Independent Online

Thursday, August 11, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

How Hyundai plans to reduce electric car costs - by sharing tech

Published Aug 25, 2020

Share

SEOUL - As Tesla accelerates the shift to electric cars, Hyundai's loyal suppliers have increasingly turned to "outsiders" for parts - but now the South Korean carmaker's own supply company, Mobis, is plunging into the game.

Hyundai Mobis is in talks with two global carmakers to supply electrified parts, its executive told Reuters, as it hopes to boost volume and lower prices.

Story continues below Advertisement

The move is a direct response to companies such as Volkswagen and Tesla muscling in with suppliers with whom Hyundai had worked for decades.

"We were not able to supply to other companies because we were busy with keeping up with Hyundai's growth. Now this has changed," said Ahn Byung-ki, senior vice president of electric powertrain business at Hyundai Mobis.

"If we increase outside sales, overall prices will drop. This will benefit everyone - us, global companies and Hyundai," said Ahn, who previously developed eco-friendly cars at Hyundai Motor.

Hyundai recently announced plans to introduce three all-new EV models that will fall under a new brand called Ioniq.

ALSO READ: Hyundai announces new electric car brand

Hyundai Mobis, in which Hyundai Motor Group chairman Chung Mong-koo is the biggest individual shareholder, gets more than 90 percent of its revenue from the mothership.

Story continues below Advertisement

Ahn said that reducing electric vehicle costs is key to competing with cheaper internal combustion cars without subsidies.

He said Mobis hoped to win orders from a couple of global carmakers as early as this year, marking its first deal to supply electrified powertrains.

Hyundai suppliers can leverage Hyundai's longtime experience with developing eco-friendly cars, he said, which puts them ahead of European peers who have focused on diesel.

Story continues below Advertisement

Hyundai and Kia ranked third in global battery electric vehicle sales last year, behind Tesla and Renault-Nissan, according to researcher LMC Automotive.

Hyundai's heir and de facto leader, Euisun Chung, recently said Hyundai is aiming to have more than 10% of EV global market share in 2025.

Seeking survival

Story continues below Advertisement

Like many of Korea's family-owned conglomerates, or chaebol, Hyundai Group is deeply invested in vertical integration, with affiliates making key parts and even steel. Family members, aides and others close to the company founded key suppliers.

After years of breakneck growth, however, Hyundai-Kia's production volume began trending down in 2016, hitting suppliers and moving them to rely less on Hyundai.

"As growth slowed, Hyundai told suppliers to survive on their own," said Lee Hang-koo, senior researcher at Korea Institute for Industrial Economics & Trade.

Hyundai supplier Hanon Systems, which supplies parts to Tesla Model 3 and Volkswagen's ID3, generates more than half of its revenue from non-Hyundai customers.

Reuters

Related Topics:

Share