Hyundai Motor Group breaks from EV pack

The race to churn out compelling electric vehicles that will transform the auto industry over the next decade clearly has a leader. First-quarter numbers show another Tesla blowout as luxury buyers flock to its high-tech vibe. But pricey Teslas with their questionable build quality and contentious CEO, Elon Musk, aren't for everybody.

The battle among mainstream brands for second place is just getting started. And there's now a surprise front-runner among legacy automakers in key areas of EV excellence such as range, efficiency, charging speed and future-forward styling. The new darlings of the EV market, corporate siblings Hyundai and Kia, are already reaping rewards as they climb the sales charts.

South Korea's Hyundai Motor Group was comfortably No. 2 in U.S. EV registrations in the first three months of the year — and has a long-term plan to become a global EV leader by the end of the decade. The group will make a Genesis EV at its Alabama factory this year and build a new U.S. assembly and battery plant for Hyundai and Kia models.

While industry stalwarts such as General Motors and Volkswagen have boasted about their future commitments to EVs, Hyundai and Kia have been selling well-regarded EVs since the middle of the last decade. The Kona Electric and Kia Niro EV, both subcompact crossovers, are still among the most affordable long-range EVs on the market.

The automaker's second-generation models — the Hyundai Ioniq 5 and Kia EV6 — are drawing acclaim just a few months after launching in the U.S. Fully loaded versions have been compared favorably to Tesla's popular Model Y. Base versions compete with models from Ford, VW and Toyota.

"Hyundai and Kia's new EVs are shaping up as a boon to their hopes of establishing dominance at the still-early stages of the EV market share race," said Jessica Caldwell, executive director of insights at Edmunds. "Whereas the South Korean organization once had to really prove their value to the American consumer, they now seem to be in a much more comfortable, enviable position near the forefront of the EV trend."

Moreover, the Korean brands are eclipsing longtime Japanese rivals as automotive technology shifts from combustion to electric.

The Hyundai group has more electric models on sale in the U.S. than Toyota, Honda and Nissan combined. And it has five new EVs on deck to launch in the next 18 months: the Hyundai Ioniq 6 midsize sedan, the Kia EV9 three-row crossover and three models from luxury brand Genesis, including the GV60 crossover due on sale this month.

"Besides Tesla's 15-year effort to position themselves, I see the Koreans as the most aggressive and successful," said Karl Brauer, executive analyst at iSeeCars.com. "They committed to super-efficient batteries, fast charging technology and having these vehicles in showrooms before anyone else."

To be sure, the EV revolution is in its early days. GM, Ford Motor Co., Volkswagen Group and even Toyota Motor Corp. have pledged dozens of billions of dollars each in the race to the top. Ford's newly launched F-150 Lightning alone could shake up the EV market, and GM is planning a $30,000 Equinox EV for 2023.

But the Koreans are off to a good start, investing in new-generation charging technology and locking down battery supplies from trusted partners.

Rather than buy off-the-shelf systems for its battery architecture, for example, the Hyundai group developed its E-GMP platform using an 800-volt standard that has key advantages over older 400-volt systems.

To combat range anxiety, 800-volt systems such as those on high-end vehicles from Porsche and Audi can charge more quickly than 400-volt systems.

That stands in contrast to Toyota's new bZ4X electric crossover, which uses a 400-volt system that can charge at only 100 kilowatts on the all-wheel-drive version. That's less than half the peak rate for the new Hyundai group EVs. On a road trip, that could mean the difference between a 30-minute charging session for the Korean models vs. a full hour for the Toyota.

Toyota is also making a version of the bZ4X for Subaru, the Solterra. Toyota says it will sell 7,000 of the Japanese-built bZ4X crossovers in 2022. Subaru expects to receive 6,500 vehicles to deliver in the U.S. this year.

"I don't think Toyota has impressed upon the public, remotely, that they are capable of doing pure electrics," Brauer said. "Hyundai and Kia are starting to pick up that banner and gain that type of reputation and visibility. Either Toyota waited too late, or Hyundai and Kia are just more innovative."

