Q: Where are Hyundai's U.S. sales heading this year and next?
A: Well, everyone is struggling with the semiconductor issue. But I think we have done pretty well with our U.S. operations, as shown in our market share increase, which is up about 0.7 percentage point (to 5.0 percent year to date).
We have been focusing on SUVs. That captures about almost 63 percent of our total sales, generated by our full lineup on the SUV side, which is totally distinguished from what we have done in the past.
On top of that, we expect Genesis to achieve about 200,000 sales in the global market, which is very significant. It's almost a 55 percent increase versus what we have done in the past.
How is Genesis' brand development coming?
Korea is still the main driver. But in the U.S., we are hitting about 49,000 [sales this year]. We still see fast growth in the U.S., triple-digit growth. We are showing good progress with Genesis. So concerning SUVs and Genesis, those product lineups are totally different from what we have done in the past. The SUV and luxury/premium segments are new challenges for us, but that's the way we should go.
Has Hyundai completed its utility lineup, and what segments might be next?
Today we are in the transition to electrification. That's how we will reconfigure our lineup strategy, as you see in the Ioniq 5 and also what you saw at the Los Angeles motor show with the Seven concept, which is a large MPV-like EV. So we're not just focusing on ICE in SUVs but also on how we can move faster into electrification as well. That's the goal for us.
The internal combustion lineup is complete, and expansion will come through electrification?
Yes, that's the transition that we would like to pursue. As fast as possible.
Hyundai sales are up dramatically in 2021, but can the brand keep up that pace in 2022?
The semiconductor issue is one of the determinants for next year. But for the overall U.S. market, we forecast industry demand will be about 15 million to 15.7 million units. Out of that, will we maintain our market share. This year we have shown fast market share growth. But we need to keep it up.
That is the baseline for future growth in the U.S. market. The market is growing. So if we maintain market share, or even aggressively grow more, that means our total volume should increase.
What is Hyundai's electrification rollout plan?
We will go very aggressively on electrification toward carbon neutrality, first in Europe. Toward the year 2030, we expect about 70 percent of our total sales to be zero emissions in Europe (including full-electric and hydrogen fuel cell vehicles). And in 2035, there will be 100 percent carbon neutrality in Europe. That will be followed by major markets like the U.S. We are going to keep this pace around the world.
What kind of sales targets does Hyundai have for EVs?
We revisited our sales target number again for the Hyundai Motor Group. For 2026, we increased the target from 1 million to 1.7 million vehicles. That's combined between Kia, Hyundai and Genesis. That's very ambitious.
Next year, we expect to sell about 220,000 EVs around the world for Hyundai and Genesis, which is about a 56 percent increase over what we expect this year.
So we are shortening the product development schedule to have more vehicles by 2025 and 2026. We are expanding our EV volume. And we have a plan for how we can do that. Internally, we have a detailed breakdown, but there is still some fine-tuning we need to do.
What will Hyundai's lineup of EVs look like in 2026?
At least 13 globally, double the lineup we currently have, including derivatives. That's only from Hyundai. We will introduce a new platform as well.
This is to explain our confidence in how we can build up those numbers with a single platform. We are not simply looking at only one platform.
What will Hyundai's U.S. sales volume be that year?
Well, for 2025 we have an ambitious target. We are very aggressive. I will leave it to [North America chief and global COO] Jose Muñoz to announce that. I can't really say. We are focusing on the market share side, a record high. But by 2030, I think we need to procure 50 percent of our total sales from EVs, responding to the Biden administration's policy.
What needs to happen in the U.S. for half of Hyundai's sales to shift to EVs in eight years?
I think there is a big momentum in how customers feel about EVs. There are some issues with the infrastructure. But we see a clear signal from the market that demand will be increasing. So that is one factor. And the Biden administration is also driving more eco-friendly EV policies.
What is Hyundai's timeline for commercializing solid-state batteries?
We are still working on it. We have many, many research activities going on the global side with our partner companies as well.
Will they be ready by 2030?
I cannot say that. There is uncertainty in terms of timing. We are also working toward other next-generation battery technologies, not just solid-state batteries. We are working with Korean battery manufacturers because they are at the global level. Lithium ion and lithium metal batteries are all under research and development.
Is it a bigger risk right now to over-invest in EVs or to under-invest?
I think what matters is return on investment.
To be competitive in the EV market you must realize the right aggregate volume. That's why I'm focused on our EV lineup being competitive and profitable. And that depends on how much cost reduction you can do in a short period of time, not only by focusing on the battery side but on the other areas as well.
What is Hyundai's timeline for cost parity between EVs and internal combustion vehicles?
It is aggressive, but I cannot give you a specific number now. It is also linked with government subsidies. Government subsidies are going to decrease and we've got to be competitive before the subsidies are gone. As subsidies decrease, we need cost parity. Otherwise, we cannot create that much demand.
Would Hyundai ever consider contract-manufacturing EVs for a high-tech company?
We are going to optimize our global production facilities to transition from ICE to EV. In that sense, our capacity is all for our own internal demand. We have to utilize it ourselves at the maximum level.
Can you provide details on Hyundai's plan to invest $7.4 billion in electrification in the U.S.?
Definitely we are going to increase our production capacity in the U.S., but the announcement will be done next year.
Does the U.S. investment entail new undeveloped sites or expanding current facilities?
We see a lot of options.
When you say production expansion, do you mean only for EVs?
Yes, we are focusing on EVs from now on.
Has Hyundai stopped developing new internal combustion engines?
There are new emission regulations coming, such as Euro 7. Based on what we have in the internal combustion lineup, we will align our powertrain product to be applicable under the new regulations. Which doesn't mean we need to have full, new engine development.
So instead of new engines, Hyundai wants to keep current engines compliant until EVs arrive?
Yes, but there are also some hybrids that will play a role before full electrification. Regulation gets tougher and tougher. But meanwhile, we also have an interim solution, which is the hybrid. So we are also working on that, too.
How long does Hyundai expect the global semiconductor shortage to last?
We see the supply shortage lasting until the first half of next year. We are working on short-term and long-term solutions, both internally and in collaboration with partner groups.
Longer term, we try to analyze the supply trend. That requires us to have engineering capability to meet the requirements. Not only by ourselves, but in collaboration with other companies, like the foundries. How can we standardize our MCUs to have common usage?