[Click eStock] Automobiles, Electric Vehicle Target Upgrades Act as Catalysts for Stock Prices... Increase Weighting

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 27th that it maintains an overweight rating on the automotive sector. It also maintained the target prices for Hyundai Motor and Kia at 280,000 KRW and 110,000 KRW, respectively.

Despite recent strong sales, market share, and profit trends among Korean automakers (excluding China on a global basis), the sluggish stock performance is attributed to the relatively slow pace and plans for electrification transition, which is a key variable for valuation upgrades, despite valuations based on earnings not being significantly low. However, with Hyundai Motor's CEO indicating an upward revision of electric vehicle sales targets and the R&D organization restructuring focused on electrification, acceleration toward electrification is being sensed, which is expected to have a positive impact on valuation and stock prices.

Researcher Song Seon-jae of Hana Financial Investment said, "The sequential launch and sales contribution of the Ioniq 5 and EV6 in Europe and the U.S. are increasing monthly electric vehicle market share, and the electrification targets and detailed execution plans expected to be disclosed in the first half of next year will act as additional catalysts."

In an interview with U.S. Automotive News, Hyundai Motor's CEO suggested raising the 2026 electric vehicle sales target to 1.7 million units, shortening the electric vehicle development schedule to secure more lineups, and the possibility of securing dedicated platforms beyond E-GMP. Although this is not yet an official company announcement, the mere indication of a potential target increase through a media interview is enough to raise expectations.

Hyundai Motor Group's previous target was in the low 1 million units for 2025, which corresponds to about a 6% market share in the electric vehicle market. This is significantly lower than the nearly 8% market share in the internal combustion engine vehicle market, so the rapid transition to electric vehicles in the market was negatively reflected in the valuation from a business sustainability perspective.

The 1.7 million unit target for 2026 mentioned in the media interview corresponds to about 1.4 million units for 2025, representing a 40% increase over the previous target and about an 8% market share in the electric vehicle market. Although still lower than the internal combustion engine vehicle market share, considering that there are almost no electric vehicle sales in China, which accounts for over 40% of the electric vehicle market, and that the electrification transition speed is slow in emerging markets where Hyundai Motor Group has strengths, this level is understandable.

Hyundai Motor Group has implemented an organizational restructuring of its R&D headquarters. The major changes include the abolition of the engine development organization (while maintaining improvement and maintenance functions), expansion of the electrification development organization, establishment of a battery technology center (responsible for design, performance improvement, and advanced research), expansion of basic material research, and unification of development organizations to enhance collaboration and speed.

Researcher Song said, "This organizational restructuring is significant in that it demonstrates the commitment to preparing for future technologies such as electrification and mobility from the R&D stage and firmly focuses and selects available resources. It is expected that the R&D and production organizations of parts companies within the group will also be reorganized to support the transition to electrification, autonomous driving, and mobility."