KGM secures W100b from China's Chery, eyes robot and SDV cooperation

KGM has secured a strategic investment of about 100 billion won ($69.4 million) from Chery Automobile, China's largest privately owned automaker, as the two companies move to deepen cooperation across next-generation vehicle technologies. The partnership will expand well beyond their existing joint SUV development work to cover software-defined vehicles, autonomous driving, robotics and semiconductors.

KGM signed the investment agreement with Chery Automobile at the Grand Hyatt Seoul in Yongsan-gu on Sunday, with Chery committing $75 million through a convertible bond. If fully converted into shares, the investment would give Chery approximately a 10 percent stake in KGM.

The latest deal builds on a strategic partnership and platform license agreement the two companies signed in 2024, followed by a joint development agreement for mid- and large-size SUVs in 2025.

KGM Chairman Kwak Jae-sun said strategic cooperation between global companies amid the shift to electrification and software-defined vehicles is "not a choice but an essential strategy for sustainable survival." He described the deal as "the starting point of a new strategic partnership grounded in Chery Automobile's trust in KGM's future growth potential and value — going far beyond a simple financial investment."

To broaden collaboration beyond the automotive sector into semiconductors, robotics, raw materials and steel, the two companies agreed to form CEO-level task forces for each area. The task forces will explore joint research, pilot projects and commercialization opportunities, and identify specific cooperation initiatives by field. In semiconductors, the two sides will discuss joint investment and development of automotive chips.

Cooperation on core future-vehicle technologies will also move into full gear. KGM will use Chery's SDV-based electrical and electronic architecture, EEA 5.1, as the foundation for advancing its advanced driver-assistance systems and autonomous driving capabilities.

The two companies plan to accelerate new vehicle development by combining Chery's eco-friendly powertrain and global platform technology with KGM's product planning expertise.

The first jointly developed model, project SE-10, is a D+-segment mid-size SUV carrying forward the Rexton heritage. It will be offered in plug-in hybrid and 2.0-liter gasoline variants and is scheduled to launch in early 2027. KGM plans to channel the investment funds from Chery directly into SE-10 development.

The SE-10 will ride on Chery's T2X platform, but KGM's SUV development expertise will shape the interior and exterior design as well as driving performance. KGM also plans to expand its eco-friendly lineup on the same platform, adding an extended-range electric vehicle among other options.

KGM CEO Hwang Ki-young said the company would not simply adopt the platform as-is, but would "upgrade driving and engine performance by incorporating KGM's SUV strengths and know-how." He added that the company would "differentiate the design and product quality to meet Korean consumers' expectations before bringing it to market."

The two companies also agreed to pursue a second joint development project after the SE-10. The goal is to develop a strategic model for sale in major global markets — including South Korea, China and Europe — by incorporating regional regulations, safety standards and customer requirements from the product-planning stage. Hwang said the next new vehicle development effort "will start with the most mainstream C segment."

The two companies will also discuss joint investment in overseas production and business facilities to support their international expansion. They plan to make mutual use of each other's global production facilities, supply chains, and sales and service networks, and will examine specific investment structures and cooperation models in overseas strategic markets where business viability has been confirmed.

Chery Automobile is one of China's leading automakers, having sold about 2.8 million vehicles in global markets last year. Exports accounted for roughly 1.34 million units, up 17.4 percent from the previous year, extending the company's record as China's top passenger-car exporter for 23 consecutive years. Chery operates production bases not only in China but also in Europe, South America and Southeast Asia.

Chery Automobile President Zhang Guibang said that since both Chery and KGM operate multiple overseas production facilities, "a cooperation model that shares overseas production capacity is also worth considering." He added that because tariffs on Chinese- and Korean-made products vary by region, "leveraging each other's production bases and networks could benefit both companies."

However, KGM drew a line on the question of contract manufacturing Chery vehicles at its Pyeongtaek factory, saying there are currently no concrete plans for such an arrangement. Hwang said the immediate priority is making the SE-10 a success, and that contract manufacturing Chery vehicles at the Pyeongtaek factory "has never been under consideration."