Agreement Reached to Cut 70 Workers on Ioniq 5 and Kona EV Production Line
Hourly Output Reduced to 17.5 Units
Sluggish Sales and Subsidy Exhaustion Take Toll
Increased Local Production at HMGMA in the US
Shift Toward Hybrid-Focused Strategy
Hyundai Motor Company, which had already reduced overtime shifts on its electric vehicle production line at the Ulsan Plant, has ultimately decided to cut the number of workers on its daytime production shifts as well. Despite multiple production halts this year, the situation has shown little improvement, prompting the company to take the drastic step of workforce restructuring. Following recent decisions by global automakers such as Ford to halt electric vehicle production, and the European Union's reversal of its planned ban on internal combustion engine vehicle sales, negative developments in the electric vehicle sector are now significantly impacting domestic production.
According to industry sources on December 22, Hyundai Motor Company and its labor union recently agreed to reduce the number of workers on the assembly line (parts assembly process) of Line 12 at Ulsan Plant 1, which produces the Ioniq 5 and Kona Electric, by 70 per shift. This reduction accounts for more than 20% of the 327 production workers on that line. The affected employees will be reassigned to other production lines based on workforce demand analysis.
Additionally, the labor and management agreed to reduce the hourly production rate (UPH) of Line 12 from 27.5 units to 17.5 units. A Hyundai Motor Company representative explained, "Starting today, we are temporarily implementing a 'pitch-down' to lower the UPH without changing the number of workers, and once the reassignment is finalized this week, the workforce reduction will take effect from next year."
The primary reason Hyundai Motor Company is significantly reducing its electric vehicle production capacity is sluggish sales. For the Ioniq 5, domestic sales reached 13,602 units last year, while exports totaled 71,837 units. This year, domestic sales slightly increased to 14,109 units, but exports have plummeted by more than 40,000 units to 29,829 units as of last month.
In particular, increased local production in the United States, a key market, due to tariffs has negatively impacted exports. The cumulative production of the Ioniq 5 at Hyundai Motor Group Meta Plant America (HMGMA) in Georgia, USA, which began full-scale operations this year, reached 39,467 units by the third quarter, surpassing the production volume at the Ulsan Plant. The Ulsan Plant produced 33,967 units of the Ioniq 5 in the first to third quarters of this year, which is only about half of the 70,943 units produced during the same period last year.
Exterior view of Hyundai Motor Group Meta Plant America (HMGMA) located in Georgia, USA. Hyundai Motor Group
The downturn in electric vehicle demand has already become evident overseas. In September, the United States discontinued its electric vehicle purchase subsidies, and the European Union has also withdrawn its regulation that would have banned sales of internal combustion engine vehicles starting in 2035, signaling a slowdown in electrification efforts.
Automakers, which had previously ramped up investment in electric vehicles, are now responding with restructuring and delaying electric vehicle launches. General Motors (GM) recently laid off 1,200 workers at its electric vehicle plant, and Nissan of Japan is postponing its electric vehicle production timeline. Ford is shifting its business focus to hybrid and internal combustion engine models. Recently, Ford announced plans to scale back its electric vehicle business and pivot its electrification strategy toward hybrids (HEV) and extended-range electric vehicles (EREV). Ford has decided to convert its all-electric pickup truck, the F-150 Lightning, from a pure electric vehicle to an EREV model.
To respond to shrinking electric vehicle demand, Hyundai Motor Company and Kia are increasing the number of hybrid models among their popular vehicles. Hyundai Motor Company has begun selling the Palisade Hybrid in the United States, and Kia is set to launch the Telluride Hybrid in the first quarter of next year. The newly released Seltos also features a hybrid model for the first time.
An industry insider commented, "In most markets worldwide, except for China, the pace of electrification is falling short of expectations due to pricing and various other factors," adding, "We have no other choice but to diversify our portfolio by appropriately mixing hybrids and internal combustion engine vehicles to adapt to shifting demand."
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