Hyundai Motor and Kia Chase Tesla, Dependent on Autonomous Driving Software [Tech War, Birth of Advanced Nations]

Tesla sales account for 26%, but investment scale is proactive
Investing 123.5 trillion KRW by 2030... Expanding production to 3.23 million units

[Asia Economy Reporter Hyunseok Yoo] Domestic automakers hold a higher position in the global electric vehicle (EV) market than expected. Hyundai Motor and Kia's electric vehicles, Ioniq 5 and EV6, built on the E-GMP platform, are rapidly increasing sales in the global market, thereby boosting their market share. However, the situation is not one to be complacent about. There remains a significant gap with the leading companies, and other global automakers are also strengthening their EV market strategies through aggressive investments. Industry experts advise that to stay ahead in the increasingly competitive global EV market, substantial investment in software, as well as stabilization of battery and semiconductor supply, is necessary.

◇ Hyundai Motor and Kia rank 5th in EVs but lag behind top players = Among domestic automakers, Hyundai Motor and Kia are the ones achieving results in the global EV market. According to the Korea Automotive Technology Institute, last year Hyundai Motor and Kia sold 245,000 EVs, a 65% increase compared to the previous year. They ranked 5th following Tesla (921,642 units), SAIC Motor (610,023 units), Volkswagen (436,669 units), and BYD (335,257 units).

Although ranking 5th globally is a significant achievement, the sales volume gap with the top players is large. Their sales amount to only 26.09% of Tesla's number one sales volume. The year-over-year sales growth trend is similar. Tesla's sales increased by 86% last year compared to 2020. During the same period, SAIC Motor grew by 160%, Volkswagen by 98%, all significantly surpassing Hyundai Motor and Kia's 65% growth.

The gap with top global players remained large in the first quarter of this year as well. According to the EV-focused media InsideEV, Hyundai Motor and Kia sold a total of 81,744 pure electric vehicles globally in the first quarter. Tesla ranked first with 310,411 units sold. Following were China's SAIC Motor and BYD in second and third place, selling 154,623 and 144,203 units respectively.

It can be interpreted that while other automakers significantly increased EV production, Hyundai Motor and Kia could not keep pace. In fact, Tesla's Shanghai Gigafactory began full-scale operations in December 2019. Moreover, with the German Gigafactory also operational, Tesla's production volume is expected to increase further.

◇ Automakers expanding investments = Although Hyundai Motor and Kia lag behind global leaders in sales volume, their outlook is relatively bright. They are among the most aggressive investors among global automakers. Hyundai Motor and Kia plan to invest a total of 123.5 trillion KRW, with 95.5 trillion KRW and 28 trillion KRW respectively, by 2030 to increase global EV production to 3.23 million units. They also aim to expand their EV lineup to 31 models and secure a 12% market share.

Toyota plans to invest 8 trillion yen (approximately 83 trillion KRW) by 2030 to launch 30 EV models and set a sales target of 3.5 million units. General Motors (GM) will invest 35 billion USD (about 43 trillion KRW) during the same period to release 30 EV models and aims to sell 3 million units. Ford has announced plans to invest 50 billion USD (about 61.4 trillion KRW) in EVs by 2026 and aims to produce 2 million EVs annually.

The industry expects Hyundai Motor and Kia's EV models to narrow the gap with top-tier models globally, as their quality is by no means inferior. In fact, the Ioniq 5 won the 'World Car of the Year' award at the 2022 World Car Awards (WCA). Additionally, the EV6 earned the honor of '2022 European Car of the Year,' the first for a Korean automotive brand. An industry insider explained, "When compared objectively with Tesla, the Ioniq 5's completeness is much superior," adding, "It is expected that they will develop the capability to catch up in terms of market share and other aspects in the future."

Experts emphasize that not only increasing EV production volume but also focusing investments on software, a critical technology for future vehicles such as autonomous driving, is essential. According to the Korea Automobile Industry Association (KAIA), while the total number of autonomous vehicles operated by companies in the U.S. and China exceeds 1,000 units each, Korea's pilot service vehicles number only about 30. Furthermore, the cumulative autonomous driving distance by Korean companies is 720,000 km, whereas Waymo in the U.S. has driven 32 million km and Baidu in China 21 million km, both far exceeding Korea's figures.

Professor Kim Pil-su of Daelim University’s Department of Automotive Engineering stated, "Our autonomous driving technology lags behind advanced countries by 2 to 3 years," emphasizing, "The key is how to secure this technology and integrate it into high-quality EVs." He added, "Although progress is being made, if battery stabilization and semiconductor supply are strengthened, Korea could become a leader in the top group, making the coming period extremely important."