Hyundai Motor Group plans to invest $7.4 billion in the U.S. over the next four years to make electric vehicles and expand hydrogen refueling stations, among others, in line with billionaire heir-apparent Euisun Chung’s green-car ambitions.
Hyundai, South Korea’s second-biggest conglomerate by revenue, announced last week it would spend some of that money to manufacture EVs and improve production facilities. An EV plant will start production next year in the U.S., the announcement added.
Investments in the U.S. will help the Korean automaker compete, says Chris Robinson, senior analyst with research firm Lux Research. “Governments are increasingly focused on not only promoting greater adoption of electric vehicles, but also putting in place policies which promote local electric vehicle production,” Robinson says. “Hyundai’s investment will put it in a much stronger competitive position in the U.S.”
Localized production helps cut shipping costs, especially for EV batteries that can be bulky and pose safety risks during shipping, says Sam Abuelsamid, principal research analyst with Guidehouse Insights. Cell production capacity is rising in the U.S., he adds.
“Localizing production as volumes increase helps to reduce the risk of supply chain disruptions,” Abuelsamid says. “Every industry has recognized the need for more supply chain resilience over the past year.”
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Hyundai’s biggest challenge with EVs remains the supply of batteries, he adds. Abuelsamid says Hyundai must now limit how many EVs it can sell in various markets because of the number of cells it can get from suppliers.
Hydrogen is another area of focus for Hyundai. Chung said in 2019 that he envisions a “hydrogen society” around the world. The $7.4 billion announcement says Hyundai is “committed to advancing the hydrogen ecosystem in the U.S.” Last year, Hyundai signed a memorandum of understanding with the U.S. Department of Energy on hydrogen fuel-cell technology. That tie-up would include installation of a hydrogen refueling station.
In December 2018, Chung announced the Hyundai group and its suppliers will invest 7.6 trillion won ($6.5 billion) in hydrogen R&D and facility expansion by 2030. Hyundai’s push into hydrogen is also supported by the Korean president Moon Jae-in. The Moon administration has been pushing to phase out fossil fuels and nuclear power for more clean energy sources like hydrogen.