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Hyundai's Strategy in EV and Mobility

General Report January 10, 2025
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TABLE OF CONTENTS

  1. Summary
  2. Overview of the 'Hyundai Way' Strategy
  3. Electrification and Hybrid Vehicle Expansion
  4. Development of Extended Range Electric Vehicles (EREVs)
  5. Investment in Battery Technology
  6. Advancements in Autonomous Vehicles
  7. Hydrogen Energy Initiatives
  8. Financial Commitments and Shareholder Returns
  9. Conclusion

1. Summary

  • At the 2024 CEO Investor Day, Hyundai Motor Company announced its ambitious 'Hyundai Way' strategy aimed at propelling the company into a leadership position in the electrification and mobility sectors. The company has set goals to achieve annual global sales of 5.55 million units by 2030, with 2 million designated as electric vehicles (EVs). Key components of this strategy include the introduction of Extended Range Electric Vehicles (EREVs) and an expansion of hybrid offerings, underpinned by significant investments in next-generation technology and battery innovation. Hyundai ambitiously aims for electrification, investing around KRW 120.5 trillion over the next decade in advanced vehicle technologies and sustainable profitability, particularly focusing on North America and China as key markets. Additionally, Hyundai plans to enhance its hydrogen energy initiatives and pursue advancements in autonomous driving, all contributing to its comprehensive growth strategy in the automotive industry.

2. Overview of the 'Hyundai Way' Strategy

  • 2-1. Introduction to the 'Hyundai Way'

  • The 'Hyundai Way' strategy was unveiled by Hyundai Motor Company during its 2024 CEO Investor Day. This strategy primarily focuses on enhancing the company's competitiveness in electric vehicles (EVs) and hybrids, advancing battery technology, and enhancing autonomous vehicle capabilities. Key aims include solidifying Hyundai's position as a leader in the evolving automotive and energy markets. The strategy emphasizes a flexible response system that enables Hyundai to navigate market uncertainties effectively, positioning the company to create a mobility-centered future.

  • 2-2. Goals and Aspirations for 2030

  • Under the 'Hyundai Way', Hyundai aims to achieve several significant goals by the year 2030. The company targets annual global sales of 5.55 million units, including 2 million electric vehicles. This represents a 30% increase from the 2023 sales figures. Hyundai plans to introduce a complete lineup of 21 electric vehicle models ranging from affordable to luxury high-performance segments by this target year. Furthermore, it plans to expand its hybrid lineup from 7 to 14 models, including offerings from its luxury brand Genesis, and to enhance the performance and fuel efficiency of its next-generation hybrid systems. Significant investments of around KRW 120.5 trillion are expected to be made from 2024 to 2033 to support these goals, with a focus on R&D and sustainable profitability targets.

3. Electrification and Hybrid Vehicle Expansion

  • 3-1. Expansion of Hybrid Lineup

  • Hyundai Motor Company is set to double its hybrid lineup from seven to fourteen models. This expansion will include new options from the luxury Genesis brand, which will join the hybrid vehicle offerings. This strategic move reflects Hyundai's commitment to leading in the hybrid market by providing high-performance, fuel-efficient vehicles that cater to a diverse customer base.

  • 3-2. Introduction of Next-Generation TMED-II Hybrid System

  • The next-generation TMED-II hybrid system is being introduced as part of Hyundai's ambitious electrification strategy. This advanced hybrid system, which is set to debut in production vehicles by January 2025, promises significant improvements in both performance and fuel efficiency. Future hybrid models will also feature enhancements such as smart regenerative braking and Vehicle-to-Load (V2L) technology, positioning Hyundai as a top-tier competitor in the hybrid vehicle segment.

  • 3-3. Sales Targets for Hybrid Vehicles

  • Hyundai has set ambitious sales targets for its hybrid vehicles, aiming to reach sales of 1.33 million units by 2028. This represents a 40% increase from previous sales plans. The primary market driving this growth is North America, where Hyundai plans to sell approximately 690,000 hybrid vehicles by 2030. To meet these targets, Hyundai is investing in enhancing its manufacturing capabilities, including production at its Hyundai Motor Group Metaplant America in Georgia.

