[Exclusive] Hyundai Motor Rushes Business Restructuring... Closes Engine Parts Line After 32 Years

Hyundai Motor's Internal Combustion Engine Core Parts Production 'Forging Plant'
Operations Halted After 32 Years Since Starting in 1991
Electrification Accelerates, Reducing Internal Combustion Engine Parts Share
No Forged Parts Production at Ulsan Plant... Subsidiaries and Outsourcing Under Review

Hyundai Motor Company has decided to halt operations at its Ulsan forging plant, which has played a key role in producing internal combustion engine parts, starting next year. The forging plant, which began supplying parts alongside Hyundai's independently developed engine in 1991, will close after 32 years. This is seen as another symbol showing that Hyundai's business transformation is accelerating while the era of internal combustion engines is coming to an end.

According to a comprehensive report from our coverage on the 21st, Hyundai Motor's labor and management agreed earlier this month on the reassignment of personnel at the forging plant. Production at Forging Plants 1 and 2, which manufacture internal combustion engine parts, will be suspended in January and October of next year, respectively, and idle personnel will be primarily reassigned to the new Hypercasting plant.

The forging plant produces core components of engines and transmissions, such as camshafts and crankshafts. Until recently, Hyundai's material plants, including the forging plant, have produced 200,000 tons of casting and forging parts annually.

It is no exaggeration to say that the forging plant shares the history of Hyundai's engine development. It began operations in 1991 alongside the production of Hyundai's first domestically developed engine, the 'Alpha Engine.' The Alpha Engine, installed in Hyundai's 2-door coupe Scoupe and compact sedan Accent, laid the foundation for South Korea to grow as an automobile exporting country. In the 1990s, Hyundai invested over 200 billion won to establish a new engine plant with an annual production capacity of 300,000 units. At that time, a separate material plant equipped with casting and forging production facilities was also completed.

However, Hyundai plans to gradually reduce the proportion of internal combustion engine vehicles as it announced its electrification plan. According to the company, the share of electrified models among global vehicle sales is planned to expand to 30% by 2030 and 80% by 2040. With the decision to close facilities responsible for producing core engine parts, it is expected that parts necessary for engine production will be handled by affiliates such as Kia and parts suppliers.

The business transformation is also expected to accelerate. An exclusive electric vehicle production line is planned to be installed at the Ulsan plant, and Hyundai plans to refurbish the closed plant to produce core electrification parts, further solidifying the electric vehicle production hub. The existing internal combustion engine production lines have already been converted into mixed production lines capable of manufacturing electric vehicles, producing key EV models such as the Ioniq 5, Kona EV, and Porter EV.

Hyundai has set a goal to sell 2 million electric vehicles globally (including Genesis) by 2030. It plans to increase the production share of electric vehicles in major regions such as the United States, Europe, and Korea to 48% by 2030. Among these, the domestic plant's electric vehicle production share is targeted to increase from 14% this year to 24% in 2026 and 36% in 2030.

Hyundai will invest 35.8 trillion won in electrification transition. This means an average annual investment of 3.6 trillion won in electrification over the next 10 years. From this year until 2025, equal amounts will be invested in future technologies including internal combustion engines and electric vehicles, and from 2026 to 2030, when next-generation electric vehicle platforms are fully applied, investments in internal combustion engine vehicles will gradually decrease.