Hyundai turns to new hybrid tech to power growth amid 'slowdown' in EV demand

Citing “the recent slowdown” in electric-vehicle demand, Hyundai plans to lean heavily into hybrids by introducing two new gasoline-electric drivetrains, doubling the number of hybrid offerings worldwide and introducing the technology across the Genesis brand.

The South Korean automaker now expects global hybrid sales to more than triple to 1.3 million vehicles in 2028 as it positions the technology as a hedge against cooling interest in EVs.

On tap is a new extended-range electric vehicle system that powers the wheels solely through an electric motor but uses an internal combustion engine to recharge the motor’s battery.

Hyundai will also introduce a second generation of its existing hybrid system in production vehicles from January 2025. That upgrade will be deployed across the entire lineup, from small vehicles to large and luxury models, and also be used in the Genesis premium brand.

The company now expects its traditional hybrid sales to surge to 1.3 million vehicles in 2028, more than double the 510,000 hybrids Hyundai forecasts selling this year.

The new hybrid goal is about 40 percent higher than the hybrid target Hyundai had floated just last year.

North America will see the biggest hybrid sales surge, with sales forecast to more than triple to 690,000 vehicles in 2028, from a forecast of 170,00 in the region this year.

Hybrid sales in Europe are expected to increase to 220,000 in 2028, from around 150,000 this year.

CEO Jaehoon Chang outlined the vision Aug. 28 in the company’s annual CEO Investor Day presentation. He said global EVs sales growth is slowing, and the company must answer.

“Looking back the past year, there were major changes to the automobile market, with the rosy projections for the EV transition giving way to heightened concerns,” Chang said.

“The shift to EVs is currently slowing down,” the CEO said. “And with the recent slowdown in the EV transition, the demand for hybrids has been picking up.”

Global shift

Chang’s reworked electrification strategy came as he outlined a sweeping range of initiatives for the automaker. Top brass at the briefing talked about plans for new battery technologies, software-defined vehicles, hydrogen energy, manufacturing techniques and commercial vehicles.

The company also said that over the next 10 years it would plow 54.5 trillion won ($40.9 billion) in R&D and $38.8 billion in capital expenditure for growth.

Hyundai’s hybrid shift comes as international rivals rethink investments in full EVs and take a fresh look at gasoline-electric drivetrains as a cost-effective bridge technology.

Ford and Nissan are among global players reprioritizing hybrids as initial consumer uptake of EVs slows amid concerns about affordability and limited charging infrastructure.

Meanwhile, Toyota and Honda, early pioneers of hybrid technology, have seen sales and profits surge on the back of their wide-range of gasoline-electric offerings.

“In the short term, we will respond closely to any shifts in market demand,” Chang said.

Chang’s presentation offered a reality check of the EV optimism offered in last year’s Investor Day. At the 2023 event, Chang said EV sales were growing faster than expected and raised the company’s EV sales goal to 2 million EVs a year by 2030, from its earlier target of 1.87 million.

This year, Hyundai kept that EV target unchanged at 2 million amid shifting market trends, while hybrids emerged as the clear focal point of the company’s tweaked expansion plans.

Buying time

Hyundai will delay the launch of some EV products in order to improve their value and price competitiveness, and the company will lean on hybrids while EV demand stabilizes, Chang said.

“It is an opportunity for us to buy time to be better prepared for EVs,” Chang said.

The new range-extender technology, a kind of series hybrid, was pitched as a best-of-both-worlds solution for customers who want the driving feel of an EV but the range of old-school internal combustion. The wheels will be powered by electric motors. But because it can refuel at the pump, it can achieve driving ranges of over 600 miles on a full charge.

Hyundai did not specify under which testing regime that range was calculated.

The technology, which the automaker calls EREV, will enable more affordable electrified vehicles because the systems will not require big, costly batteries such as those in pure EVs.

The battery will cost about a third of that in an EV, Chang said. And while the setup will have an engine, it will not have the additional cost of a transmission, as with a traditional gasoline vehicle.

The system will also allow four-wheel drive through a two-motor layout.

Hyundai will launch the system in North America and China by the end of 2026, with widespread sales taking root in those markets the following year. In North America, the technology will initially be deployed in D-segment crossovers for the Hyundai and Genesis brands.

The company expects annual EREV sales of 80,000 a year in North America and 30,000 in China, where the technology will be used in a C-segment platform.

Genesis strategy

Separately, Hyundai plans a next-generation upgrade of its standard hybrid technology, from early next year. Hyundai said that system will improve performance and fuel efficiency, though the company did not give concrete targets.

The technology upgrade will underpin a doubling in the number of hybrid nameplates to 14 models from seven today.

Under Hyundai’s hybrid push, Genesis will get its first gasoline-electric offerings. The company’s top-tier marque will get a hybrid option for every model except for its dedicated EVs, Chang said.

Despite the hybrid focus, Hyundai said the long-term road still leads to EVs. And the company said it still plans to launch 21 full electric models by 2030, including six for Genesis.

Hyundai forecasts global sales to expand some 30 percent to 5.6 million vehicles in 2030, from 4.2 million last year.

Today’s global powertrain mix is about 20 percent hybrid and EV versus 80 percent internal combustion, COO Jose Muñoz said. By 2030, the balance is expected to shift toward 55 percent for electrified vehicles and about 45 percent for internal combustion.

EV sales are seen growing to 2 million in that time frame, from 268,785 EVs sold worldwide in 2023.

The company expects North American EV sales to rise to 690,000 vehicles in 2030, up from an anticipated 90,000 in 2024. EV sales in Europe will grow to 631,000 by the end of the decade, from an expected 118,000 in 2024, Hyundai predicted.