While top Japanese auto executives have seesawed on EV investment, Hyundai Motor Group Executive Chair Euisun Chung has embraced an electric future.

Globally, the Hyundai and Genesis brands are developing 17 new battery-electric models by 2030, and Kia is planning a lineup of 14 EVs by 2027. Overall, the group is targeting 3.1 million EV sales by 2030.

And it's not just future promises. The Hyundai group will have nine full-electric models in the U.S. by next year — seven crossovers and two sedans.

"Euisun Chung has told us loud and clear he doesn't want Hyundai to be a fast follower. He wants Hyundai to be a pioneer," said Jose Muñoz, global COO of Hyundai Motor Co. and CEO of Hyundai Motor North America. "On electric vehicles, we've done a better job than most of our competitors."

Muñoz, who spoke with Automotive News this month, said the Hyundai group's fast rise in the sales charts happened even more quickly than expected.

"We ourselves are positively surprised by the fact that we have significantly increased our EV sales even to become No. 2 in the market," Muñoz said. He believes maintaining the position is sustainable thanks to "a very strong product portfolio, which will continue to grow."

First-quarter registration data from Experian puts Tesla way out front in the EV race, with 113,882 registrations across its four models. But Tesla's counterpart to the Ioniq 5 and EV6, the Model Y, starts at $64,440 with shipping. That's about $22,000 more than the Kia and about $19,000 more than the Hyundai, based on entry-level models currently on sale.

Experian last week reported 6,265 registrations for the Ioniq 5 in the first quarter and 4,901 for the EV6. Kia also had 3,549 registrations for the Niro EV, and Hyundai had 685 for the Kona Electric. Hyundai's discontinued Ioniq Electric hatchback, which launched in 2017, posted 14 registrations.

All told, the group had 15,414 EV registrations in the first quarter, Experian said. The Ford brand had 7,407 registrations, mostly for the Mustang Mach-E compact crossover. Chevrolet had just 479 EV registrations for the Bolt EV and Bolt EUV combined after a long factory shutdown, but GM had 80 for the new GMC Hummer EV pickup.

All global automakers, including Tesla, have said their production is constrained by parts shortages, particularly semiconductors.

Registrations of Volkswagen's ID4 compact crossover were 2,926 in the January-March period, and Nissan had 4,401 for its Leaf compact hatchback.

Brands with zero first-quarter EV registrations included Toyota, Honda, Subaru and Mitsubishi — the very Japanese rivals Hyundai and Kia are targeting for conquest, along with Nissan and Mazda.

The group's game plan is to source more of its EVs in the critical North American market. Right now, all of them are imported from South Korea, although Hyundai has a large plant in Alabama and Kia has one in Georgia that make gasoline-powered vehicles.

Muñoz said the Hyundai group is investing $7.4 billion in the U.S. on EVs, mobility and production by 2025. That will include a new factory for Hyundai and Kia vehicles in the near term. Reuters reported last week that Hyundai has held discussions with officials in Georgia about a new factory site there, but the automaker said it had nothing to announce yet.

"We believe it is a perfect moment to think about increasing our capacity in the U.S. and to focus on what we believe is not only the future, but already the present, which is EV," Muñoz said.

In fact, Hyundai Motor Group's first U.S.-built EV is scheduled for December. Hyundai will make the Electrified GV70 compact crossover for its Genesis luxury brand at its plant in Montgomery, Ala. Hyundai will spend $300 million to build the Genesis EV and a plug-in hybrid version of the Hyundai Santa Fe midsize crossover, the company said.

The Electrified GV70 will go on sale in early 2023, but Genesis will have two models coming from South Korea before that. The GV60 goes on sale this month, and the Electrified G80 is coming in the summer.

With nine EV models across the Hyundai group by next year, the automaker has a good shot of remaining at the top of the EV sales chart — as long as supply chain restraints don't get significantly worse.

"Battery-electric will be the predominant vehicle technology in the future, so anyone out early and able to build a strong customer base is setting themselves up for success," Caldwell said. "The race is a long one, with many new entrants expected in the coming years, but making a good impression early on will only serve the Hyundai group well."