Invested half in joint venture Beijing Hyundai
Used in the progress of new eco-friendly vehicles such as electric vehicles
Launching customized products adn exporting them in parallel
Hyundai Motor Company and Beijing Automobile Corporation of China (BAIC) have decided to produce electric vehicles for the first time in China through a joint investment worth 1.56 trillion won. This decision is a very different move from Hyundai Motor Company‘s strategy of ‘downsizing in China’, including the recent sale of Chinese factories. Some analysts say that Hyundai Motor company is no longer reducing its Chinese business, but rather has shifted its strategy to focus on electric vehicles.
On the 11th (local time), Hyundai motor Company and BAIC announced to the Hong Kong Stock Exchange that they each plan to invest $548 million (about 780 billion won) in Beijing Hyundai, a joint venture between the two companies. The two companies plan to use the funds to develop new eco-friendly vehicles such as electric vehicles. in China, the proportion of eco-friendly cars (electric cars + plug-in hybrid cars) among new cars has already exceeded 50%.Despite this, Hyundai Motor Company does not yet produce any electric vehicles directly in China.
Beijing Hyundai announced that it plans to produce its first electric vehicle model using a dedicated platform next year through this investment. Starting in 2026, five types of eco-friendly cars, including hybrid vehicles, are scheduled to be released in the Chinese market. Hyundai Motor Company saeid, “We plan to support Beijing Hyundai’s new product development through China’s Yantai Technology Research Center and Shanghai’s Advanced Research and Development Center.”
Hyundai Motor Company is planning to export overseas in parallel,as it has judged that it cannot guarantee expansion of market share in China even if it releases customized products for China. Hyundai Motor Company already strengthened its localization strategy last year by launching the local strategic sports utility vehicle (SUV) ‘Mufasa’, but has not yet achieved a meaningful rebound in market share. Because of this very reason, we plan to not only rely on local sales for products produced in China, but also actively export them overseas. Electric vehicles produced in China must pay high tariffs when exported to Europe or the United States. Therefore, exports of Chinese products are expected to be mainly directed to Southeast Asia. A Hyundai motor official said, “Beijing Hyundai will not only be a base for domestic sales in China, but also a global export base.”
The automobile industry considers Hyundai Motor Company’s new investment in China to be unexpected. Hyundai and Kia sold 1.79 million units annually in China in 2016, increasing their market share to 7.5%. However, after the THAAD incident, sales plummeted, reaching only 340,000 units (1% market share) in 2022. Hyundai sold two of its five factories in China, and Kia leased one of its three factories to another company. Because of this very reason, the prevailing response was that Hyundai Motor Group would close its business in china and focus on the united States, Southeast Asia, and India.
<img src="https://dimg.donga.com/wps/However, it is known that Hyundai Motor Company and Kia Motors have decided that they cannot completely give up on the Chinese market. This is as China is still a huge market with a population of 1.4 billion people. At the same time, it is believed that this is because cooperation with Chinese companies that have advanced in the fields of autonomous driving and vehicle software technology may increase in the future. Ho-Geun Lee, a professor of the Department of Future Automotive at Daedeok University, said, “China has relatively few regulations on self-driving cars, so Hyundai Motors can use the local market as a ‘test bed’ for self-driving cars. Demand for hydrogen cars is rapidly growing in China. “Hyundai Motors, which is supporting hydrogen vehicles, would like to continue its cooperation in China,” he said.
Reporter Jaehee Han [email protected]
Reporter kim Jae-hyung [email protected]
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