Key Hyundai affiliate aims to muscle into EV market in battle for survival2 min read . Updated: 25 Aug 2020, 07:22 AM IST
- Hyundai Mobis is in talks with two global automakers to supply electrified parts as it hopes to boost volume and lower prices.
As Tesla Inc accelerates the shift to electric cars, Hyundai Motor's loyal suppliers have increasingly turned to "outsiders" for parts - but now the South Korean carmaker's own supply company, Mobis, is plunging into the game.
Hyundai Mobis is in talks with two global automakers to supply electrified parts, its executive told Reuters, as it hopes to boost volume and lower prices.
The move is a direct response to companies such as Volkswagen and Tesla muscling in with suppliers with whom Hyundai had worked for decades.
"We were not able to supply to other companies because we were busy with keeping up with Hyundai's growth. Now this has changed," said Ahn Byung-ki, senior vice president of electric powertrain business at Hyundai Mobis.
"If we increase outside sales, overall prices will drop. This will benefit everyone - us, global companies and Hyundai," said Ahn, who previously developed eco-friendly cars at Hyundai Motor.
Hyundai Mobis, in which Hyundai Motor Group chairman Chung Mong-koo is the biggest individual shareholder, gets more than 90% of its revenue from the mothership.
Ahn said reducing electric vehicle (EV) costs is key to competing with cheaper gasoline cars without subsidies, especially as Chinese rivals undercut Hyundai, and Tesla accelerates the industry's shift to EVs.
He said Mobis hoped to win orders from a couple of global automakers as early as this year, marking its first deal to supply electrified powertrains, although it has supplied other parts of EVs or gasoline cars to Fiat-Chrysler and others.
Hyundai suppliers can leverage Hyundai's longtime experience with developing eco-friendly cars, he said, which puts them ahead of European peers who have focused on diesel.
Hyundai Motor and its affiliate Kia Motors ranked third in global battery electric vehicle sales last year, behind Tesla and Renault-Nissan, according to researcher LMC Automotive.
Hyundai Motor Group's heir and de facto leader, Euisun Chung, recently said Hyundai is aiming to have more than 10% of EV global market share in 2025.
Logistics affiliate Hyundai Glovis Co Ltd <086280.KS>, which counts Euisun Chung as its biggest shareholder, has also expanded customers from Hyundai to Tesla and Volkswagen to transport vehicles across continents.
Like many of Korea's family-owned conglomerates, or chaebol, Hyundai Group is deeply invested in vertical integration, with affiliates making key parts and even steel. Family members, aides and others close to the company founded key suppliers.
After years of breakneck growth, however, Hyundai-Kia's production volume began trending down in 2016, hitting suppliers and moving them to rely less on Hyundai.
"As growth slowed, Hyundai told suppliers to survive on their own," said Lee Hang-koo, senior researcher at Korea Institute for Industrial Economics & Trade.
Hyundai supplier Hanon Systems <018880.KS>, which supplies parts to Tesla Model 3 and Volkswagen's ID3, generates more than half of its revenue from non-Hyundai customers.
Myoung Shin Co Ltd, founded by a former confidant of Hyundai's legendary founder Chung Ju-yung planned to manufacture EVs for Chinese startup Byton after acquiring GM's closed factory in Korea, creating potential competition with Hyundai, a key customer. An affiliate is also supplying hot-stamping parts to Tesla for the Model 3's body.
But the pandemic hit Byton hard, delaying Myoung Shin's plan to start pilot production of Byton's M-Byte model this year, a person familiar with the matter said, speaking on condition of anonymity because of the sensitivity of the matter.
"It is not easy to reduce reliance on Hyundai," he said.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.