[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, Cherry Chairman Yin Tongwei and 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. Once all the CBs are converted into shares, Cherry’s stake in KGM will be around 10%.

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 Cherry’s T2X platform that year, they entered into a joint development agreement for mid- to large-sized sports utility vehicles (SUVs) last year, which has now led to this strategic investment agreement.

KGM is currently developing “SE10”—the first result of the collaboration between the two companies—with the goal of completing it by January of next year. The SE10 is a mid-large (D+ segment) SUV that carries on the Rexton’s heritage and will be available in plug-in hybrid (PHEV) and 2.0-liter gasoline models.

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 vehicle that can be sold in various regions by incorporating regulations and customer demands from major markets—including South Korea, China, and Europe—from the product planning stage. Details regarding the vehicle model, specifications, production and sales regions, and the division of roles between the two companies will be discussed in phases.

Hwang Ki-young, CEO of KGM, stated, “KGM will directly refine the interior and exterior designs, as well as driving and engine performance, and validate the vehicle to meet the expectations of consumers in Korea and Europe before launch,” adding, “Once the vehicle is launched, people will be able to see how KGM’s technological capabilities have been incorporated.”

Through this partnership, KGM expects to reduce the time and costs required for in-house development while rapidly acquiring 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. Chery also anticipates expanding export opportunities to third countries by utilizing Korea’s extensive network of free trade agreements (FTAs).

Some in the industry have expressed concerns that reliance on Chinese platforms and future vehicle technologies could increase, potentially weakening KGM’s unique SUV identity. There are also doubts as to whether Cherry might directly enter the Korean market in the future or use KGM’s Pyeongtaek plant as a production base for Cherry-branded vehicles.

However, CEO Hwang drew a clear line on this issue, stating, “We have no such plans at present, nor have we ever considered it.” Zhang Guibing, President of Cherry Auto, also said, “If Korean customers show interest in Cherry vehicles, we may consider entering the local market, but the most important thing right now is to work together to make KGM a brand that is even more beloved in the Korean and global markets.”

The two companies are also seeking to expand their cooperation beyond automobiles into fields such as semiconductors, robotics, raw materials, and steel. They agreed 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 to form a task force (TF) to explore opportunities for collaboration 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 the two companies’ cooperation. CEO Hwang remarked, “Chery’s chairman presented us with a robot dog,” adding, “There are many areas where we can collaborate in the robotics field as well.”

Yin Tongwei, Chairman of Cherry Auto, 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 representing 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.”