South Korean auto giant Hyundai Motor plans to invest about $16 billion and roughly double its market share in the global electric vehicle market to 7% by 2030 amid increasing competition from startups and traditional peers.
Hyundai Motor’s president and CEO, Jaehoon Chang, made the announcement at the company’s 2022 CEO Investor Day virtual forum last week as a way to seek “sustainable progress for the company,” Hyundai said in a statement.
The automaker, led by Korean billionaire Euisun Chung, is pushing into a global EV market that’s expected to accelerate over the coming years in keeping with goals set by governments in much of the world to cut greenhouse emissions. The market will be worth $957 billion by 2030 on a compound annual growth rate of 24.5% from this year, Market Research Future forecasts.
But the field of automakers is getting more crowded, while a global chip shortage sparked by pandemic-era demand has challenged the sourcing of key parts for vehicle production. The semiconductor shortage was estimated to have cut production by 11.3 million cars last year, AutoForecast Solutions says.
“Hyundai is successfully accelerating its transition to electrification and becoming a global leader in EVs despite a challenging business environment caused by the global chip shortage and ongoing pandemic,” Chang told the virtual event.
Hyundai plans to reach its 2030 goal by strengthening EV line-ups, optimizing production capacity and securing hardware and software competitiveness, Chang added. It also set aside 95.5 trillion won ($79 billion) for future business investment including 19.4 trillion won for electrification and 12 trillion won for software.
The 19.4 trillion won figure is “actually not too large compared to other automakers” with EVs, notes Chris Robinson, research director with market analysis firm Lux Research. Toyota Motor, for example, is investing “over double that” in the same time frame, he adds, and Volkswagen’s investments exceed Hyundai as well as Toyota.
“All automakers globally are focused on expanding production of battery electric vehicles for several reasons,” Robinson says. “First and foremost, customer demand is high and several automakers underestimated demand for new electric vehicles, leading to lengthy reservation times.”
Hyundai may be allocating less capital than other automakers as it stresses sourcing batteries from local suppliers, Robinson says. South Korea is home to three of the world’s five biggest EV battery makers: LG, SK and Samsung.
Toyota and Volkswagen are expected to build their own battery plants, he adds, while “Hyundai will likely struggle to capture 7% global market share by 2030 without investing additional funds in expanding battery and vehicle production.”
The automaker with existing EV plants in South Korea and the Czech Republic plans to build new vehicles by expanding factories such as an Indonesian plant that will kick off EV production this year, according to the statement. It intends to secure a supply of batteries through alliances with vendors in key regions including the United States.