[Click eStock] "Hyundai Motor, $13 Trillion Investment in North America EV Factory... Positive Factor for Stock Price"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment on the 23rd released an analysis stating that Hyundai Motor's market responsiveness will be strengthened through investment in a North American electric vehicle plant. The investment opinion of "Buy" and the target stock price of 260,000 KRW were maintained.

Hyundai Motor recently finalized its North American electric vehicle plant. The plan is to invest approximately 5.5 billion USD (7 trillion KRW) in the state of Georgia, USA, to establish an electric vehicle plant with an annual capacity of 300,000 units and battery cell production. Construction is scheduled to begin in the first half of 2023, with mass production starting in the first half of 2025. Additionally, Hyundai plans to invest another 5 billion USD to develop robotics, Urban Air Mobility (UAM), autonomous driving software, and artificial intelligence.

In the first quarter, the US electric vehicle market reached 215,000 units, a 63% increase compared to the same period last year. The sales share rose by 3.2 percentage points to 6.6% compared to the same period last year. Among these, battery electric vehicles (BEVs) accounted for 173,000 units, with Tesla selling 126,000 units, capturing a 76% share within the BEV segment. Hyundai Motor and Kia recorded market shares of 4% and 5%, respectively, continuing their upward trend by exporting 6,244 units of the Ioniq 5 and 5,281 units of the EV6, both dedicated electric vehicle models, early this year.

Seonjae Song, a researcher at Hana Financial Investment, said, "This North American electric vehicle plant is advantageous in terms of securing volume and cost compared to production and export within Korea," adding, "It will enable rapid market response in line with the expansion of North American electric vehicles, market segmentation, and future demand diversification." Researcher Song further stated, "By nurturing related parts suppliers and workforce earlier than competitors, there is an opportunity to lead in technology and productivity," and noted, "It is positive in that it can avoid increasingly stringent regulations in the US and receive support."

So far, Hyundai Motor's stock price has been subject to a higher discount rate compared to the global industry average. The price-to-earnings ratio (PER) stands at 7 times. Despite expectations for profit growth due to rising average selling prices and volume effects in the second half of the year, concerns about the somewhat slow response speed to future vehicles have acted as a discount factor.

Researcher Song analyzed, "The recently announced domestic electric vehicle investment plan, along with the North American electric vehicle plant and additional investments, will act as valuation uplift factors, as Hyundai Motor's response speed to future vehicles is relatively faster compared to global competitors."