4. Development of Extended Range Electric Vehicles (EREVs)

  • 4-1. EREV Technology Overview

  • Hyundai Motor is developing a new Extended Range Electric Vehicle (EREV) as part of its Hyundai Dynamic Capabilities strategy. The EREV will combine the advantages of Internal Combustion Engines (ICE) and Electric Vehicles (EVs), providing a unique powertrain and power electronics system designed for four-wheel drive with the implementation of two motors. The operation focuses on electric power similar to EVs, while the ICE will be utilized solely for battery recharging. The new EREV maximizes existing engine use, enhancing customer appeal and cost competitiveness by significantly reducing the required battery capacity, thereby offering a driving experience that mimics that of an EV.

  • 4-2. Production Plans and Market Launch

  • Hyundai Motor plans to mass-produce the new EREV in North America and China by the end of 2026, with significant sales initiatives anticipated to begin in 2027. In North America, the initial launch will focus on D-class SUVs under both Hyundai and Genesis brands, targeting over 80,000 units to fulfill existing demand for ICE models. In China, due to strong price competitiveness needs, production will pivot to an economical C-segment platform with expectations of selling more than 30,000 units. This strategic approach provides a critical bridge to full electrification, addressing current EV deceleration while expanding both hybrid and EREV offerings, aiming for a gradual increase in EV models by 2030.

  • 4-3. Target Markets for EREVs

  • Hyundai Motor is directing its EREV market strategy towards North America and China as key demographics. The North American market is identified for its substantial demand for ICE models, where Hyundai plans to increase hybrid vehicle volume significantly, projecting a total of 690,000 units by 2030. In China, Hyundai's approach addresses the affordability and price competitiveness essential in the eco-friendly car market. Additionally, there are plans for further market expansion contingent upon future demands, thereby ensuring flexibility within their market portfolio strategy.

5. Investment in Battery Technology

  • 5-1. Overview of New Battery Initiatives

  • Hyundai Motor Company's strategy, termed the 'Hyundai Way,' focuses on the advancement of battery technology as a critical element to maintain its competitive edge in the electric vehicle (EV) market. The company plans to introduce a new, cost-effective nickel-cobalt-manganese (NCM) battery and is actively developing solid-state batteries. To support this initiative, Hyundai is establishing a new battery research facility at its Uiwang Research Institute, which is set to open in late 2024, thereby enhancing its focus on battery innovation.

  • 5-2. Safety Enhancements in Battery Management

  • Safety is a paramount concern in Hyundai's battery strategy. The company is enhancing its Battery Management System (BMS) technology to provide real-time detection and response to minor battery abnormalities. This improvement in safety measures is designed to ensure that Hyundai’s EVs are not only efficient but are also among the safest options available in the market, mitigating risks associated with battery failures.

  • 5-3. Research and Development Investments

  • Hyundai Motor Company is committing substantial resources to research and development (R&D) in the field of battery technology. This commitment is part of the broader financial strategy, which includes a projected $90 billion (approximately KRW 120.5 trillion) investment over the next decade aimed at innovation across various sectors including battery technology. This investment will bolster Hyundai's capabilities in developing advanced battery systems while also emphasizing the importance of safety and performance in its electric vehicle offerings.

6. Advancements in Autonomous Vehicles

  • 6-1. Transition to Software-Defined Vehicles (SDVs)

  • Hyundai Motor Company is undergoing a significant transition towards Software-Defined Vehicles (SDVs). This shift involves incorporating advanced software development methods into vehicle development, allowing for greater flexibility and innovation. The SDV initiative focuses on creating hardware devices capable of collecting diverse data from both inside and outside the vehicle, which can control the vehicle's interface through software. This development aims to enhance the overall user experience and operational efficiency of Hyundai's vehicles.

  • 6-2. Autonomous Vehicle Foundry Business

  • Hyundai Motor Company is entering the autonomous vehicle market through its new autonomous vehicle foundry business. This strategy involves supplying autonomous vehicles to global software firms specializing in self-driving technology. The foundry aims to leverage Hyundai's advanced technology and insights gained through the development of SDVs, positioning the company as a major player in the growing field of autonomous driving.

  • 6-3. Partnerships and Collaborations in Autonomous Driving

  • Hyundai is actively pursuing partnerships and collaborations to enhance its capabilities in autonomous driving. By collaborating with leading software firms and technology providers, Hyundai aims to strengthen its position in the mobility ecosystem. These partnerships will facilitate the sharing of data and resources, enabling Hyundai to accelerate its developments in autonomous vehicle technology and ensure the safe and efficient integration of these vehicles into the transportation infrastructure.

