Can electric vehicles revitalize American manufacturing?

Hyundai's investment in high-tech production facilities in the U.S. could fuel innovation and employment growth, says Wharton's Lynn Wu.

Plans by Hyundai and Samsung to invest billions of dollars in high-tech production facilities in the United States is a hopeful sign that a different kind of manufacturing is on the rise in the country after decades of industrial decline, Wharton School professor Lynn Wu says.

Gloved hands in a car factory working on an electric vehicle motor.

During President Joe Biden’s three-day trip to Seoul last month, Hyundai announced it will spend $5.5 billion to build an electric vehicle and battery plant near Savannah, Georgia, about 275 miles from where it already operates a Kia manufacturing hub.

While in Seoul, Biden also toured a computer chip plant owned by Samsung, which last year announced it would build a $17 billion semiconductor factory near Austin, Texas, to boost capacity and alleviate the global chip shortage.

Wu, a professor of operations, information and decisions, says the time is right for Hyundai and other firms to invest in producing a combination of software and hardware. She studies the impact of emerging technologies on business and said it is critical for automakers to embrace driverless technology as the mode of the future.

“In my research, we found that firms that invest in robotics and artificial intelligence are far more productive than the firms that do not. They hire more people and are more productive,” Wu says. “I actually think this a really good time to do this for Hyundai.”

Wu says leaders also need to think about how best to blend workers with widely varying skills—from the person on the factory floor to the one who sits behind a computer.

“Marrying the two is not easy,” she says. “You’re talking about two different cultures of work. But it is possible to do it. We’ve seen people who have done it well. It requires fundamental shifts in firm practices and culture, and I think that’s where we’re beyond the $5 billion.”

When such partnerships are executed thoughtfully and correctly, she adds, they result in employment growth and the creation of best practices, which could spill over from EVs to other types of innovation, she says.

Read more at Knowledge at Wharton.