[Edaily Reporter Kim Hyung-wook ] KG Mobility(003620)(KGM) and China’s Cherry Automobile are expanding the scope of their cooperation beyond platform collaboration and joint new vehicle development to include capital, future new businesses, and overseas production bases.
KGM and Cherry signed a strategic investment agreement worth $75 million (approximately 110 billion won) at the Grand Hyatt Seoul on the 2nd. The signing ceremony was attended by KGM Chairman Kwak Jae-seon and CEO Hwang Ki-young, as well as Cherry Automobile Chairman Yin Tongwei, President Zhang Gui-bing, and Chinese Ambassador to South Korea Dai Bing.
The investment will take the form of Cherry acquiring convertible bonds (CBs) issued by KGM. CEO Hwang stated, “Once all the CBs are converted into shares, Cherry’s stake in KGM will be around 10 percent,” adding, “This will serve as an opportunity for the two companies to cooperate even more closely.”
The two companies have been strengthening their cooperative relationship since signing a strategic partnership agreement in 2024. Following the signing of a license agreement for the Cherry T2X platform that year, they entered into an agreement last year to jointly develop mid- to large-sized sport utility vehicles (SUVs), which has now led to this strategic investment agreement.
KGM is currently developing “SE10”—the first result of the collaboration—with a target launch date of January next year. The SE10 is a mid-to-large-sized (D+ segment) SUV that carries on the Rexton’s heritage and is scheduled to be available in both plug-in hybrid (PHEV) and 2.0-liter gasoline engine variants.
Under this agreement, the two companies will also pursue a second joint development project following the SE10. The goal is to develop a global strategic model that can be sold in various regions by incorporating the regulations, safety standards, and customer demands of major markets—including South Korea, China, and Europe—from the product planning stage. The plan is to introduce a differentiated product by combining Cherry’s platform competitiveness with KGM’s expertise in SUV product planning, design, and tuning, accumulated over approximately 70 years. Discussions regarding the vehicle model, specifications, production and sales regions, and the division of roles between the two companies will proceed in phases.
CEO Hwang stated, “KGM will directly refine the interior and exterior designs as well as driving and engine performance, and will validate and launch the vehicles to meet the expectations of consumers in Korea and Europe,” adding, “Once the vehicles are launched, people will be able to see how KGM’s technological capabilities have been incorporated.”
Through this partnership, KGM is expected to reduce the time and costs required for in-house development while rapidly securing PHEV and SDV technologies.
Chery also expects to leverage KGM’s SUV design and tuning capabilities, as well as its understanding of Korean and European consumers, while reducing new vehicle development costs through joint development. Additionally, the company anticipates expanding export opportunities to third countries by utilizing Korea’s extensive network of free trade agreements (FTAs).
The two companies will also mutually utilize each other’s global production facilities, supply chains, and sales and service networks. In strategic overseas markets where business viability has been confirmed, they plan to finalize joint investment approaches and cooperation models. To this end, they will form sector-specific task forces (TFs) involving top management to define roles, and executives from both companies will regularly review progress and key achievements.
Chery is China’s largest automotive exporter, having sold approximately 2.8 million vehicles globally last year, of which 1.34 million were exported. In the first half of this year, it exported 944,000 vehicles—a 71.5% increase year-over-year—becoming the first in China’s automotive industry to surpass 900,000 exports in just six months.
The two companies are also seeking to expand their cooperation beyond automobiles into fields such as semiconductors, robotics, raw materials, and steel. They plan to advance Advanced Driver Assistance Systems (ADAS) and autonomous driving technologies based on Cherry’s Software-Defined Vehicle (SDV)-based electrical and electronic (E/E) architecture, and have agreed to form a task force (TF) to explore collaboration opportunities in semiconductors, robotics, raw materials, and steel.
Chery’s gift of a four-legged walking robot—commonly known as a “robot dog”—to KGM to commemorate the agreement symbolically demonstrated the expanded direction of cooperation between the two companies. CEO Hwang stated, “There are many areas where we can collaborate in the robotics field as well.”
Yin Tongwei, Chairman of Cherry Automobile, emphasized, “The collaboration between Cherry and KGM is the result of the natural alignment of the shared values and strategic directions of both companies,” adding, “We will use this agreement as an opportunity to create a model case that represents cooperation and innovation in the South Korean and Chinese automotive industries.”
KGM Chairman Kwak Jae-seon remarked, “This investment goes beyond a mere financial investment; it marks a new starting point for a long-term strategic partnership based on Cherry’s confidence in KGM’s growth potential and corporate value,” adding, “We will combine the technologies and capabilities of both companies to grow into a sustainable future mobility enterprise.”
