Just as its sales take off, Genesis pivots to EVs

Genesis marked a significant milestone in May after five long years of struggling to establish itself in the U.S. The luxury upstart sold the first of its eagerly awaited GV70 compact crossovers.

The brand had suffered with a sedan-only lineup since its launch in late 2015. But it finally had a rounded portfolio, with the GV70 joining the recently introduced GV80 midsize crossover. And as a result, in August, sales more than tripled to 4,975 from a year earlier.

But now an even bigger product strategy has been announced for Genesis: It will start phasing out all those vehicles beginning in 2025 and instead launch eight new battery-electric and fuel cell electric replacements that will make Genesis an all-EV brand by 2030.

"Genesis is now a truly global brand, with a complete portfolio of desirable and sophisticated products," Hyundai Motor Group Chairman Euisun Chung said during a video presentation this month. "And now Genesis is once again at the starting point of an audacious journey — the journey towards a sustainable future."

The announcement was not a complete surprise, since the Hyundai brand had already announced aggressive plans for an all-electric future, along with corporate sibling Kia Corp. But the Genesis plan is even more aggressive: No new internal combustion vehicles will be launched after 2025.

"It's going to be an exciting shift for Genesis to completely pull the plug on ICEs and go all-electric by the end of this decade, especially with a barrage of EVs coming from its competitors," said Robby DeGraff, industry analyst at AutoPacific. Having seen the first new EVs from Hyundai group, he said: "I'm pretty confident Genesis will be able to pull it off."

From 2025 to 2030, Genesis will continue to sell combustion engine vehicles but won't launch any new ones. Genesis' first EVs will come to the U.S. next year as the Electrified G80 sedan and GV60 compact crossover.

Future Genesis EVs could share a platform with Hyundai's coming Ioniq 5 sedan and Ioniq 7 three-row crossover that are due to arrive by 2025.

The abrupt change did not faze retailer Mike Sullivan, CEO of LAcarGuy auto group in Southern California.

Sullivan acquired his first Genesis dealership this summer because of the brand's commitment to an electric and zero-emission future. If Genesis was just another luxury brand with combustion engines and vague plans for electrification, he said, the franchise would not have been nearly as attractive.

"The EV move was really a major reason I took them on," Sullivan told Automotive News. The longtime dealer, who operates 13 stores, is one of the first Genesis dealers to commit to a full-service, standalone dealership. Generally, Genesis dealers operate out of Hyundai stores. Sullivan's new dealership will replace the temporary location of Genesis Santa Monica that he opened in July.

"In California, it makes absolute sense," said Sullivan, also a Toyota dealer who was a top seller of the Prius when it was a hot commodity and whose Volkswagen dealership is now a top seller of the ID4 crossover EV. "We're bringing EV cars to market about the same time as the customer is coming around. It's evolving in a really natural way."

Over on the East Coast, Peter Lanzavecchia of Genesis of Cherry Hill in Marlton, N.J., mostly agrees. He owns the Genesis store in addition to Burns Hyundai and Burns Buick-GMC. He is supportive of the move to EVs by the Korean automaker — as long as it takes into account what is happening with consumer demand on dealer lots.

"Ultimately, what's most important to me are the consumer preferences," Lanzavecchia said last week. "The government can say this and that about needing to embrace a carbon-free society and maybe provide incentives to do so. But at the same time, water seeks its own level," and consumers are going to buy what they're comfortable with, he said.

"Is there a chance that Genesis is moving too fast and might alienate some customers that really prefer combustion engines? It could. But I don't think it will," Lanzavecchia said. "Sometimes these automakers announce EV plans to make the investor community excited — to be seen as tech companies. And then they'll transition at a pace that makes economic sense."

Dealers and analysts seem confident that Genesis will be able to execute the new plan, given the brand's recent track record. One advantage it has over rivals is that it can lean on parent company Hyundai Motor Group for cutting-edge EV technology and parts sourcing.

Genesis also is relatively young and relatively small, so the transition should be easier compared with luxury giants, they point out.

"The shift may have some mitigated risk," said Stephanie Brinley, principal automotive analyst at IHS Markit. "Genesis is years off from having to address similar volumes as the traditional luxury brands, like Mercedes-Benz and BMW. Genesis doesn't have decades of existing owners to convince to try a new technology — it is still in the position of convincing those buyers to try Genesis at all."

To be sure, Genesis is headed into unknown waters. The EV plan has a goal of reaching global sales of 400,000 vehicles in 2030. And its success may come down to having attractive products in the right segments.

The Electrified G80 is essentially a conversion of the existing G80 sedan, with a newly developed electric drivetrain that features ultrafast charging capabilities. The GV60, meanwhile, will be the brand's first EV on Hyundai Motor Group's E-GMP dedicated platform, which is also being used by the Hyundai Ioniq 5 that arrives in the U.S. this year and the Kia EV6 coming next year.

Even though the gasoline version of the G80 gets extremely high marks from auto analysts, the Electrified G80 is arriving to a declining sedan market. And the first images of the GV60 have not bowled over analysts in terms of styling like the GV70 and GV80.

"The GV60 is interesting," AutoPacific's DeGraff said, but added: "I think Genesis would have better luck in luring curious EV buyers into the brand if the GV60 adopted more of the GV70's graceful, fastback crossover look, rather than its upright, perhaps youthful hatchback shape.

"But we'll see; maybe it'll work."

He also thinks it's important for the young brand to take on traditional luxury segments, such as sports sedans, even if sedan sales are falling.

"Genesis has confidently proven that it can pull people away from the common likes of Mercedes-Benz, Audi and BMW towards its excellent gas-powered models," DeGraff said. "And as more battery-electric luxury sedans crowd the space in coming years, I think it's critical for Genesis to offer an electric G80."