU cybersecurity controls for the automaker.

By adopting AUTOSAR with support from MaaZ, the Swedish car manufacturer successfully accelerated the time-to-market of new products. Its teams were able to have new software-ready every day and roll out updates to vehicles on a regular cadence, releasing them into production approximately every two months.
Learn more about the success story here.

AI accelerates autonomous driving

South Korea aims to become one of the global leaders in autonomous driving, targeting the commercialization of Level 4 autonomous vehicles by 2027 and expecting 50% of newly launched vehicles in 2035 to be Level 4 models [5]. To support this ambition, AI is positioned as a core enabler for the development and deployment of autonomous vehicles.
AI powers critical use cases that allow vehicles to operate safely and securely on their own, including the ability to:

• Interpret their surroundings using data from cameras, radar, LiDAR and other sensors.
• Perform complex path planning by analyzing traffic conditions, speed limits and potential obstacles.
• Make real-time decisions to control key vehicle functions such as acceleration, braking and steering.

To accelerate these capabilities, South Korea is actively advancing research and development, including a new project to develop an AI accelerator semiconductor for autonomous vehicles with performance that aims to surpass that of U.S. semiconductor giant NVIDIA [6]. The government recently announced an investment of 480 billion won ($349.1 million) this year to develop AI-based services and products, such as AI factories, AI chips and self-driving cars [7].

In parallel, Korean automakers are stepping up their own AI and autonomous driving initiatives. Hyundai Motor Group plans to roll out vehicles equipped with Level 2+ autonomous driving technology by 2027, using an “AI deep learning decision structure” to analyze data captured by vehicle cameras and radar [8]. The company also recently announced a partnership with Waymo to integrate Waymo’s sixth-generation fully autonomous technology into Hyundai’s all-electric IONIQ 5 SUV [9].

Collaboration among local enterprises and government-linked institutions is also intensifying. Hyundai Motor Group and Kia are partnering with the Korea Advanced Institute of Science and Technology (KAIST) to jointly develop LiDAR sensors for advanced autonomous vehicles. This joint research focuses on a new signal detection technology called Frequency Modulated Continuous Wave (FMCW), which is designed to significantly improve the accuracy of distance detection in severe weather conditions [10].

Tech investment on the rise

Tech spending in South Korea's automotive industry is steadily increasing. Key segments such as automotive artificial intelligence and autonomous vehicles are projected to grow robustly, with both markets expected to expand at nearly 30% between 2025 and 2030 [11][12].
At the enterprise level, Hyundai Motor Group has announced a record investment of 24.3 trillion won ($16.65 billion) in the South Korean market in 2025. Around half of this budget is earmarked for research and development of next-generation products, including electrification, software-defined vehicles, hydrogen fuel-powered products, and other advanced technologies. A further 800 billion won is allocated to strategic initiatives such as autonomous driving [13].
These developments underscore South Korea's strong commitment to technology as the global automotive industry moves toward a new, software-driven revolution. Backed by bold investments, strategic alliances, and a government-supported vision for smart mobility, the country's automotive sector is charting a promising path forward despite economic headwinds and market uncertainties.

Conclusion

South Korea’s auto industry stands at a critical inflection point, challenged by new tariffs yet empowered by rapid technological change. By accelerating the shift from hardware to software, embracing AI-driven mobility, and scaling strategic tech investments, automakers can turn external shocks into engines of innovation and competitiveness. Those who move fastest and collaborate widest will set the pace for the next era of resilient, intelligent transportation.

Key Takeaways:

• Prioritize software-defined vehicle platforms to stay agile amid global market volatility
• Leverage AI and data analytics to enhance autonomous driving and connected services
• Increase R&D and digital infrastructure investments to offset tariff and trade pressures
• Strengthen partnerships across tech ecosystems to accelerate innovation cycles
• Continuously reskill the workforce to support advanced automotive technologies