7. Hydrogen Energy Initiatives

  • 7-1. Expansion of Hydrogen Fuel Cell Systems

  • Hyundai's commitment to sustainable energy is evident in its plans to expand its hydrogen fuel cell system lineup under its HTWO brand. The company is targeting broader hydrogen applications including advanced air mobility, heavy equipment, and maritime transportation. By developing various hydrogen fuel cell systems, Hyundai aims to solidify its leadership in the hydrogen energy market.

  • 7-2. Innovations in Hydrogen Production

  • Hyundai is investing in innovative hydrogen production methods such as Waste-to-Hydrogen (W2H) and Plastic-to-Hydrogen (P2H). These advanced technologies demonstrate Hyundai's dedication to leading the global energy transition by utilizing waste materials for sustainable hydrogen production, thus contributing to greener operations and efficient energy use.

  • 7-3. Strategic Goals for Hydrogen Leadership

  • As part of its 'Hyundai Way' strategy, Hyundai has set strategic goals to establish itself as a leader in the hydrogen sector by 2030. The company aims to significantly increase its hydrogen production capabilities and market presence, with specific targets designed to support this leadership position in the rapidly evolving energy landscape.

8. Financial Commitments and Shareholder Returns

  • 8-1. Investment Plans Through 2033

  • Hyundai Motor Company plans to invest a total of KRW 120.5 trillion through 2033 to support the ambitious 'Hyundai Way' strategy. This investment is divided among various segments with KRW 54.5 trillion allocated for research and development (R&D), KRW 51.6 trillion for capital expenditures (CAPEX), and KRW 14.4 trillion designated for strategic investments. The company aims to bolster its electric vehicle (EV) and hybrid offerings as well as its battery and autonomous technologies throughout this investment period.

  • 8-2. Target Shareholder Return Initiatives

  • Hyundai Motor Company has implemented a target shareholder return (TSR) initiative aimed at exceeding 35%. As part of its financial strategy, the company has planned a share buyback scheme worth up to KRW 4 trillion, effective from 2025 through 2027. Furthermore, the annual dividend for the year 2024 is set to be a minimum of KRW 10,000, with quarterly dividends of KRW 2,500 starting in 2025. These initiatives reflect Hyundai's commitment to enhancing shareholder value.

  • 8-3. Financial Performance and Global Market Position

  • In 2023, Hyundai Motor achieved a global sales volume of 4.21 million units, positioning itself as one of the top three automakers globally. The company's strong financial performance has been recognized, leading to an A-grade credit rating from major global credit rating agencies. With ambitious targets set to achieve annual global sales of 5.55 million units by 2030, Hyundai aims to significantly increase its market share, including selling 2 million EVs globally within the same timeframe. This growth strategy is supported by their commitment to investment and shareholder returns.

Conclusion

  • Hyundai Motor Company's 'Hyundai Way' strategy signals a transformative period for the company, as it seeks to secure its future competitiveness in the global EV and mobility space. By 2030, the company aims to expand its hybrid lineup and achieve significant milestones in the sale of electric and hybrid vehicles, driven by advanced Extended Range Electric Vehicle (EREV) technologies. Despite ambitious targets, the strategy's success will depend on overcoming challenges such as global market volatility and competitive pressures. Hyundai's significant investments in battery technology, autonomous driving, and hydrogen energy demonstrate its commitment to sustainability and technological leadership. Future directions suggest a potential amplification of market influence if Hyundai effectively addresses the implementation challenges and maintains technological innovation momentum. Practical implications include improved offerings in energy-efficient vehicles and increased shareholder returns through strategic financial initiatives. As Hyundai pursues its dynamic growth objectives, its adaptive approach to market trends will be critical in shaping its future market position.

Glossary

  • Hyundai Motor Company [Company]: Hyundai Motor Company is a global automotive manufacturer headquartered in South Korea. It is recognized for its commitment to innovation in electric and hybrid vehicle technology, as well as its initiatives in hydrogen energy and autonomous driving. The company's strategies aim to position it as a leader in the rapidly changing automotive landscape, emphasizing sustainability and technological advancement.
  • EREV (Extended Range Electric Vehicle) [Vehicle Technology]: The Extended Range Electric Vehicle (EREV) is a hybrid vehicle that operates primarily on electric power while utilizing an internal combustion engine for battery charging. This dual-system enhances driving range and provides a bridge for consumers transitioning from traditional vehicles to fully electric options. Hyundai's development of EREVs is a key component of its electrification strategy.

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