[Hyundai Way Secret④] GM and BMW Abandoned EREV Challenge... Surpassing 98% of Chinese Companies

Charging with Engine, Driving with Motor
'Electric Vehicle Evangelist' Utilizing Existing Charging Infrastructure
Focusing on Vast Territories of North America and China

[Image source=Yonhap News]

Hyundai Motor Company has chosen extended-range electric vehicles (EREVs) as a lever to overcome the chasm (temporary demand slowdown) in the electric vehicle market. However, this market is currently dominated by Chinese companies, which hold 98% of the global market share. Hyundai plans to use EREVs alongside conventional hybrid electric vehicles (HEVs) as a bridge to transition into the electric vehicle era, continuing its market penetration strategy by enhancing technological capabilities and battery cost competitiveness for a direct confrontation.

Hyundai's decision to position EREVs as a link in the transition to the electric vehicle era is gaining credibility as a realistic choice considering charging infrastructure and other practical factors. EREVs are hybrid vehicles equipped with both an engine and an electric motor. Unlike traditional hybrids that primarily rely on the engine, EREVs center on the electric motor. During driving, the engine charges the battery to extend the driving range. Essentially, it is close to an electric vehicle powered by an engine. Hyundai's focus on EREVs lies precisely here. By using existing internal combustion engine gas stations while extending driving range, Hyundai aims to become an 'electric vehicle evangelist.'

There is also analysis that Hyundai intends to simultaneously target the world's largest automotive markets, North America and China. Due to the vast land areas of these two countries, electric vehicle charging infrastructure is not yet widely established. Environmental regulations are also relatively weaker compared to Europe and other regions. These factors make these markets ideal for the adoption of EREVs. Hyundai expects to play a significant role as an 'electric vehicle evangelist' until charging facilities are densely installed in the U.S. and China. At the end of last month, Hyundai announced at its CEO Investor Day that it plans to sell 80,000 units annually in the U.S. and 30,000 units in China.

The variable is the Chinese companies. According to EV Volumes, a specialized electric vehicle statistics firm, global EREV sales last year totaled 705,900 units. Chinese companies hold an overwhelming 98% market share. Li Auto, a Chinese company, alone sold 376,000 units, accounting for more than half of the market. Although U.S. GM and German BMW attempted to enter the market, they are generally considered to have failed.

Hyundai's weapon is the technological expertise accumulated through hybrids. While EREVs are close to electric vehicles, their essence lies in using both an engine and a motor, classifying them as hybrids rather than electric vehicles. Hyundai internally believes that leveraging the technology developed in hybrids and electric vehicles will enable it to compete sufficiently with Chinese companies. Additionally, by reducing battery capacity, which accounts for a high portion of costs, Hyundai expects to secure price competitiveness.

Hyundai is already developing an EREV system that can travel over 900 km on a single refuel and reduces battery capacity by 30%, which is a significant cost factor. The first vehicle is expected to be a mid-size sports utility vehicle (SUV) under the Genesis brand. There are also plans to introduce an affordable compact EREV.

Furthermore, since EREVs are not classified as electric vehicles, they can maintain sales even if electric vehicle regulations tighten due to concerns such as fire risks. An industry insider explained, "In countries where charging infrastructure is insufficient or fossil fuel prices are low, reducing incentives to switch to electric vehicles, or where consumers want electric vehicles but cannot afford them, EREVs can be an attractive alternative. Because they run on electric motors, they may even improve perceptions of electric vehicles more effectively than hybrids."