Last week, South Korea’s Hyundai Motor announced that it would invest $2.45 billion (approximately Rs. 20,000 crore) in Tamil Nadu over the next 10 years to strengthen its electric vehicle (EV) production in India.
SNE Research, which provides global market research and consulting to the rechargeable battery industry, ranks Hyundai as the sixth-largest electric vehicle manufacturer by sales in 2022. The Asian automaker is increasing its production capacity and aims to become one of the world’s top three electric vehicle manufacturers by 2030.
The South Korean automaker, which owns Hyundai, Kia and Genesis brands, delivered 510,000 electric vehicles last year, a 40.9% increase from 2021, according to SNE Research. Ranking first is China’s BYD, which delivered 1.87 million vehicles, followed by Tesla, which delivered 1.31 million vehicles. Germany’s Volkswagen and China’s Geely ranked fourth and fifth respectively.
CEO Jaehoon Chang told CNBC, “We are now developing two additional platforms that will enable us to have 18 models by 2030. Our goal is to achieve 2 million electric vehicle sales around 2030.”
The automaker is investing heavily in research and development, building new factories and platforms, and expanding electric vehicle production lines and capacity.
Its electric vehicles are currently developed on the Hyundai Electric Global Modular Platform (E-GMP), an advanced custom electric vehicle platform. The 2021 Ioniq 5 crossover SUV is the first model from Hyundai Motor’s Ioniq sub-brand focused on electric vehicles to be developed in accordance with E-GMP. Hyundai then launched the Ioniq 6 sedan model in 2022. Electric vehicle platforms can scale production of future models and reduce development and manufacturing costs.
Hyundai Motor plans to launch vehicles based on two new electric vehicle platforms, eM and eS, in 2025, which is expected to improve vehicle development efficiency and further reduce costs.
Staying out of the spotlight, Hyundai has gradually slipped to third place in the global race to become the world’s largest automaker by 2022. According to industry data compiled by CNBC, Hyundai and Kia sold a total of 6.85 million vehicles globally last year, a year-on-year increase of 2.7%. Toyota, which ranked first, sold nearly 10.5 million units, while European auto giant Volkswagen sold about 8.26 million units.
Zhang said Hyundai Motor’s first-quarter 2023 net profit increased 92% year-on-year, “mainly driven by the United States and Europe.”
Hyundai Motor reported net profit of 3.42 trillion won ($2.56 billion), up from 1.78 trillion won in the same period last year. Revenue increased by 24.7% year-on-year, from 30.3 trillion won to 37.78 trillion won.
Hyundai is eager to make an impact in China’s auto market, but the company’s exposure is currently very limited.
“We have a joint venture in China. We are now deeply studying how to regain competitiveness in the Chinese market,” CEO Zhang said. Counterpoint Research predicts that China’s electric vehicle sales will exceed 8 million units in 2023.
“I think our first consideration is how to optimize our operational capabilities in China. The next step should be our product portfolio, which should be attractive to local customers with comparable software features as well as hardware and design features,” Zhang told CNBC.
By 2022, China will produce nearly two-thirds of the world’s battery electric vehicles, and a quarter of the cars sold in China will be electric. In China, more than 94 brands offer a total of more than 300 models, priced from just US$5,000 to more than US$90,000. Local brands account for 81% of the electric vehicle market, with BYD, Wuling, Chery, Changan and GAC being some of the top brands.
Europe ranks second, followed by North America, accounting for 17% and 11% of global electric vehicle production in 2022 respectively.
It now appears that China has gained an insurmountable lead in the race to become the leading electric vehicle manufacturer. However, it’s still early days, with only 9% of all light vehicles produced last year being electric, leaving plenty of room for other markets to catch up.
Where China is today, government support plays a big role. China has provided more than 300 billion yuan ($43.5 billion) in purchase subsidies and tax breaks between 2009 and 2022 to support locally produced electric vehicles of domestic and foreign brands. The government also offers large procurement contracts to buy products from emerging electric vehicle companies, helping them with their early development and providing funding for further research and development.
In Chennai, Tamil Nadu, known as the Detroit of Asia, Hyundai Motor plans to increase the production capacity of its plant near Chennai from about 775,000 units to 850,000 units per year. Additionally, the carmaker’s Indian subsidiary Hyundai Motor India will set up a battery pack assembly plant with an annual capacity of 178,000 vehicles and install 100 electric vehicle charging stations in southern states over the next five years.
The investment plan follows the Union government’s recent announcement that it would increase taxes on imported vehicles to encourage local manufacturing.
In Singapore, Hyundai Motor said earlier this year that its Singapore assembly plant in Jurong would begin rolling out the electric Ioniq 5 mid-year, partly due to delays due to the COVID-19 pandemic. It was due to be completed last November.
Andy Kang, head of Hyundai Motor’s sales innovation group, said the plant would first import the car’s fully painted body shell from its newly opened factory in Indonesia, with all other parts shipped from South Korea. It plans to gradually source components locally once production ramps up.
In addition to the Ioniq 5, the newly launched Ioniq 6 and the new Kona Electric will also be assembled at the Jurong plant. The plant is expected to produce 30,000 vehicles per year by 2025.
“Our goal is to become Singapore’s No. 1 electric vehicle brand,” Kang said. The position is currently held by Tesla.